July 15, 2019

July 15, 2019

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"Approved As To Form" Is No "Sick Chicken"

Attorneys often sign settlement agreements under the words "approved as to form" or "approved as to form and content".  In signing the settlement agreement, an attorney may not expect to be bound by the settlement, but should she?  That question was addressed yesterday by the California Supreme Court in Monster Energy Co. v. Schechter, Cal. S. Ct. Case No. S251392 (July 11, 2019).  

The settlement agreement in that case several provisions purporting to impose confidentiality obligations on the parties and their counsel.  When the plaintiffs' counsel allegedly violated those obligations, the defendant sued.  Plaintiff's counsel (now a defendant) then sought dismissal under California's Anti-SLAPP (strategic lawsuit against public participation) statute (CCP § 425.16).

The California Supreme Court found that "approved as to form and content" is an affirmation that "counsel has read the document, it embodies the parties’ agreement, and counsel perceives no impediment to his client signing it".  (citing Freedman v. Brutzkus, 182 Cal. App. 4th 1065, 1070 (2010)).  The Court did not stop there, however, finding "the legal question is whether counsel’s signature approving an agreement as to form and content for his clients’ signature precludes, as a matter of law, a finding that he also intended to be bound by the agreement".  The Court, citing references to the parties' attorneys in the confidentiality provisions of the settlement agreement, concluded that an attorney’s signature on a document with a notation that it is approved as to form and content does not, as a matter of law, preclude a factual finding that the attorney intended to be bound by the document’s terms.

The Supreme Court did not hold that every time an attorney approves a settlement agreement as to form and content, the attorney will become contractually bound to the substantive terms of the agreement.  However, the Court did leave open the door to that possibility.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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