June 01, 2011

From the Bench: Are Settlements Sacrosanct?

Jed S. Rakoff

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When should a judge turn down a settlement that is presented for the judge’s approval? Some would say never. After all, if the parties to a dispute have reached an amicable resolution of their differences, why should a judge interfere? Doesn’t the judge have better things to do than to muck up an agreement that the parties have labored, often long and hard, to reach?

As with so much in the law, however, the answer to this last question is neither yes nor no, but rather, “it depends.” Even in the case of a purely monetary settlement between two private individual parties where there is no request for any further involvement by the court, a court is required to scrutinize the settlement if it involves an infant or incompetent and may choose to get involved if the settlement smacks of collusion. The reason for the court’s involvement in such cases is the risk that, otherwise, the façade of a legally binding settlement will conceal over-reaching by one or more parties (as when an infant’s recovery is actually going to the benefit of his guardian) or will serve to compromise the rights of third parties (as in the case of a collusive settlement), or the like.

 

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