Author: LegalEase Solutions
When a court should oppose settlement when that settlement may adversely affect the property or other interest of the intervening party.
In FDIC v. United States, 1996 U.S. Dist. LEXIS 19644 (D. Or. 1996), it was observed by the District Court that an intervenor, is a full participant in the lawsuit and is treated just as if it were an original party. And as a general proposition, the original parties may not stipulate away the claims of the intervenor. The Court further stated that the one party — whether an original party, a party that was joined later, or an intervenor — could preclude other parties from settling their own disputes and thereby withdrawing from litigation. The court in FDIC Supra stated:
Of course, parties who choose to resolve litigation through settlement may not dispose of the claims of a third party, and a fortiori may not impose duties or obligations on a third party, without that party’s agreement. A court’s approval of a consent decree between some of the parties therefore cannot dispose of the valid claims of non consenting intervenors; if properly raised, these claims remain and may be litigated by the intervenor.
Id. at 19650,19651.
The court in Gamier v. Alexander, 801 F.2d 799 (6th Cir. 1986) also observed:
Parties who choose to resolve litigation through settlement may not dispose of the claims of a third party, and a fortiori may not impose duties or obligations on a third party, without that party’s agreement.
Id. at 808.
Thus it appears that there is a line of case law that protects the claims and interests of third parties in settlement discussions. As such, this line of case law may be added to our client’s Response In Opposition To Plaintiff’s Motion to Stay.