CASE SUMMARY:
PINTO V. SPECTRUM CHEMS. & LAB. PRODS, 200 N.J. 580
(2010)
David Zimmerman
Rutgers Conflict Resolution Law Journal
March 26, 2010
Brief Summary:
Plaintiffs were represented by Legal Services of New Jersey in a wrongful termination suit.
The trial court ordered mediation and the two parties left the mediation feeling that a settlement
had been reached. Ultimately, upon returning to the Court, the two parties disagreed regarding
the terms of the settlement. In particular, the disagreement was over whether or not the
defendant had agreed to pay the plaintiff’s legal fees. The trial court held that no settlement was
reached, and an appeal was made regarding the legality of public-interest organizations engaging
in simultaneous negotiations of substantive issues and attorney’s fees.1 The New Jersey
Supreme Court heard the appeal.
Rule:
Public-interest attorneys may simultaneously negotiate both the merits and fees. This
decision overturned the rule established in Coleman which banned public-interest attorneys from
including attorney’s fees in settlement discussions in order to minimize the risk that the client’s
and the attorney’s interests would diverge.2
1
2
Coleman v. Fiore Bros., 113 N.J. 594 (1989).
Id.
1
Facts of the Case:
Plaintiffs William Pinto and Alvaro Vasquez were employees of Spectrum Chemical and
Laboratory Products in New Brunswick, New Jersey. They were terminated from their jobs after
they complained about working conditions at the plant and attempted to unionize the shop.
Plaintiffs, with the assistance of Legal Services of New Jersey, brought an action for wrongful
termination under New Jersey’s Conscientious Employee Protection Act (CEPA)3 and the New
Jersey Law Against Discrimination (NJLAD)4.
The defendant understood the settlement agreement to include all substantive issues as well
as any legal fees. Conversely, the plaintiffs understood that the agreement settled the substantive
issues, but did not address the legal fees. The trial court held that no settlement was reached. An
appeal was made to resolve the question of whether or not Legal Services could include
attorney’s fees in the settlement discussion.
The Court’s Holding:
The New Jersey Supreme Court held that the central issue of the case was whether publicinterest attorneys were banned from simultaneously negotiating both the case’s merits and
counsel-fees. Although the Court held that the parties in this case did not reach a settlement
agreement, it lifted the ban on public-interest attorneys negotiating attorney’s fees as part of their
settlement discussions. This marked a change in the law as it had been established in Coleman.5
This prohibition on combined settlement discussions had first been announced as a judicial
principle in Coleman where the Court stated that it wished to promote efficient settlements but
was concerned about issues that could arise. In Coleman, the Court was concerned that in
statutory fee cases where a defendant’s offer addressed simultaneously the merits of a claim and
Conscientious Employee’s Protection Act, N.J. STAT. ANN Section 34:19-1 et seq.
Law Against Discrimination, N.J. STAT..ANN. Section 10:5-1 et seq.
5
Coleman at 601.
3
4
2
attorney fees, ethical conflicts could arise. The Court held in such cases that an offer to settle the
attorney’s fees at a high rate could be a bribe or, conversely, an offer to settle the attorney’s fees
at a low rate could be blackmail. The Court observed that in fee shifting cases a defendant’s
demand that a plaintiff’s attorney waive his/her statutory fee as the price of a settlement intrudes
upon the relationship between the attorney and the client.
3