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Matsuura v. Alston & Bird

Citation: 29 ELR 20643
No. 97-16400, -17033, 166 F.3d 1006/(9th Cir., 02/02/1999, 06/25/1999)

Applying Delaware law, the court holds that a settlement agreement resolving product liability claims between nursery workers and a chemical company does not bar the workers' subsequent claim that the company fraudulently induced settlement. The original claims arose over the workers' use of the company's fungicide that killed all of the workers' plants. The court first holds that the Supreme Court of Delaware would not interpret the releases in the settlement agreement as barring the workers' fraud claims. The broad release language in the settlement is restricted by the specific recital that only claims related to the purchase or use of the fungicide or incident to the underlying litigation are released. These restrictions would not encompass claims for fraud. In addition, a clear statement requirement for release of fraudulent inducement claims would likely be imposed by Delaware courts. Further, Delaware courts are reluctant to enforce unintended releases of fraud claims. The court also holds that permitting the workers to affirm their settlement agreement and sue the company for fraud will further Delaware's policy favoring voluntary settlement of legal disputes.

Counsel for Plaintiffs
Stephen T. Cox
Molligan, Cox & Moyer
703 Market St., Ste. 1800, San Francisco CA 94103
(415) 543-9464

Counsel for Defendant
William H. Boice, A. Stephens Clay
Kilpatrick & Stockton
1100 Peachtree St., Ste. 2800, Atlanta GA 30309
(404) 873-2127

Before Browning, Goodwin, and Schroeder, JJ.