“THE APPROVED AS TO FORM AND CONTENT CLAUSE”
The “Approved as to form and content” clause can be both innocuous or material; Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781 explains the distinction.
In Monster Energy, parties to a products liability and wrongful death action settled their lawsuit and, in a settlement, which included confidentiality obligations, lawyers for the parties (Schechter for the plaintiff) signed a notation that they approved the written agreement as to form and content. Plaintiff’s counsel allegedly violated the agreement by making public statements about the settlement and were then sued, inter alia, for breach of contract. They urged that they were not personally bound by the confidentiality provisions and moved to dismiss the suit under the anti-SLAPP statutes. The trial court denied the motion as to the breach of contract claim but granted it as to the other causes of action. The Court of Appeal reversed that ruling, concluding that the “approved as to form and content” notation meant only that counsel recommended that their clients sign the document. The Supreme Court reversed, holding that the clause “does not preclude a factual finding that counsel both recommended their clients sign the document and intended to be bound by its provisions.” (Id., at p. 787; emphasis in the original.)
The Supreme Court reasoned that the import of the “approved as to form and content” clause depends on the totality of the circumstances in the applicable document. “If … the agreement contains no provision purporting to bind counsel or otherwise impose any obligation on him, the question is easily answered. (Citation.) In that circumstance, counsel’s signature that he approved the agreement as to form and content could only mean he is approving it for his client’s signature.” (Id., at p. 792; emphasis in the original.) However, in the instant matter, the Court found that a fact finder could conclude that “all the circumstances could reasonably conclude Schechter agreed to be bound. The confidentiality provisions are not only extensive but repeatedly refer both to the parties and their counsel.” (Id., at pp. 792-793.) “Given this backdrop, it is reasonable to argue that counsel’s signature on the document evinced an understanding of the agreement’s terms and a willingness to be bound by the terms that explicitly referred to him, which, in turn, would appear consistent with the expectations of the parties and their counsel. … (Thus), “Monster Energy has met its burden of showing its breach of contract claim has ‘minimal merit’ sufficient to defeat an anti-SLAPP motion.” (Id., at p. 796.)
The fact that Schechter was not a party to the lawsuit was not an impediment to his being bound by the confidentiality provisions. The “(party) label does not answer the question of whether Schechter, by signing an agreement that included provisions purporting to bind him individually, manifested his intent to be so bound. It is the substance of the agreement that determines his status as a party to the contract, as opposed to a party to the lawsuit.” (Id., at p. 794; emphasis in the original.)
MDM’s observation: Monster Energy does not hold that an attorney who signs an “approved as to form and content” clause is automatically bound by the terms of the underlying agreement. What it does find is that the attorney’s intent (the critical issue) in signing the aforementioned clause is controlled by the totality of the circumstances in the agreement. Accordingly, if attorneys do not want to be bound by an agreement but feel compelled nonetheless to execute an “approved as to form and content” clause, they should include an accompanying phrase that their signing the clause is not intended as an express or implied acceptance of the agreement’s terms. More appropriately, out of an abundance of caution, attorneys should not sign this troublesome language.
Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
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