Corporate & Securities Law

Don?t Count on the Courts to Fix Your Mistakes

By Ken Adams

Drafting mistakes are mainly of interest to me for the lessons I can deduce about how not to draft; I don’t particularly care how the mess is cleaned up. But sometimes I’ll pause to examine the wreckage.

In that spirit, I recently read this article by Alison Frankel for the American Lawyer. It describes as follows the circumstances leading to a lawsuit on appeal before the Seventh Circuit Court of Appeals:

A class of Bell Atlantic pension plan participants filed suit against Bell successor Verizon, claiming that Verizon miscalculated?by $1.67 billion!?the lump-sum cash payments they were due because it applied a particular multiplier only once, not twice. It turned out that the sentence in the ERISA plan that implied the multiplier should be applied twice was a drafting error: An in-house Verizon lawyer inadvertently neglected to delete a phrase about the multiplier from the end of a sentence after he inserted the same phrase in the middle of the sentence.

The Seventh Circuit affirmed the holding of the lower court declining to enforce the plan provision with the mistake. Apparently, an important factor was that no one relied on the mistake.

I recommend that you not take away from this case that the courts will save you from your mistakes. I’m not inclined to start researching the caselaw on mistake, but I recall that in one case?I wrote about it in this August 2008 blog post?the court declined to save a contract party from the consequences of a drafter’s having inadvertently used the word less instead of more. I’m confident that I could easily enough compile one list of cases where the court cut some slack and another list where the court let a contract party live with the consequences of mistake.

Playing roulette with the courts is a distant second to not making a mistake in the first place.

Full post as published by AdamsDrafting on August 16, 2010 (boomark / email).