Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Brass Smith, LLC v. Rpi Industries

December 8, 2011


The opinion of the court was delivered by: Hillman, District Judge




This matter comes before the Court upon the parties' request for an order of dismissal pursuant to Fed. R. Civ. P. 41(a)(2). A private settlement agreement was entered into between plaintiff, Brass Smith, LLC, and defendant, RPI Industries, Inc. The parties seek to have certain terms of their settlement agreement incorporated into the Court's order of dismissal, including a provision that this Court retain indefinite jurisdiction to enforce the terms of the settlement agreement. Retention of indefinite jurisdiction, however, raises important questions regarding the limits of federal judicial authority. As such, the Court finds it necessary to examine its ability to retain jurisdiction to enforce settlement agreements. This analysis explores the extent of the Court's discretion to retain jurisdiction, and whether that discretion allows for alteration of settlement terms within the order of dismissal, as well as any temporal delimitations on retention of jurisdiction.


A. Jurisdiction Over Settlement Agreements

We begin with the axiom that "[f]ederal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). Federal courts draw their jurisdictional power from explicit grants by Congress, and from Art. III of the U.S. Constitution. See U.S. Const. art. III; Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701-02 (1982). Regardless of whether both parties wish for the federal court to retain indefinite jurisdiction to enforce their settlement agreement, "parties may not confer subject matter jurisdiction by consent." Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004) (citations omitted); see also Collins v. Thompson, 8 F.3d 657, 659 (9th Cir. 1993) (holding that "[a] federal court may refuse to exercise continuing jurisdiction even though the parties have agreed to it. Parties cannot confer jurisdiction by stipulation or consent."), cert. denied, 511 U.S. 1127 (1994); Stewart v. O'Neill, 225 F. Supp. 2d 6, 8 (D.D.C. 2002) (stating that "[p]arties may not, by consent, definitively invoke or deny the Court's jurisdiction over the settlement agreement."); Taylor v. Wolff, 158 F.R.D. 675, 676 (D. Nev. 1994) (stating that "an agreement between the parties that this court would maintain continued jurisdiction to enforce the consent decree indefinitely ... would not bind me to retain jurisdiction").

"Enforcement of [a] settlement agreement ... is more than just a continuation or renewal of the dismissed suit, and hence requires its own basis for jurisdiction." Kokkonen, 511 U.S. at 378. The Supreme Court has rejected the notion that a federal district court has any "inherent power" to enforce a settlement agreement. Id. at 381. Nor does a federal court have jurisdiction over a settlement agreement simply because it had jurisdiction over the original dispute. See Washington Hosp. v. White, 889 F.2d 1294, 1298-99 (3d Cir. 1989). A settlement agreement is a contract, and a dispute over the settlement agreement is governed by state contract law. See Mortellite v. Novartis Crop Prot., Inc., 460 F.3d 483, 492 (3d Cir. 2006) (acknowledging that "[u]nder New Jersey law, a settlement agreement is a form of contract, and courts must look to the general rules of contract law to resolve disputes over a settlement agreement) (citations omitted); Nelson v. Pennsylvania, 125 Fed. App'x 380, 382 (3d Cir. 2005) (finding that dismissal of the suit terminates federal jurisdiction, hence an action to enforce the settlement agreement becomes a separate contract dispute, based on the terms of the agreement). For a settlement agreement dispute to remain in federal court, there must be an independent basis, such as diversity, for jurisdiction. See O'Connor v. Colvin, 70 F.3d 530, 532 (9th Cir. 1995); Nelson, 125 Fed. App'x at 382 (Absent diversity, "[t]he proper forum in which to enforce a settlement agreement is the state court," through application of state contract law); Langella v. Anderson, 734 F. Supp. 185, 189 (D.N.J. 1990) ("if the parties are not diverse in citizenship, the enforcement action [of the settlement agreement] may be limited to state court.").

Notwithstanding its limited jurisdiction, a federal court may nonetheless retain jurisdiction to enforce a settlement agreement under the doctrine of ancillary jurisdiction. Ancillary jurisdiction permits jurisdiction by federal courts " over some matters (otherwise beyond their competence) that are incidental to other matters properly before them." Kokkonen, 511 U.S. at 378. A court may exercise ancillary jurisdiction to enforce a settlement agreement "... if the parties' obligation to comply with the settlement agreement ha[s] been made part of the order of dismissal - either by [1] separate provision (such as a provision 'retaining jurisdiction' over the settlement agreement) or [2] by incorporating the terms of the settlement agreement in the order." Id. at 381 (numbers added); see Shaffer v. GTE North, Inc., 284 F.3d 500, 503 (3d Cir. 2002) (citing Kokkonen 511 U.S. at 381). "[A] judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order." Id. The phrase "pursuant to the terms of the settlement" is also insufficient to establish ancillary jurisdiction because it does not incorporate the terms of the settlement into the dismissal order. See In re Phar-Mor, Inc. Sec. Litig., 172 F.3d 270, 274 (3d Cir. 1999).

Whether or not a court decides to retain ancillary jurisdiction over the settlement agreement is discretionary. See Wright v. Prudential Ins. Co. of Am., 285 F. Supp. 2d 515, 522 n.17 (D.N.J. 2003) ("The exercise of [ancillary] jurisdiction to enforce its own order [of dismissal] is discretionary; the court [is] under no obligation to reserve [jurisdiction] in the first place." )(citing Kokkonen, 511 U.S. at 381). "If the parties wish to provide for the court's enforcement of a dismissal-producing settlement agreement, they can seek to do so." Kokkonen, 511 U.S. at 381 (emphasis in original). "When the dismissal is pursuant to Federal Rule of Civil Procedure 41(a)(2)...the court's 'retention of jurisdiction' over the settlement contract... may, in the court's discretion, be one of the terms set forth in the order."*fn1 Id. Even when the dismissal is pursuant to Fed. R. Civ. P. 41(a)(1), which by its terms does not "empower a district court to attach conditions" to the parties' dismissal, the court is nonetheless "authorized to ... retain jurisdiction over the settlement contract[] if the parties agree." Id. at 381-82.

law therefore establish that a court is under no obligation to retain jurisdiction over a settlement agreement, but may do so if it chooses. Kokkonen, supra; Wright, supra. "The Court ... can use its discretion under Rule 41(a)(2) and 41(c) to decide the proper 'terms and conditions' of the stipulation" that it incorporates into its order for dismissal. Glaxo Group Ltd. v. Dr. Reddy's Labs., Ltd., 325 F. Supp. 2d 502, 506 (D.N.J. 2004). Parties, even if they mutually agree, do not have a right to incorporation of all their settlement terms in a dismissal order, since "nowhere in [Kokkonen] does it say that a court must allow such an incorporation." Glaxo, 325 F. Supp. 2d at 508 (emphasis in original). It is within the Court's discretion to decline "the invitation to place the judicial stamp of authority on whatever private arrangements have been made between the parties." Id.

If a court decides in its discretion to exercise ancillary jurisdiction, it may modify the terms in its order to delimit its retainer of jurisdiction. See Glaxo, 325 F. Supp. 2d at 509 (stating "the Court exercises its discretion under Fed. R. Civ. P. 41 to modify the 'terms and conditions' of the order requested by [plaintiff] and [defendant]"); Wright, 285 F. Supp. 2d at 522 n.17 (affirming that the Court has discretion to delimit its retainer of jurisdiction in the order of dismissal). A federal court may also extend the jurisdictional time frame within the order of dismissal if the parties so desire. See Stewart v. O'Neill, 225 F. Supp. 2d 6, 8 (D.D.C. 2002) (extending jurisdiction during implementation of the settlement agreement upon request of both parties).

Additionally, the Third Circuit has recognized that a federal court exercising ancillary jurisdiction has "inherent power to enforce a consent decree in response to a party's non-compliance, and to modify a decree in response to changed conditions." Holland v. New Jersey Dep't. of Corr., 246 F.3d 267, 270 (3d Cir. 2001)(citations omitted). Although the consent decree might not explicitly mention the power to modify its terms, a federal court, upon a showing of good cause or changed circumstances, may exercise its inherent power to modify the decree, even over the objection of one party. See United States v. Swift & Co., 286 U.S. 106, 114-15 (1932); Delaware Valley Citizens' Council for Clean Air v. Pa., 674 F.2d 976, 980 (3d Cir. 1982) (citing Jordan v. School Dist., 548 F.2d 117 (3d Cir. 1977)).*fn2

The maximum length of time over which a Court may retain ancillary jurisdiction to enforce a settlement agreement does not appear to be explicitly addressed in case law. Certain opinions either implicitly or explicitly contemplate that a length of time greater than the 60-day local rule (Local R. 41.1(b)) is acceptable. See Langella v. Anderson, 734 F. Supp. 185, 192 (D.N.J. 1990) ("Absent an intention, either express or implied, to retain jurisdiction past this [60-day] period, the court lost jurisdiction to enforce the terms of the Settlement Agreement"); Holland, 246 F.3d at 270 (indicating that the district court, in its consent decree, explicitly retained jurisdiction for four years). This suggests that a retention of jurisdiction for a period of time greater than that provided by the local rule is ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.