Miller et al v. Up In Smoke Inc et al

Filing 264

OPINION AND ORDER GRANTING 257 STIPULATION to Dismiss with Prejudice by Receiver Martin Seifert, Plaintiff John P Miller, III, Defendants Charlotte Rodriguez, Rudolfo Rodriguez, Jr. This case is DISMISSED WITH PREJUDICE. The Court RETAINS jurisdiction to wind up the Receivership, but DENIES the parties' request to retain jurisdiction to enforce the settlement terms. Signed by Magistrate Judge Roger B Cosbey on 1/23/12. (cer). Modified on 1/23/2012. (cer)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
JOHN MILLER III, et. al.,
Plaintiffs,
v.
UP IN SMOKE, INC., et. al.,
Defendants.

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CASE NO.: 1:09-CV-242

OPINION AND ORDER DISMISSING WITH PREJUDICE
I. INTRODUCTION
This matter is before the Court on the parties’ Stipulation of Dismissal with Prejudice.1
(Docket # 257.) A telephonic hearing on the Stipulation was held on January 23, 2012. For the
reasons stated on the record and below, the case will be DISMISSED WITH PREJUDICE, but
the Court will not retain jurisdiction to enforce the terms of the Settlement Agreement and
counsel for the parties do not object.
II. PROCEDURAL BACKGROUND
On December 20, 2011, the parties filed their Stipulation of Dismissal with Prejudice,
asking the Court to retain jurisdiction to wind up the Receivership and enforce the terms of the
Settlement Agreement, but omitting the agreement itself. Because the case is partly a derivative
action, under Federal Rule of Civil Procedure 23.1(c), the Court is required to approve the
Settlement Agreement. At the Court’s direction, the parties filed the agreement (Docket # 261),
and the Court engaged in the required review of it, see Fed. R. Civ. P. 23.1(c).
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Jurisdiction of the undersigned Magistrate Judge is based on 28 U.S.C. § 636(c), all parties consenting.
(See Docket # 43.)

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III. DISCUSSION
While Kokkonen v. Guardian Life. Ins. Co. of Am., 511 U.S. 375, 381 (1994), allows a
district court to retain jurisdiction to enforce the terms of a settlement agreement in certain
circumstances, “[a] district court is not obliged to retain jurisdiction to enforce a settlement
simply because parties may wish it to do so,” Cross Media Mktg. Corp. v. Budget Mktg., Inc.,
319 F. Supp. 2d 482, 483 (S.D.N.Y. 2004). Moreover, “[r]etaining jurisdiction over a dismissed
action for purposes of enforcing the settlement agreement is potentially problematic . . .” Carson
Mfg. Co., Inc. v. Star Headlight & Lantern Co., Inc., No. 1:03-CV-0090-JDT-TAB, 2003 WL
21755517, at *1 (S.D. Ind. July 28, 2003). The Seventh Circuit Court of Appeals has described
this as a “serious problem,” explaining that “a district judge cannot dismiss a suit with prejudice,
thus terminating federal jurisdiction, yet at the same time retain jurisdiction to enforce the
parties’ settlement that led to the dismissal with prejudice.” Shapo v. Engle, 463 F.3d 641, 643
(7th Cir. 2006). Generally, settlement agreements do not involve the Court as a party or
otherwise; they are private contracts between parties. Indianapolis Fruit Co., Inc. v. SCI, Inc.,
No. 3:08-CV-46-TS, 2008 WL 2626671, at *1 (N.D. Ind. June 26, 2008). As such, “[i]n the
ordinary case when federal court litigants enter into a settlement agreement, [the] Court does not
retain jurisdiction to oversee enforcement issues that arise months or even years down the road;
rather those concerns typically implicate state law and are left for state courts to adjudicate.”
Parke v. Glover, No. 09-0327-WS-C, 2010 WL 2036408, at *1 (S.D. Ala. May 19, 2010).
If the parties make a showing that the procedural options and enforcement mechanisms
available under state law are insufficient to protect their future interests, then retention of
jurisdiction to enforce the settlement agreement may be appropriate. Id. On the other hand, the

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Court may decline to retain jurisdiction to enforce the settlement terms where there are no
extraordinary or unusual circumstances that would warrant an ongoing commitment of judicial
resources to monitor and enforce the agreement, id., or where the administration of a settlement
threatens to impose undue burdens on it, Cross Media Mktg. Corp., 319 F. Supp. 2d at 483.
Here, after a careful review of the terms of the Settlement Agreement, the Court declines
to retain jurisdiction to enforce the agreement for several reasons. First, the Court is not
obligated to retain jurisdiction simply because the parties request it. Id. Turning to the terms of
the agreement, one term involves a purported covenant not to compete for a period of 5 years by
locating a store within 12 miles of the former location, which raises a question of enforceability
as well as the applicable state law. Considering the length of this covenant, the Court and its
resources would be potentially involved in overseeing this agreement for years down the road,
which would threaten to impose undue burdens on it. Id. Furthermore, the parties have made no
showing that the ordinary procedural options and enforcement mechanisms available under state
law are insufficient to protect their interests such that the Court should retain jurisdiction and use
its resources to monitor and enforce the agreement for years to come. See Parke, 2010 WL
2036408, at *1. Moreover, several terms purport to bind (and have this Court enforce claims
against) the son of the Rodriguez’s, who is not even a party to the action. Therefore, taking into
account the “serious problem” raised by dismissing a case with prejudice while retaining
jurisdiction to enforce the settlement agreement, Shapo, 463 F.3d at 643, the suitable
enforcement mechanisms available under state law, and the burdens that retaining jurisdiction
would impose on the Court, the Court will not retain jurisdiction to enforce the terms of the
Settlement Agreement. The Court will, however, retain jurisdiction to wind up the Receivership.

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IV. CONCLUSION
For the foregoing reasons, the case is DISMISSED WITH PREJUDICE. (See Docket #
257.) The Court retains jurisdiction to wind up the Receivership, but denies the parties’ request
to retain jurisdiction to enforce the settlement terms.
SO ORDERED.
Entered this 23rd day of January, 2012.
/S/ Roger B. Cosbey
Roger B. Cosbey,
United States Magistrate Judge

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