Oriental Trading Company, Inc. et al v. Yagoozon, Inc.

Filing 136

MEMORANDUM AND ORDER - Defendant's motion to enforce settlement 123 is denied. On or before March 31, 2016, the parties shall submit a joint proposal for progression of the case for purposes of discovery and trial. Ordered by Senior Judge Lyle E. Strom. (GJG)

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
ORIENTAL TRADING COMPANY,
INC., a Delaware corporation,
and FUN EXPRESS LLC, a
Nebraska limited liability
corporation,

)
)
)
)
)
)
Plaintiffs,
)
)
v.
)
)
YAGOOZON, INC., a Rhode
)
Island corporation,
)
)
Defendant.
)
______________________________)

8:13CV351

MEMORANDUM AND ORDER

This matter is before the Court on the defendant,
Yagoozon, Inc.’s (“defendant”) motion to enforce settlement
(Filing No. 123) filed on January 19, 2016.

The defendant

submitted a brief in support of the motion (Filing No. 124) as
well as an index of evidence in support (Filing No. 125).

The

plaintiffs, Oriental Trading Company, Inc., and Fun Express, LLC
(“plaintiffs”) filed a brief in opposition to the motion (Filing
No. 126) and an index of evidence in opposition (Filing No. 127).
The defendant filed its reply brief on February 16, 2016 (Filing
No. 129).

The Court held a hearing on March 8, 2016, at which

time the parties offered evidence and testimony, and made their
arguments to the Court.

After review of the motion, the parties’

briefs and oral arguments, and the applicable law, the Court
finds as follows.
BACKGROUND
Plaintiffs brought suit alleging numerous copyright and
trademark infringements.

See Filing No. 35.

Plaintiffs’

complaint also alleges violations of unfair competition under the
Lanham Act and two related Nebraska state-law claims.

See id.

Discovery led to the plaintiffs filing three different motions
for partial summary judgment (Filing Nos. 64, 103, and 106) and a
Daubert motion to exclude defendant’s expert report and related
testimony (Filing No. 90).

Following these motions, the parties

sought to extend the progression order because “[t]he parties
ha[d] . . . entered into serious settlement discussions . . .
[and were] preparing settlement papers and . . . finalizing the
terms of a likely settlement.”

(Filing No. 121 at 1).

The

current motion arises out of the parties’ settlement discussions
during a telephone conference on January 6, 2016.
On January 5, 2016, plaintiffs’ counsel sent
defendant’s counsel a settlement proposal (Filing No. 125-1 at 45).

The proposal indicated “[p]laintiffs are willing to

compromise their claims, including their claims for attorneys’
fees, for an amount of $750,000.00.”

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(Id. at 4).

The settlement

offer also included an alternative.

See id.

The alternative

provided that “[p]laintiffs [would] forego all of their claims
. . . in exchange for an agreement that Yagoozon [would] refrain
from using or displaying . . . [p]laintiffs’ photographs or
trademarks in the future.”

(Id. at 5).

This alternative also

required “a liquidated damages amount of $200,000" if defendant
violated the agreement.

(Id.)

However, plaintiffs would

“provide notice to Yagoozon and Yagoozon [would] have five
business days to stop its use or display” before the liquidated
damages provision would be triggered.

(Id.)

The settlement

proposal gave a deadline of “Wednesday January 6, 2016 by 5:00
p.m. CST.”

(Id.)
Although both parties agree a telephone conversation

regarding the settlement offer took place between plaintiffs’ and
defendant’s counsel on the morning of January 6, 2016, the
parties dispute what was said and determined.

Following the

receipt of an email dated January 14, 2016, from plaintiffs’
counsel withdrawing the January 5, 2016, settlement offer,
defendant filed the instant motion.

See Filing No. 124 at 3.

Defendant claims “[p]laintiffs and [d]efendant reached agreement
on all material terms of a settlement to resolve all outstanding
issues in the case” and now asks the Court to “enforce the

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voluntary and valid settlement agreement entered into by the
parties.”

(Id. at 1, 6).

LAW
Under Nebraska law, “[s]ettlement agreements are
governed by basic principles of contract law.”

MIF Realty L.P.

v. Rochester Assocs., 92 F.3d 752, 756 (8th Cir. 1996)(quoting
Sheng v. Starkey Labs., Inc., 53 F.3d 192, 194 (8th Cir. 1995)).
“To have a settlement agreement, there must be a definite offer
and an unconditional acceptance.”

Strategic Staff Mgmt., Inc. v.

Roseland, 619 N.W.2d 230, 234 (Neb. 2000).

“An enforceable

settlement requires the parties to reach agreement on the
essential terms of the deal.”

Sheng v. Starkey Labs., Inc., 117

F.3d 1081, 1083 (8th Cir. 1997).

Settlement agreements that are

accepted orally are enforceable.

See Enterprise Rent-A-Car Co.

v. Rent-A-Wreck of America, Inc., 181 F.3d 906, 910 (8th Cir.
1999)(affirming the district court’s order enforcing a settlement
agreement that found “the offer was orally accepted . . . .”).
DISCUSSION
The Court has jurisdiction over plaintiffs’ claims
under both 28 U.S.C. § 1331 and 28 U.S.C. § 1332.

Whether the

Court exercises jurisdiction based on a federal question or on

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diversity of citizenship, Nebraska law governs.1

See Cole v.

Wells Fargo Bank, N.A., 437 F. Supp. 2d 974, 981 n.5 (S.D. Iowa
2006)(“Although our circuit has not directly ruled on the issue,
. . . other circuits have uniformly decided that if subject
matter jurisdiction rests on 28 U.S.C. § 1331, a district court
should apply the forum state’s choice of law rules . . . .”).2
Defendant claims “[d]efendant’s counsel obtained the
authority . . . to accept [o]ffer [t]wo.”
(internal citation omitted).

(Filing No. 124 at 2)

He further alleges that “[o]n the

morning of January 6, 2016, [d]efendant’s counsel called
[p]laintiffs’ counsel to accept [o]ffer [t]wo . . . and agreed to
every terms [sic] and condition proposed . . . that related to
[o]ffer [t]wo.”

(Id.)

The parties dispute the language defense

counsel used during the little over four-minute conversation.
Compare Filing No. 127-1 at 1-2 with Filing No. 125-1 at 2.
During the brief conversation, the attorneys also discussed
upcoming dates and deadlines and placed a call to the Court to
seek a continuance (Filing Nos. 124 at 2-3, 126 at 2, 121, and

1

The parties agree that settlement agreements can be
reached orally under the law applicable to the instant motion.
2

Neither party disputes that Nebraska’s choice of law rules
lead to the conclusion that Nebraska law governs defendant’s
motion. See Filing No. 124 at 3 (“Under Nebraska law . . . .”)
and Filing No. 126 at 5 (“the alleged agreement cannot be
enforced because it does not comport with Nebraska law.”).
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122).

The Court advised the parties to file a motion (Filing No.

126 at 2).

The parties filed a joint stipulation seeking to

continue upcoming dates and deadlines.
parties’ stipulation stated:

See Filing No. 121.

The

“[t]he parties have, in the last

two days, entered into serious settlement discussions.

They are

preparing settlement papers and are finalizing the terms of a
likely settlement.”

(Id.)

Following the telephone conversation between the
parties and with the Court, no additional communication
concerning settlement occurred until January 14, 2016.
Filing No. 124 at 3.

See

On January 14, 2016, plaintiffs’ attorney

sent an email with the subject “Withdrawal of Settlement Offer in
Oriental Trading v. Yagoozon.”
omitted).

(Id.) (internal citation

Defendant’s counsel responded noting his confusion as

to the withdrawal of “an offer that was already accepted.”

(Id.)

Defendant alleges the parties’ telephone conversation as well as
the parties’ subsequent conduct, including the notification to
the Court regarding the settlement discussions and the period of
silence after the conversation until plaintiffs’ attorney’s
subsequent withdrawal, provide adequate evidence that a
settlement agreement was reached and is enforceable.
Plaintiffs argue the Court ought to deny the
defendant’s motion because “Nebraska’s local rules require any
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agreement between parties to be in writing and signed by the
parties or, alternatively, to be made orally on the record . . .
[and contend] the basics of a contract have not been met because
Yagoozon did not unconditionally accept [the] offer.”
No. 126 at 1).

(Filing

Finally, plaintiffs contend “there is not even an

oral agreement covering the fundamental terms of an agreement.”
(Id. at 7)(internal citation omitted).
After careful review of the record and thorough
consideration of the parties’ arguments, the Court finds that
defendant’s motion should be denied.

The record fails to

conclusively show an unconditional acceptance occurred through
words or the parties’ conduct, or a combination thereof.

Because

the Court finds no unconditional acceptance, the Court need not
discuss whether all material terms were agreed upon.

Defendant

has failed to satisfy its burden to show an unconditional
acceptance.

Accordingly,

IT IS ORDERED:
1) Defendant’s motion to enforce settlement is denied.

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2) On or before March 31, 2016, the parties shall
submit a joint proposal for progression of the case for purposes
of discovery and trial.
DATED this 10th day of March, 2016.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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