SS Niles Bottlestoppers, LLC v. Steer Machine Tool & Die Corp

Filing 38

MEMORANDUM (Order to follow as separate docket entry) re 35 MOTION for Contempt and 34 MOTION to Reopen Case Signed by Honorable James M. Munley on 12/5/17. (sm)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
SS NILES BOTTLESTOPPERS, LLC, :
No. 3:16cv320
Plaintiff
:
:
(Judge Munley)
v.
:
:
STEER MACHINE TOOL &
:
DIE CORP.,
:
Defendant
:
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
MEMORANDUM
Before the court are two motions filed by Defendant Steer Machine Tool &
Die Corporation in this case, which was closed in October 2016. The first motion
is to reopen the case. The second motion is titled “Motion for Contempt,”
however, it mainly involves enforcement of the settlement agreement that the
parties entered into in October 2016 after a conference held before Magistrate
Judge Karoline Mehalchick. For the following reasons, we will deny the motion to
reopen and dismiss the motion for contempt.
Background
This case involves a trademark for a bottlestopper. (See Doc. 11, Am.
Compl.) Plaintiff SS Niles Bottlestoppers, LLC manufactures bottlestoppers for
use in bottles of wine, olive oil, balsamic vinegar, bath oil, liquors and decorative
herb bottles. (Id. at 15). Plaintiff filed a thirteen-count complaint against

Defendant Steer Machine Tool & Die Corp., alleging, inter alia, trademark
infringement. (Doc. 11, Am. Compl.).
On June 20, 2016, the court referred the case to Magistrate Judge Karoline
Mehalchick for a settlement conference. (Doc. 16). Judge Mehalchick held a
settlement conference and reported to the court that the case had settled. Then
on July 26, 2016, we issued an order of dismissal providing sixty (60) days in
which to consummate the settlement. (Doc. 23).
Although the docket is not precise, it appears that problems arose in the
settlement and the parties contacted Judge Mehalchick for further assistance.
She held a telephonic status conference on the matter on August 31, 2016.
(Doc. 25). The parties then asked the court to extend the time for
consummation of the settlement, which the parties deemed “the deadline to
reinstate this case.” (Doc. 30). The court issued an order on September 27,
2016, extending the deadline to reinstate the case to October 3, 2016. (Doc. 32).
Plaintiff filed a notice of settlement of the case on October 4, 2016. (Doc.
33). The case had previously been closed due to the first notice from Magistrate
Judge Mehalchick that the case had settled in July 2016, and thus, it remained
closed when the court received this second notice of settlement.
Then more than a year later on November 20, 2017, the defendant filed the
instant motion to reopen the case and motion for contempt. (Doc. 34 & Doc. 35).
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The defendant contends that the plaintiff “has failed to comply with the consent
order and agreement entered by this court.” (Doc. 36, ¶ 43). As discussed
below, however, no consent order and agreement was ever entered by the court
in this case - the parties entered into a settlement agreement between
themselves. (Doc. 46, Exh. A, “Confidential Settlement Agreement and Mutual
Release”). Hence, relief will not be granted to the defendant.
Jurisdiction
Originally, this court had jurisdiction over this matter because several of the
causes of action were based on federal intellectual property law. See 28 U.S.C.
§ 1331, 28 U.S.C. § 1338. We had supplemental jurisdiction over the state law
claims under 28 U.S.C. § 1367. As set forth below, however, we find that we no
longer have jurisdiction.
Discussion
As noted above, defendant has filed a motion for contempt. The basis for
the contempt motion is the assertion that plaintiff “has failed to comply with the
consent order and agreement entered by this court.” (Doc. 36, Pl.’s Memo. at
13). 1 In other words, defendant asks the court to enforce the settlement

The memorandum actually states that “defendant” has failed to comply,
however, as plaintiff filed the memorandum, and in light of the substance of the
memorandum, we assume that they meant that the defendant failed to comply.
This transposition of “plaintiff” and “defendant” continues in the memorandum but
we have interpreted “plaintiff” for “defendant” and vice versa where appropriate.
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agreement and find plaintiff in contempt. (Id.) We do not have jurisdiction to
enforce the settlement agreement at issue. We only have jurisdiction to enforce
a settlement where “the parties’ obligation to comply with the terms of the
settlement agreement had been made part of the order of dismissal – either by
separate provision (such as a provision ‘retaining jurisdiction’ over the settlement
agreement) or by incorporating the terms of the settlement agreement in the
order[.]” Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 381
(1994); see also Shaffer v. GTE North, Inc., 284 F.3d 500, 503 (3d Cir. 2002)
(indicating that providing the parties a certain amount of time to consummate the
settlement and reinstate the case if settlement had not been consummated by
that date is not sufficient to indicate that the court retained jurisdiction over the
settlement agreement).
The reasoning of the courts is that enforcement of a settlement agreement
is more than the continuation or renewal of a dismissed suit, and requires its own
basis of jurisdiction. Kokkonen, 511 U.S. at 378. For example, in a case such as
this one, a federal question no longer exists after the case is settled. If the
parties attempt to enforce the settlement agreement, the basis of the dispute has
changed from a federal trademark issue into a contract dispute. Such a dispute
would be governed by state law and would need an independent basis of
jurisdiction.
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Here, the order of dismissal reads as follows: “ORDER OF DISMISSAL
Upon notice to the Court by the appointed settlement officer, it is hereby ordered
that this case is dismissed without costs. The parties will have sixty days in
which to consummate the settlement.” (Doc. 23, Order dated July 26, 2016).
The parties’ obligation to comply with the settlement agreement is not
incorporated into the dismissal order either by a separate provision or
incorporating the terms of the settlement agreement in the order. Thus, we do
not have jurisdiction to enforce the settlement agreement.
Defendant’s memorandum in support of its contempt motion indicates that
the undersigned judge entered a court order upon the settlement agreement.
(Doc. 36, Pl.’s Memo. at 4). The record does not reveal any such order. Rather,
the parties entered into a settlement agreement between themselves, which was
not made into a court order. (Doc. 46, Exh. A, “Confidential Settlement
Agreement and Mutual Release”).
The defendant also argues that we have jurisdiction because the parties
agreed that the undersigned and Magistrate Judge Mehalchick would have
jurisdiction over any dispute regarding the agreement. Defendant is correct that
the settlement agreement demonstrates that the parties intended for the court to
have jurisdiction to hear disputes arising out of it. The agreement states: “The
parties consent and agree that Judge James M. Munley and Magistrate Judge
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Karoline Mehalchick . . . shall have sole and exclusive jurisdiction over any . . .
enforcement of this Agreement.” (Doc. 36, Exh. A, Settlement Agreement ¶ 12).
The fact that the parties agreed that this court would have jurisdiction, however,
has no legal effect. Parties cannot grant jurisdiction to this court by agreement.
Beach v. KDI Corp., 490 F.2d 1312, 1318 (3d Cir. 1974); see also Kokkonen, 511
U.S. at 377 (“Federal courts are courts of limited jurisdiction. They possess only
that power authorized by Constitution and statute.”).
The defendant further indicates that Magistrate Judge Mehalchick retained
jurisdiction over the case when she noted: “But in the event that you have any
other problems, just reach out to chambers or file a letter, and we’ll be noticed on
it, and we will proceed accordingly.” (Doc. 34, Exh. A, N.T. July 25, 2016 at 5)
This statement does not make compliance with the settlement agreement a term
of the dismissal order or incorporate the settlement agreement into the dismissal
order. It appears that Judge Mehalchick made this statement on the assumption
that the parties would file a consent to proceed before a magistrate judge form
and then the Magistrate Judge would retain jurisdiction over the case. (Id. at 23). Specifically, Judge Mehalchick stated: “Additionally, the parties have agreed
to consent to the jurisdiction of the Magistrate Judge in this case, and upon
approval of that Consent Order, I’ve agreed to retain jurisdiction of this case, in
the event that there is an issue with it, either, the final drafting of the release or
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enforcement of the settlement agreement at any future time.” (Id.) That is not,
however, what happened in this case.
The parties did not file a consent to the jurisdiction of the magistrate judge,
and thus, Judge Mehalchick’s comments cannot be deemed to have retained
jurisdiction over enforcement of the settlement agreement. Additionally, it
appears that all was not well with the settlement that was reached at the July 23,
2016 conference as Magistrate Judge Mehalchick held another conference, this
time telephonically, on September 23, 2016. (Doc. 31, Minute Sheet for Sept.
23, 2016 Conf.). At this conference the parties indicated that they should have
the settlement agreement worked out by the end of the week. Then,
approximately a week and a half later, the parties filed a notice of settlement.
(Doc. 33). None of these filings evince the court’s intention to retain jurisdiction
over the settlement agreement.
Conclusion
Accordingly, the defendant’s motion to reopen this case will be denied and
the motion for contempt/motion to enforce settlement agreement will be
dismissed for lack of jurisdiction.

Date: Dec. 5, 2017

s/ James M. Munley
JUDGE JAMES M. MUNLEY
United States District Court
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