Mantissa Coporation v. Ondot Systems, Inc. et al

Filing 132

ORDER DENYING Joint Motion for Indicative Ruling Regarding Rule 60(b) Motion to Vacate 129 . (Signed by Magistrate Judge Dena Hanovice Palermo) Parties notified. (Palermo, J.) (Main Document 132 replaced on 9/26/2019) (dpalermo, ).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MANTISSA CORPORATION,

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Plaintiff,
v.
ONDOT SYSTEMS, INC.; LONE
STAR NATIONAL BANK; and
LONE STAR NATIONAL
BANCSHARES-TEXAS, INC.,
Defendants.

CASE NO. 4:15-CV-1133

MEMORANDUM AND ORDER
For the reasons given below, the parties’ “Joint Motion for Indicative Ruling
Regarding Rule 60(b) Motion to Vacate,” ECF No. 129, is DENIED.
Plaintiff filed this patent infringement suit in April of 2015. On August 10,
2017, this Court issued a memorandum opinion granting summary judgment in
Defendants’ favor on grounds of patent-ineligibility, ECF No. 119, and entered a
final judgment, ECF No. 120. Plaintiff appealed to the United States Court of
Appeals for the Federal Circuit, ECF No. 122, where the matter remains pending.
On May 8, 2019, Plaintiff and Defendants filed a joint motion asking this
Court to issue an indicative ruling stating that if the Federal Circuit were to remand
the case to this Court, this Court would grant the parties’ joint motion to vacate the
August 10, 2017 order and opinion. In support of their motion, the parties aver that
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they have entered into an settlement agreement, that “[a] condition of the agreement
is vacatur of this Court’s August 10, 2017 order and opinion (either by this Court or
the Federal Circuit),” and that, “[a]bsent vacatur, the settlement cannot be
implemented, and litigation between the parties in this case (including the Federal
Circuit appeal and any proceedings on remand) will continue.” ECF No. 129 at 2.
After reviewing the joint motion, this Court ordered the parties to file a joint
statement “explaining why they have conditioned settlement on vacatur of the
August 10, 2017 order and opinion.” ECF No. 130 at 2 (citing Marseilles Hydro
Power LLC v. Marseilles Land & Water Co., 481 F.3d 1002, 1004 (7th Cir. 2007)).
The parties responded with the following statement:
If the ruling was affirmed by the CAFC, collateral estoppel would preclude
any future assertions. Consequently, the parties cannot merely dismiss the
case and return to the status quo. The Marseilles Hydro Power v. Marseilles
Land & Water Co. case is, therefore, distinguishable because the court in that
case concluded that the plaintiff would not be prejudiced by lack of vacatur.
ECF No. 131.
Federal Rule of Civil Procedure 60(b) grants district courts the authority to
“relieve a party . . . from a final judgment” if “applying [the judgment] prospectively
is no longer equitable” or for “any other reason that justifies relief.” Fed. R. Civ. P.
60(b)(5), (6). Federal Rule of Civil Procedure 62.1 provides that, when a motion is
made for relief that the district court lacks authority to grant due to a pending appeal,
the court may “(1) defer considering the motion; (2) deny the motion; or (3) state
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either that it would grant the motion if the court of appeals remands for that purpose
or that the motion raises a substantial issue.”
The value of judicial decisions to the public and the interest in maintaining
judicial economy by avoiding routine vacatur of judicial decisions both weigh
against granting the parties’ requested relief. See U.S. Bancorp Mortg. Co. v. Bonner
Mall P’ship, 513 U.S. 18 (1994).
Judicial precedents are presumptively correct and valuable to the legal
community as a whole. They are not merely the property of private
litigants and should stand unless a court concludes that the public
interest would be served by a vacatur.
***
[W]hile the availability of vacatur may facilitate settlement after the
judgment under review has been rendered and certiorari granted (or
appeal filed), it may deter settlement at an earlier stage. Some litigants,
at least, may think it worthwhile to roll the dice rather than settle in the
district court, or in the court of appeals, if, but only if, an unfavorable
outcome can be washed away by a settlement-related vacatur. And the
judicial economies achieved by settlement at the district-court level are
ordinarily much more extensive than those achieved by settlement on
appeal.
Id. at 26-28 (citations omitted). Caselaw indicates that the mere fact that a settlement
has occurred is not sufficient to justify vacatur of a final judgment. See id. at 29.
Considerations may be somewhat different when a settlement is conditioned on
vacatur, but even then, the parties must be able to articulate a legitimate reason for
conditioning the settlement on vacatur: at a minimum, the reason cannot be based
on a mistaken understanding of law or fact. See Marseilles Hydro Power, 481 F.3d
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at 1004 (explaining that “it has become apparent, from the parties’ response to our
request for a fuller statement of why they have conditioned settlement on the
vacating of the district court’s decision . . . , that their reason for seeking this relief
rests on a misunderstanding,” and denying relief).
Here, the parties’ explanation of why they have chosen to condition settlement
on vacatur—i.e., because “[i]f the ruling was affirmed by the [Federal Circuit],
collateral estoppel would preclude any future assertions”—demonstrates a
fundamental misunderstanding. If the parties settled the matter without conditioning
their settlement on vacatur of this Court’s judgment, the Federal Circuit would not
need to affirm this Court’s ruling but would presumably dismiss the appeal in light
of the settlement.1 Thus, as in Marseilles Hydro Power, the parties’ own explanation
reveals that they are harboring under a misapprehension. With that misapprehension
removed, the parties have failed to justify the relief they request.
Accordingly, the joint motion is DENIED.
Signed on September 26, 2019, at Houston, Texas.

______________________________
Dena Hanovice Palermo
United States Magistrate Judge

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Furthermore, the August 10, 2017 order and opinion ruling would likely retain its collateral estoppel effect
even if this Court were to vacate it based on the parties’ settlement. See Watermark Senior Living Ret.
Communities, Inc. v. Morrison Mgmt. Specialists, Inc., 905 F.3d 421, 427 (6th Cir. 2018) (“[J]udgments
may retain their finality and preclusive effect when they are set aside or vacated upon settlement.”).

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