Tuesday, February 18, 2020

CAFC in Serta Simmons: We conclude that a binding settlement agreement generally moots the action even if the agreement requires future performance

The outcome:

Serta Simmons Bedding, LLC and Dreamwell, Ltd. (together, “Serta Simmons”) own U.S. Patent Nos. 7,036,173
(“the ’173 patent”), 7,424,763 (“the ’763 patent”), and
8,918,935 (“the ’935 patent”). Serta Simmons sued Casper
Sleep Inc. (“Casper”) for infringement of certain claims of
those patents. The parties executed a settlement agreement and advised the district court of the settlement. The
district court nevertheless granted Casper’s summary
judgment motions of non-infringement. It later denied
Serta Simmons’s motions to vacate the summary judgment
order and to enforce the settlement agreement.
We vacate the district court’s judgment and remand
with instructions to enforce the settlement agreement. We
affirm the district court’s denial of Casper’s motion for fees
and costs pertaining to proceedings before the parties entered into the settlement agreement.

The issue:

Generally, a “[s]ettlement moots an action” because
there is no longer a case or controversy with respect to the
settled issues. Gould v. Control Laser Corp., 866 F.2d
1391, 1392 (Fed. Cir. 1989) (citations omitted). Nevertheless, Casper argues that the parties’ Settlement Agreement
did not moot the action because it called for future performance providing that Casper had ten days to pay $300,000,
after which the parties would file papers to dismiss the
claims and then “be obligated to ‘release[] . . . [the other
party] from all liabilities.” Appellee’s Br. 38–39 (citing
J.A. 1867–68)). We disagree.

The CAFC alludes to decisions of the Seventh Circuit:

Casper contends that two Seventh Circuit decisions are
to the contrary and that the case was not mooted by the
Settlement Agreement, citing Selcke v. New England Ins.
Co., 2 F.3d 790 (7th Cir. 1993) and Gould v. Bowyer, 11
F.3d 82 (7th Cir. 1993). Those cases are not binding on us,
are questionable on the merits, and in any event, are distinguishable since one involved a settlement agreement
that was not yet binding (Selcke, 2 F.3d at 791–92), and the
other potentially required further action by the court (Brief
of Defendant-Appellant Larry Bowyer, Gould v. Bowyer, 11
F.3d 83 (7th Cir. 1993) (No. 92-3697), 1993 WL 13036997,
at *5).

We conclude that a binding settlement agreement generally moots the action even if the agreement requires future performance.
While the issue is not before us in this case, we note
that there are circumstances where a district court may refuse to enforce a settlement agreement or where the district court is obligated to refuse to enforce such an
agreement. For example, district courts will not enforce
settlement agreements that are contrary to law or public
policy. See Hurd v. Hodge, 334 U.S. 24, 34–35 (1948); Oscanyan v. Arms Co., 103 U.S. 261, 267–68 (1880); FombyDenson v. Dep’t of Army, 247 F.3d 1366, 1373–75 (Fed. Cir.

The 1993 Selcke opinion was authored by Judge Posner.


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