KOKKONEN v. GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
Argument of Michael J. Jencks
Chief Justice Rehnquist: We'll hear argument next in 93-263, Matt.
T. Kokkonen v. the Guardian Life Insurance Company of America.
Mr. Jencks: Mr. Chief Justice, and may it please the Court:
This case raises the issue of the scope of a Federal court's power to enforce a settlement agreement reached in a case before it.
Specifically, the question is whether the district court properly invoked its inherent power in enforcing the settlement agreement in this case where the action was no longer pending, having been dismissed months previous, where the action was not incorporated or made a part of any court order or otherwise given judicial--
Unknown Speaker: You say the action wasn't incorporated.
What you mean is the agreement, don't you?
Mr. Jencks: --Yeah.
Thank you, Mr.--
Unknown Speaker: And it was not a written agreement?
Mr. Jencks: --That's correct.
This was an... let me turn to the facts, because I think they're important in this case.
This originally was a case filed in State court.
It was removed on diversity grounds on account of the respondent's New York citizenship; raised only State law claims.
3 days into the trial of this matter, the parties reached a settlement which, at the insistence of the respondent, was not converted to a formal settlement agreement.
Approximately 5 weeks later the case was dismissed unconditionally under 41(a)(1), and the parties went their separate ways, only 4 or 5 months after that to come to a major disagreement over the terms of the settlement and who was breaching what terms.
The respondent sought its remedy back before the Federal court, and the petitioner sought his remedy before the State court.
But, you're correct, the... Mr. Chief Justice, there was no written settlement agreement.
This was an oral agreement and never incorporated into an order, never given judicial sanction to be made an order of the court.
Unknown Speaker: Was it dictated into the record some way?
Mr. Jencks: It was summarized by one of the counsel in chambers in front of the district court judge, who had taken, as many judges do, an active role in encouraging the settlement.
But it was never... except for that recitation, the summarization in chambers, never made a part of the record or otherwise incorporated into an order of the court.
We have proposed, as have the 10 States who filed an amicus brief, a rule of practice, as it were, a line where we suggest the constitutional concerns of the limited jurisdiction of Federal courts are met, and that also serves an important function as a rule of practice.
Unknown Speaker: Well, do you argue that application of the Federal rules themselves means if you just follow the rules, that there is no right to come in later for enforcement?
Mr. Jencks: Yes, Justice O'Connor.
I don't think the Federal rules confer jurisdiction in this case, with the single exception... and it really doesn't confer jurisdiction, but Rule 60 would allow, under the proper circumstances and a showing--
Unknown Speaker: But that wasn't resorted to here.
Mr. Jencks: --It was not resorted to here.
Unknown Speaker: So do you take the position that if you just follow the rules, the court had no authority to enforce this judgment?
Mr. Jencks: Yes.
Unknown Speaker: But on your--
--Then if that were the case, we wouldn't reach any constitutional question.
Mr. Jencks: The only... the constitutional question arises from the district court deciding to exercise its inherent jurisdiction to enforce this settlement.
Unknown Speaker: Well, but we can solve it by just saying the rules don't allow it.
Mr. Jencks: That's correct.
Unknown Speaker: Well, rules, strictly speaking, I suppose, can't confer jurisdiction.
It's statutes that confer jurisdiction.
A rule could implement a statute.
Then what you're saying here, I suppose, is that there's no independent basis for Federal jurisdiction and the judicial code.
Mr. Jencks: Exactly, Mr. Chief Justice.
Unknown Speaker: But are you not also saying that there is no juris... there would be no jurisdictional problem if a Rule 60 motion had been filed here and the other side had been... had asked to be relieved from the burden of the judgment?
Mr. Jencks: If either party contesting the terms had made a motion that was granted, under the standards of Rule 60 the dismissal could have been vacated and the case could have been restored to the docket.
Unknown Speaker: All right, now if the case had been restored to the docket, would you then take the position that the court could not consider your settlement and that the only thing the court could do would be to litigate the case?
Mr. Jencks: Yes.
Unknown Speaker: And that being on a jurisdictional basis or on the text of the rules?
Mr. Jencks: Both on the text of the rules, but also on a practical basis.
In most settlements reached, the dismissal of the action is obviously one of the major elements of consideration.
If you were unfolding the settlement for some fraud in its procurement or other reason and can convince a court that to let it stand and not vacate it would perpetrate some extreme hardship or great injustice, to fall under Rule 60.
And I want to... Rule 60 I don't believe is available for every breach of a settlement agreement that may occur.
I think it... its history, its usage, its application, we can assume it to be a much more of a reserved--
Unknown Speaker: Well, would it be available here?
Mr. Jencks: --I don't believe so under the facts, even, that the district court found of the breach, of the alleged breach of the settlement agreement.
Had they made the motion--
Unknown Speaker: What more would you have needed?
Are there any set of facts that you can imagine in which Rule 60 could have been invoked here properly?
Mr. Jencks: --Certainly, I think there could be cases where either there was a clear fraud in the procurement of the settlement, or perhaps a changed circumstance.
For example, something that has happened in this case was a change in State law that makes one of the terms of the settlement--
Unknown Speaker: But mere breach of settlement would never be sufficient under Rule 60?
Mr. Jencks: --I don't think... I guess the circumstance of the parties could be such, that would be the only way to avoid great hardship.
But I think, generally, simple breach of a settlement agreement would not qualify for a Rule 60 setaside.
Unknown Speaker: Mr. Jencks, I'm not sure I understand how you say the constitutional question can be avoided.
It seems to me if neither the rules nor the statute provide for this kind of jurisdiction, the argument is still going to be made, and is made by your adversary here, that it doesn't have to be in the statute or in the rules; that the court has it by virtue of the Constitution, automatically; there is an inherent authority under the Constitution.
Isn't that question in this case, no matter what we say about the rule--
Mr. Jencks: The question of the scope of inherent jurisdiction here is this case, because I think we are prepared to concede that there is such a thing as inherent jurisdiction, and in some situations it may apply to the enforcement of settlement agreements.
In fact, that is exactly--
Unknown Speaker: --So--
Mr. Jencks: --Why we've adopted and suggested to the Court the rule of practice.
Because if you take a settlement agreement and incorporate it into an order, you give it judicial sanction, you can access one of the bedrock principles of inherent jurisdiction where the exercise of the inherent power is indispensable, is essential to the performance of the power formally granted.
Unknown Speaker: --But we have to consider that question, don't we, whether the inherent power under the Constitution covers this?
Mr. Jencks: Absolutely, Your Honor, and I apologize if I indicated we didn't.
Unknown Speaker: What is that inherent power again?
Inherent power to do what, judge's inherent, what are we talking about?
Mr. Jencks: In this case, in the way we would view a proper scope of inherent jurisdiction, it would be the power to vindicate and enforce the court's own orders.
Unknown Speaker: Well, the only order that's outstanding here is an order dismissing the case.
Mr. Jencks: That's right.
Unknown Speaker: That's all... that's the only order we have.
Mr. Jencks: That's right, and that's why we believe--
Unknown Speaker: So the inherent power to enforce an order of dismissal is what we're talking about.
Mr. Jencks: --I think... excuse me, Justice Stevens.
I think the court has the power to vacate, upon a proper application under Rule 60, the order of dismissal.
Unknown Speaker: Yeah, but I think you just... you suggested earlier we're not talking about vacating a judgment and going forward with the preceding lawsuit.
They are rather seeking to enforce a separate agreement that resulted in dismissal of the lawsuit, and they're suing for enforcement of that agreement.
That's quite a different lawsuit.
Mr. Jencks: That's correct.
Unknown Speaker: And I'm still... I still don't quite understand the concept of inherent jurisdiction to enforce the court's order to dismiss.
Mr. Jencks: Maybe you misunderstood--
Unknown Speaker: I know you're not... that's not... you're arguing the other side.
I'm not quite sure of the scope of your concession, I guess that's what I'm saying.
Mr. Jencks: --No, Justice Stevens, I apologize.
Let me... the issue... I was talking about our proposed rule that tried to access a well established principle for the exercise of inherent jurisdiction that would anchor this enforcement mechanism constitutionally and in a way that's supported by existing authority.
It's really in some ways the counterpart to this Court's addressing the discipline or sanctions side in Chambers, in the Chambers decision, where the need to access or discharge a disciplinary function is essential or viewed as essential to the court's maintenance of the order of its proceedings and the conduct of its business.
I think much the same thing can be said about the inherent power necessary to enforce and vindicate orders that have been given judicial sanction by the court.
Unknown Speaker: Well, suppose in this case there had been a motion to reopen the judgment under Rule 60, and the court then had said there are problems with this settlement agreement and so I am now going to enter a new judgment which incorporates the settlement agreement and I'm going to enforce the settlement agreement if I have to, would that have been an appropriate method of proceeding and could the judge then have enforced the settlement agreement?
Mr. Jencks: I don't believe so, Justice Kennedy.
The... as I understand--
Unknown Speaker: Why, if he could have done that in the first instance?
Mr. Jencks: --I think that the remedy provided by Rule 60 to unwind an order or set aside an order or judgment of the court is premised on restoring the parties to the position they were before they gave up, in this case the dismissals that they reached in connection with the settlement.
Different issues, it would go back on the calendar, in our position, and should be tried and resolved.
The issues are different--
Unknown Speaker: Well, I just want to make... get one thing clear.
Do you concede or do you not that if the judge had said when he heard the settlement agreement: I am very interested in making sure that this settlement agreement is honored.
I therefore put the settlement agreement into the judgment; I make it a part of the judgement.
Could he have done that and could he have enforced it under those premises?
Mr. Jencks: --He could have incorporated with the parties' consent.
This was still a voluntary private settlement agreement.
I think had they agreed that they wanted to retain Federal court oversight and jurisdiction over the enforcement of this settlement, that would have been exactly the course to take.
And what we're suggesting should be the rule where the parties decide to use the district court's continued jurisdiction as a means of enforcement, they also could--
Unknown Speaker: Well, if we're talking about the constitutional limitations on jurisdiction, why does that depend on the consent of both parties?
Mr. Jencks: --As I under... I believe I understood you to ask if... could the court simply on its own, sua sponte, take the parties' agreement, regardless of their consent, and incorporate it in the judgment of the court.
Unknown Speaker: Well, suppose he said I'm not going to dismiss this suit unless it's incorporated in the judgment?
Otherwise, I'm going to--
Mr. Jencks: Fine.
I mean, it seems to me that puts it directly to the parties to decide, in their negotiation, whether that's the way they wanted to go, or whether they wanted to proceed with the trial and have a judgment.
Unknown Speaker: --But, Mr. Jencks, doesn't that raise still another question?
Pursuant to such an understanding with the judgment incorporated in... I mean, with the terms of the settlement agreement incorporated in the judgment, it seems to me that the judgment could do one of two things.
One, it could say, as injunctions often do, the court retains jurisdiction for the purposes of enforcement.
Or alternatively, it could just put it in there, say nothing, and dismiss the case.
Now, if the case is dismissed with just the terms of the agreement printed in the judgment, would the court have jurisdiction or not?
Mr. Jencks: With a simple statement expressly retaining jurisdiction?
Unknown Speaker: No, without such a statement.
If it retains jurisdiction expressly, of course it's easily, like any... and most decrees such a recital.
But my question is supposing there's no such recital in the judgment, just a copy of what the parties agreed to, and then a judgment saying the judgment is dismissed... the case is dismissed and the parties shall go hence without day, you know.
This is a dismissal with prejudice and just a recital of the basis of the settlement.
Mr. Jencks: If the basis of the settlement was recited in the judgment, I think there would be--
Unknown Speaker: And the case is dismissed.
Mr. Jencks: --And the case was--
Unknown Speaker: And 4 months later one of the parties comes in and says they're not abiding by the settlement, what can the judge do?
Does he have jurisdiction just because he put some words in the judgment?
Mr. Jencks: --IF the basis... well, one of the hopes is to trigger the existing rules and remedies.
For example, in Rule 65(d) there's requirements about the precision and the detail--
Unknown Speaker: Right.
Mr. Jencks: --That must be given in an injunctive order.
And most of the terms of this settlement would fall under that.
They were essentially injunctive; you shall not communicate or you shall return files.
The hope, or one of the notions by incorporating it in some order, is to require or have the existing rules apply regarding... that have been well worked out, including the specificity of the order.
Unknown Speaker: I understand all that, and I understand your difficulty in answering.
Do you have a position on the hypothetical I've given you as to whether the court would have jurisdiction if the judgment recited the terms of a settlement and then dismissed the case without an express retention of jurisdiction for purposes of interpreting or enforcing the decree?
Mr. Jencks: My position would be that the existence of the judgment could confer jurisdiction.
There may be, depending on the detail, enforceability problems in terms of the rest of it, but there would be jurisdiction if the judgment was, in fact, entered and given judicial sanction.
Unknown Speaker: I'm having a similar difficulty, I guess, and I'd like to go back to your answer to Justice Kennedy's questions, which I don't think I understood.
Is... I think you said that if we assume the moment after the Rule 60 motion is granted, the prior judgment, silent as to any settlement and so on, silent with respect, in fact, to anything except the dismissal, has been vacated.
I think you said that if the parties then said, in effect,
"Look, Judge, we're having trouble sort of administering our settlement and we would like to put that on the record and make that a part of the judgment. "
there would be no jurisdictional problem in your view.
Is that right?
Mr. Jencks: If the court--
Unknown Speaker: It's done by consent, in other words.
Mr. Jencks: --If the court... I don't think parties can privately necessarily contract for jurisdiction, but upon judicial scrutiny and his entry, that could... would be done.
Unknown Speaker: But there would be no jurisdictional problem in doing that.
Mr. Jencks: I don't believe there would be a jurisdictional problem.
Unknown Speaker: Okay.
Why then is there a jurisdictional problem when they don't consent to that and one party simply says we had a settlement; I want to prove to you what the settlement was; I want you then to embody that settlement in a judgment or at least enforce it now?
As you said, they can't confer subject-matter jurisdiction by agreement.
Why do they have jurisdiction in the first case and not in the second case?
Why does the court have jurisdiction in the first case and not in the second case?
Mr. Jencks: The jurisdiction, as I understand your hypothetical, Justice Souter, to enforce the settlement agreement after vacating the dismissal under a Rule 60 motion, I believe runs into the difficulty that the breach of a settlement agreement, the breach of a private contract, is going to be fundamentally different.
Different proof, different tests--
Unknown Speaker: No, but if I may interrupt you, in each case what you've got is what you describe here, at this point, as a private contract.
In each of the alternatives the parties have not previously brought it before the court and had it embodied in any order of the court.
In the one case they, in effect, are saying we'll find it easier to live with this if you make it part of your judgment.
In the other case one of the parties says, no, I deny that we had a settlement agreement of the sort that is claimed here.
In the one case the parties in effect consent to its embodiment in an order.
In the second case one of the party refuses, one of the parties refuses, and therefore if it's going to be embodied in the order or, indeed, if it's going to be enforced by the court, it's going to have to be proven.
In each case what you've got at that moment is what you describe as a private contract.
Why does the court have jurisdiction, in your view, to accede to the parties' request in the first case and not have subject-matter jurisdiction in the second case?
Doesn't it either have it in both or in neither?
Mr. Jencks: --I don't believe so.
I... the choice of the parties in that situation would be either to go back to the drawing board, vacate the dismissal on 60(b), or follow their remedies for breach of the contract.
Unknown Speaker: You're saying in effect it would be a new settlement agreement.
What you're saying is the 60(b) can reopen the proceeding.
Then if there is to be restoration of the original settlement agreement, it's because the parties again say to the judge we have... this agreement was opened but now we wish to present the very same agreement and come to the same place again.
It wouldn't be an... vacating the judgment under 60(b) and then having the settlement agreement in place, is that the distinction?
Mr. Jencks: I believe that's correct.
Unknown Speaker: Is that an issue--
--Well, Mr. Jencks, you've been asked several questions where it's been assumed that there is a proper motion to vacate under 60(b), but I think you said earlier that in this case you didn't think there was any basis on which 60(b) could be used.
What would have been the basis, on the facts of this case, for a motion of Rule 30... Rule 60(b) motion?
I take it you don't think one should have been granted.
Mr. Jencks: Not as I understand the evidence that was presented on the motion to enforce, though the motion to enforce would have different... a different showing.
It's a different test.
Unknown Speaker: Well, a motion to enforce wouldn't be brought under Rule 60(b).
Mr. Jencks: No.
I'm only saying in terms of the respondent's position about what they view as... they chose not to file a Rule 60(b) motion.
Unknown Speaker: Right.
But there have been a number of hypothetical questions put to you.
Mr. Jencks: Well, let me... let me give you the best example.
There was a change in the Insurance Code of the State of California.
It actually made a misdemeanor not to disclose certain information that you... as an insurance agent, you receive from a client.
That communication is prohibited as a term of the settlement here.
You have a change in the law that affects the... one of the important terms of the settlement.
Unknown Speaker: That's peculiar to this case.
What of the general circumstance of a settlement agreement not itself incorporated in the record, breached several months later, the court simply orders a dismissal; is there any basis for a Rule 60(b) motion on the part of the party that wishes to have the Federal court enforce the settlement agreement?
Mr. Jencks: I don't believe that on a routine breach situation there is.
I think that the interest in finality, of encouraging parties to reach a final enforceable good settlement... settlement alone isn't a good enough goal; we need effective settlements that will clear the court's dockets.
Here we had a situation where the parties by choice never converted this agreement to writing, didn't want it incorporated in any order of the court.
They have their remedies, either to come in on 60(b) or to enforce privately.
Unknown Speaker: What you're saying is that there's no evidence of fraud, mistake, or the sort of other things that 60(b) is used for.
Mr. Jencks: Or the degree of injustice or hardship that it conventionally is reserved for either, I think, in the case law.
It's not an automatic... I don't read it and I don't believe it's been interpreted as an automatic escape valve whenever you get a few months down the road and things aren't perfect.
The idea is to encourage parties--
Unknown Speaker: How about any other 60(b)(6), the catchall, and the judge saying well, it sounds like a pretty good 60(b) motion to me; I was listening to these two people debate what their settlement was going to be, and they made certain representations, and one of them is trying to get out of it.
So I think that fits the 60(b)(6) catchall.
It justifies relief to tell me one thing and the go do another thing.
Mr. Jencks: --It... in terms of a private agreement, you could have a conclusion under 60(b)(6) that it should be set aside.
But in addition to that, I think you need to show... for one reason or another, the parties here chose not to bring that motion.
They chose to enforce... the respondent tried, by a motion, to enforce before the district court judge; the petitioner chose to enforce, in State court, the agreement.
But I think conceivably you could have a 60(b)(6) motion that would offer relief on some kinds of breach cases.
I just don't think that on an... absent some fraud and absent some hardship, it is often going to make the cut.
Unknown Speaker: But if I hear your position, on such a motion--
--Let me just test--
--the relief to be granted would be to reinstate the lawsuit and go forward with that rather than enforcing the settlement agreement.
Mr. Jencks: That's correct, Justice Stevens.
Unknown Speaker: Yeah.
Let me just test out one more proposition with you, because there are two undercurrents to your argument.
You seem to resist the idea that the judge of his own motion could incorporate a settlement agreement.
Suppose the jury is sent home for the afternoon midtrial because the parties think they can settle, and they do and they tell the judge they have a settlement, everyone agrees.
They judge said, fine, we'll bring the jury back tomorrow morning and we'll make an appropriate order to dismiss this suit.
The next morning the parties... one of the parties said,
"I've changed my mind, I'm not going to settle. "
The judge said,
"Don't do that to me. "
"You've made an agreement, you've got to stick by it, I'm incorporating that settlement in... and that contract of settlement in the judgment whether you like it or not. "
Can the judge do that?
Mr. Jencks: I don't believe so.
The only justification for that would be if it was viewed in terms of the statements to the court.
I would access... the only way that could happen would be, in effect, as a form of sanction.
If representations were made to the court, the court was misled, act in reliance on it, it seems to me you may... might be able to justify, then, imposing the agreement on the parties.
The... one of the keys here is to try to encourage the private settlement mechanism that generally is working, and many cases are settling.
I think it's one of the things where instead of having a... sort of a roving jurisdiction to mop up the loose ends and the odd bits, it is a case where maybe form is substance.
That is it's important to let the private process do its best, to give incentives; in effect to address dispute resolution, liquidated damages, other mechanisms to enforce their own contract, and as one of those options to decide whether, by converting it to a court order, to avail themselves of the assistance of the Federal court.
I think we do that by drawing a bright line that indicates what side of the line settling parties will fall.
They will know when they reach their agreement if they will fall on the side of continued Federal jurisdiction or not.
If I may--
Unknown Speaker: Just to make sure I understand, your answer to Justice Kennedy is based on subject-matter jurisdictional grounds.
Mr. Jencks: --Yes.
Unknown Speaker: Yeah.
Mr. Jencks: Mr. Chief Justice, if I may, I'd like to reserve the balance of my tin.
Unknown Speaker: Very well, Mr. Jencks.
Mr. Morris, we'll hear from you.
Argument of Frank C. Morris, Jr.
Mr. Morris: Mr. Chief Justice, and may it please the Court:
We would submit that the rule that petitioner seeks in this case is a rule that after 3 days of trial, and with the apparent view that they were going to face an imminent loss in that trial, they initiate settlement discussions; the district court judge becomes incredibly involved in those discussions, in the clarification and the refinement of that settlement agreement; upon agreement to a settlement at the initiation of petitioner, within days of the settlement agreement the petitioner breaches that agreement.
Petitioner's rule here would leave the Federal court and the Federal court processes powerless to deal with that situation and powerless, as well, to provide relief to the aggrieved party.
Unknown Speaker: But the court could say I will not dismiss unless you agree to embody this settlement agreement in my order.
He has that whip hand.
Mr. Morris: Well--
Unknown Speaker: And your adversary will acknowledge that if that's done, there would be... to enforce.
Mr. Morris: --That's true, Justice Scalia.
However, in this case the breach, though close in time, was not before the court when the stipulation and order for dismissal was signed by Judge Coyle.
Unknown Speaker: But if the court wanted to retain jurisdiction over such a breach, for... a breach in the future, it could have done just what Justice Scalia suggests, incorporate the agreement and say we retain jurisdiction.
You wouldn't have any of this problem.
Mr. Morris: Well, that may be right in another case, Your Honor.
But we would submit that what actually happened in this case is, in fact, the constructive equivalent of just that.
You asked the question earlier of whether this settlement agreement was written.
It was not written in a separate document, but it is contained in writing in the transcript of the proceedings, every single word of it, before the district court judge, in which the agreement was not read by one party.
It was a negotiation process by both parties and in which, I would also observe, the petitioner himself, Mr. Kokkonen, was also involved in the colloquy on the record with the judge.
And, in fact, Judge Coyle specifically explained several of the provisions to which Mr. Kokkonen said, yes, that's a good statement, sir, I agree.
Unknown Speaker: I don't understand the petitioner to be challenging the fact that there was an agreement, so... or saying that what appears in the record was not the agreement of the parties.
I think what the petitioner is challenging is the authority of the court to enforce the agreement.
Mr. Morris: Yes, that is correct.
But we believe that on the facts of this case... on the facts of this case, that there was, in effect, an embodiment of what was going to be.
What was agreed to by the parties is the settlement agreement.
We have the constructive equivalent of the embodiment of the agreement in the order--
Unknown Speaker: Well, now, you say:
"We have the constructive equivalent of the embodiment of the agreement in the order. "
I mean what does that mean when stripped of the adjectives.
Mr. Morris: --When stripped of the too many adjectives, Your Honor, I think what that means is this.
Judge Coyle on three separate occasions made it clear to the parties that he envisioned if there had to be any enforcement activity in this case, that it was coming back to him, not to the State court.
He said I want this clear.
I want everyone to understand the agreement.
And, indeed, on three other occasions, as reflected in the transcript, he also indicated at various points he didn't think there was an agreement.
And what you therefore have in this case is the enormous involvement... this is not a case of the parties simply going back and forth saying, okay, Your Honor, we've reached agreement; we're going to tender to you a stipulation.
Rather, the district court, part and parcel of that settlement, helped frame it and made sure that both he and the parties--
Unknown Speaker: But he didn't put it in his order.
Mr. Morris: --He didn't--
Unknown Speaker: He dismissed the case outright.
Mr. Morris: --That's... that is correct.
Unknown Speaker: Do you... suppose your opponent is correct that there was nothing here to reopen... that there was nothing here to enforce, because all there was was a dismissal with prejudice, do you think you could go back and say, well, alternately, please consider our case under Rule 60(b)(6) and reopen the judgment because?
You're not alleging fraud; what would be the reason that you could give if you were proceeding under 60(b)?
Mr. Morris: Well, Your Honor, I think we would have available to us not only 60(b)(6), but 60(b)(3).
Because if it's not fraud... and it might be... it certainly, we would suggest, was a misrepresentation.
Because the record, I think, and what Judge Coyle found in enforcement proceeding, that he had stubbornly and unjustifiably refused to comply, and that he had blatantly breached the agreement.
Unknown Speaker: But that'll just get you the lawsuit.
You don't want the lawsuit, you want the settlement, I understand.
Mr. Morris: Well, Justice Scalia, I'm not sure--
Unknown Speaker: Do you want the lawsuit or the settlement?
Mr. Morris: --Justice Scalia, I'm not sure it gets us only the lawsuit, because I believe... we would submit that once the case is properly back before the district court, the district court not only may reopen and put the lawsuit back on the calendar.
We believe that the better view of the law is those cases which take the position that if the case is properly back on the docket, any order which could have been entered at a prior time is then appropriate.
And the law... among all the circuits, none have disagreed with this proposition... is in a case on the docket, a court may enforce a settlement agreement that is reached.
And we believe that if this case when... was back before the court... and we believe, in fact, that our motion to enforce--
Unknown Speaker: That's a little strange.
You say you can both rescind the agreement and sue for breach at the same time.
Because in order to reinstate the case you have to set aside the settlement and say it's no longer binding, and then you're going to say yes, but it's binding but we want to enforce it.
I don't... I have some difficulty with that.
Mr. Morris: --Well, Your Honor, I think what we're saying is there's reason to bring the matter bring and for the court to act, either under Rule 60 or under its ancillary jurisdiction, to give effect--
Unknown Speaker: But the only way it can bring the matter back is to set aside the judgment and the settlement.
You can't have it both ways.
Mr. Morris: --Well, we believe there's ancillary jurisdiction to enforce, Your Honor, so we would part with you there.
Unknown Speaker: May I ask you this question?
I understand your argument is that the transcript here is just as clear as if they had written out a stipulation and filed it in open court as part of the judgment, but nevertheless dismissed the lawsuit and did not retain jurisdiction.
That's kind of... you're saying that's the equivalent of this case.
How long, under your view of the law, does the judge retain the power to enforce the judgment?
Mr. Morris: The short answer to that is--
Unknown Speaker: To enforce the settlement agreement, I mean.
Mr. Morris: --To enforce... there would be no express time.
Ancillary jurisdiction we believe provides the basis for enforcement in this case, and the ancillary jurisdiction should be exercised in the sound discretion of the district.
Unknown Speaker: So he... the time limit is just his sound discretion.
Mr. Morris: The district court judge's sound discretion, informed by the facts of the case.
And whether they choose at all, whether he or she chooses at all--
Unknown Speaker: Well, I really want to be sure I understand your position.
Your position is it's whatever the judgment... whatever the judge thinks is equitable or appropriate in the particular case.
Mr. Morris: --Perhaps tested by appeal, but, yes, Your Honor.
Unknown Speaker: Yeah.
Now, the court of appeals didn't rely on ancillary jurisdiction in upholding the district court's authority, did it?
Mr. Morris: Well, I think what it... it used the phrase, I believe, the inherent power.
The decisions of the Ninth Circuit... and there are three decisions of the Ninth Circuit.
I think if you read all three of those decisions of the Ninth Circuit, in Wilkinson, in Dacanay, and in our own case, that the concept here is that there is inherent or ancillary power to enforce, in appropriate circumstances, a settlement agreement.
Unknown Speaker: And you would say both of those are their... one is the equivalent of the other, inherent power or... is the same as ancillary jurisdiction.
Mr. Morris: Well, the... I don't know that there is an absolutely precise definition if you read many cases, Mr. Chief Justice.
And for purposes of how the courts frequently categorize this, the answer I would say is yes, although I understand there may be circumstances where they are different.
I don't think that difference here, however, is material to whether or not Judge Coyle had the authority to enforce his prior order.
I think there are many cases of this Court under the ancillary jurisdiction principles, which is our primary ground upon which we believe enforcement here in appropriate, where the--
Unknown Speaker: When you're using that term, are you referring... you're not referring to, like, Rule 13 or Rule 14, or 13671 you're just saying ancillary jurisdiction, inherent jurisdiction?
Mr. Morris: --Correct, Justice Ginsburg.
Unknown Speaker: You have no statutory rules--
Mr. Morris: Not in the narrow... perhaps the most frequently today encountered phrase... use of the phrase, ancillary jurisdiction, that is absolutely correct.
Unknown Speaker: --Well, you say that Judge Coyle had the authority to enforce his order.
His only order was to dismiss the case.
Mr. Morris: Well, we believe that what he did here, in effect, with the substantial proceedings in chambers and his participation, that we had, in effect, a much... a broader order than the narrow stipulation which is all that is on... entered on the docket, the narrow stipulation in his order dismissing the case.
But we would take the view that in this case... and we believe this case, frankly, presents somewhat unique facts, and that on these facts we were entitled to have what Judge Coyle did and what the Ninth Circuit also found appropriate.
We would also observe that, of course, when we brought the motion to enforce in this matter, we were proceeding in a circuit that said that's all you need to do.
Unknown Speaker: Well, surely there's a parole evidence rule of some sort with respect to orders in judgment.
You say that it isn't in writing, but somehow it hovers around the written word.
I don't know that we've ever said that the... particularly in dealing with a jurisdictional matter, that you look not merely to what's written, but to all the circumstances that kind of led up to it.
Mr. Morris: Well, it would be our position that, in fact, we essentially have the writing of the agreement here.
The writing is the reporter's transcript.
And contrary to the suggestion, both parties--
Unknown Speaker: But nobody doubts... no one is claiming that there was no agreement here.
I... the argument the other side makes is since there was no reservation of jurisdiction, that it can't be enforced in Federal court.
Mr. Morris: --Yes, Mr. Chief Justice, but our view of that is on these facts there is ancillary jurisdiction.
That going back to the earliest years of this country, the courts have, on selected occasions, used ancillary jurisdiction to see to it that prior judgments have not been misused, inequitably used.
Unknown Speaker: Ancillary to what?
I mean you can have jurisdiction ancillary to a case that's before you, but once this case has been dismissed without any reservation of continuing jurisdiction, there's nothing to be ancillary to.
Mr. Morris: Well--
Unknown Speaker: The court has... no longer has a case in front of it.
Mr. Morris: --Well, Justice Scalia, we would respectfully suggest that there are a number of instances, as cited in our brief, where this Court has said that if there was once proper jurisdiction in the Federal courts, there can be ancillary jurisdiction based on that original prior Federal court jurisdiction.
Unknown Speaker: For example, what case do you have in mind?
Mr. Morris: Well, the cases where... they come in a number of varieties.
The cases where there were judgments entered, the cases went off the books, and where... in one of the principal cases that we cite, the Julian v. Central Trust... the court, in aid of its prior decree in a mortgage foreclosure situation and when there was going to be a State court action that called into question the transfer of the property in that case, entered further orders.
We have cases in a variety of circumstances where the courts--
Unknown Speaker: The court has authority to enforce its orders.
But here there isn't anything other than a bare dismissal with prejudice.
Mr. Morris: --Well, we have attorney's fees cases, Justice Ginsburg, where the case is dismissed but the court, after the dismissal, deals with the attorney's fees.
We have contempt cases where the case is dismissed and the court deals with the contempt.
We have those circumstances where the courts quite clearly, after dismissal, have had to address various issues.
Unknown Speaker: Have you had... I'm... what is the contempt case you have, where after a case is dismissed a party is held in contempt for violating--
Mr. Morris: Well, the action that would be the basis occurred... would have occurred, certainly, Justice Stevens, during the live period of the case before the court.
But in many instances... in some instances, at least, the addressing of the contempt and whether punishment is warranted and what punishment would be warranted may be done after the dismissal of the substantive case wherein the contempt was committed.
And so too with attorney's fees issues.
The substantive case may have gone away--
Unknown Speaker: --But are there any cases in which action taken after the case is dismissed provides the basis for contempt of court?
I don't there are, are there?
Mr. Morris: --In a contempt... I am not aware of any contempt cases--
Unknown Speaker: Yeah, yeah.
Mr. Morris: --Where an action of a contempt nature would be after the case was dismissed.
Unknown Speaker: May I ask this question too?
Would it matter if the settlement agreement incorporated a term that could not have been granted by an... a provision the court could not have ordered as relief in the case?
For example, say your client had settled and said I'll move to San Francisco so I won't compete with you any more, and then he doesn't move to San Francisco.
A judge could... normally could not have ordered him to move to San Francisco.
He just... Would that make any difference?
Does it have to be... does the settlement agreement have to be limited to matters that could have been ordered in the case?
Mr. Morris: Well, if... it would probably... I believe the answer would probably be it would have to be those matters which would be properly--
Unknown Speaker: Proper relief in the case.
Mr. Morris: --Proper relief in the case.
Unknown Speaker: And you would argue in this case everything that was agreed to was something the judge could have ordered?
Mr. Morris: Yes, absolutely.
It's relatively simple.
Really, there are only a couple of provisions: that he would turn back over to the Guardian various files that he had improperly retained, and that he would not act as a representative in seeking information on behalf of continuing clients of his.
Those were the only... really the two essential provisions.
He was to pay the Guardian some money, and that was... those were the essential terms ultimately agreed to after the intervention.
Unknown Speaker: It would be too late now for a 60(b)(3)... not for 60(b)(6), but you'd be too late, wouldn't you, because you didn't move for that originally?
Mr. Morris: It may be or it may not be.
The reason I say may not be, under the normal reading of the rule we have a 1... we would have a 1-year period to seek 60(b)(3) relief.
I do not know, however, for sure whether because of the ensuing litigation and the California doctrines of equitable tolling, whether there may be an argument that the continuing litigation in this matter provides a basis where the 1-year period would have been considered to be tolled.
Unknown Speaker: Or that you could treat your original motion for enforcement as though it were a 60(b)(3) motion.
Mr. Morris: And we would suggest more than that, Justice Ginsburg, that, in fact, our original motion to enforce, appropriate under the Ninth Circuit law at the time, did all that a 60(b)(3) motion could have done.
It put the petitioner on notice that he had to defend.
It told him what we believed the actions at issue were, and it told him what we were seeking in the case.
Unknown Speaker: Did you make any reference to Rule 60(b) in your motion?
Mr. Morris: No, Your Honor, we did not.
Unknown Speaker: Then it would be a rather strange thing to treat it as a Rule 60(b) motion.
Mr. Morris: Well, there are cases cited in our brief and Professor Morris' treatise that say Rule 60 is to be liberally construed, and there is some authority for treating it liberally.
And we would suggest that it would not be so strange where every real function that 60(b) is intended to serve was met by our action with the motion to enforce, which was the motion under the law of the circuit that was appropriate.
Unknown Speaker: Well, 60(b) is addressed to the discretion of the trial judge, is it not?
Mr. Morris: Yes, Your Honor.
Unknown Speaker: And a motion to enforce, I take it, would not be.
If you have a right to have a settlement enforced, it isn't up to the trial judge to decide, well, I don't think I will enforce this, or perhaps I will enforce it.
Mr. Morris: If we're proceeding under Rule 60, that's... I believe that would be correct.
We are also saying as an alternative ground here, that Judge Coyle, under the rubric of ancillary or we've used the phrase also inherent jurisdiction, had authority to enforce.
There the discretion is has the district court's involvement in the case, has the utilization of the Federal resources been such that it makes sense that the court, though having jurisdiction, should choose whether to entertain the enforcement or whether not to entertain it.
And so in the ancillary area, it is our view that the court, though having jurisdiction to enforce our motion... to entertain our motion, did not necessarily have to.
And we would, indeed, submit that in the greater majority of cases district court judges are likely, probably, not to.
You can take the whole range of the kinds of circumstances where a settlement may have occurred, and you could say some of them will be right after a demand letter and a draft complaint.
The chances of there being any reason why a district court would entertain a motion to enforce in that circumstance is virtually nil.
We could have a midpoint where the issue has been joined in a case, where there's been Rule 16 conference held, where there's been some litigation in the case, where probably a district court judge would conclude no reason to get invested in the enforcement in that matter.
Unknown Speaker: Mr. Morris, can I give you an example that's based on many years ago that I bumped into many times in practice, and see if you... have you comment.
I was involved in a lot of cases where equitable relief was sought which were settled at one time; either Government antitrust cases, private antitrust cases, other cases.
And routinely, those decrees contained a provision, the court retains jurisdiction for the purpose of interpreting and enforcing this decree.
Are you telling me that in all of those settlements that provision was really unnecessary?
Mr. Morris: No.
In a consent decree you... I believe--
Unknown Speaker: It, of course, is a classic settlement.
Mr. Morris: --Well, it's... a consent decree, I think almost by virtue of its very nature, will have exactly the provision that you have described.
I am suggesting to you that on the facts of this case, that we do not believe that that kind of language on these peculiar facts was warrant... was necessary here.
Unknown Speaker: But was it necessary in a Government suit against a couple of newspapers, or something like that?
Why would they keep it in if it's so obvious that this is--
Mr. Morris: Well, it certainly is the safer procedure and it eliminates the possible position we have here.
Unknown Speaker: --Yeah.
Mr. Morris: No question but what... if that language is there, we resolve the problem.
Unknown Speaker: It's just I have to confess to you, a lot of lawyers thought it was necessary.
Mr. Morris: Oh, I agree.
Unknown Speaker: And I was one of them.
Mr. Morris: Well--
Unknown Speaker: And you're telling me it wasn't, really.
Mr. Morris: --Well, I think the better, prudent practice would be to do so, and certainly in a consent decree where there is probably a notion of a more vigilant district court role in enforcing the terms of a consent decree.
In this particular circumstance, though, as I say, I would suggest to you that the actions of the district court here are highly unusual in the way that the court became involved, in the way that the court expressly said that it was important to the district court judge to understand and to make sure that there was agreement.
Unknown Speaker: When you found yourself in this position, that the other side, in your judgment, had not carried out the bargain, did you find other cases in the district court and in the Ninth Circuit where, despite the failure to reserve jurisdiction, parties were able to enforce a settlement agreement that was not incorporated in the judgment?
Mr. Morris: Well, there are cases that we have cited in our brief where dismissals have been set aside and where settlement agreements that have been breached were enforced by the district courts.
This is not a completely sui generis case in that sense.
There is certainly no precedent in this Court that addresses this particular case and clearly states that there is ancillary jurisdiction or constructive... or constructively the compliance with Rule 60 in this particular circumstance.
There's no precedent here.
Unknown Speaker: Would you have had a cause of action in State court as well, or do you think this was your exclusive remedy?
Mr. Morris: No, I do not believe it is our exclusive remedy.
I believe we could have gone... that we could have gone to State court, but that would have been a stranger forum, whereas Judge Coyle had been so heavily involved in seeing this agreement come together, in making sure that he and the parties both understood it, and in telling the parties that if there was an enforcement action he anticipated it would be before him.
Unknown Speaker: And the reason you would not have access to the Federal court for this enforcement proceeding, if it was a de novo proceeding, is you no longer have diversity and a mounting controversy?
What is the lack?
Mr. Morris: Well, we would not concede that we no longer have diversity jurisdiction.
We believe we merit... very well may.
We're still citizens of different States, as far as we know, and we have the value of the files that were not returned to us and we can probably assert a fraud claim.
So I think we could probably... with regard to the alleging $50,000 in damages, I believe that we could, in good faith, make that allegation in this case.
So I believe that we would have diversity jurisdiction.
Unknown Speaker: So when your adversary says you have recourse to a State court for breach-of-contract suit, you say that you could bring that as a diversity suit as well, that you meet the requirements of diversity--
Mr. Morris: I believe that is correct, Judge Ginsburg.
I believe that is correct.
Obviously, we haven't yet had the occasion to test that fully, but that is my belief at this time.
Unknown Speaker: --Of course, the big difference, I suppose, is if you can go back the way you want to go back in... and maybe you should be allowed to... you're going to get it decided very promptly.
If you've got to start all over with a new lawsuit, you may be 3 years before you get a decision.
Mr. Morris: That's precisely the point that we make, and that's where we do think the important policies around settlement come in here.
Unknown Speaker: And you might not get Judge... what is it?
Mr. Morris: Coyle.
Unknown Speaker: Yeah.
But with 60(b), you would get him.
Mr. Morris: I would assume that we could say that this was a related... yeah.
I mean, well, first of all, if it's 60(b), even if we went in as an independent--
Unknown Speaker: You're reopening the same judgment--
Mr. Morris: --Yes.
Even if we went in as an independent action, I think we could probably say that this was a related case and seek to have it placed before Judge Coyle.
We may or may not succeed with that, but I think it would certainly be a claim that we could make.
Unknown Speaker: --Of course, then he'd be a party with access to evidentiary facts that are in dispute, and you might have to recuse.
Mr. Morris: Well, perhaps, perhaps, Justice Kennedy.
I mean, he made it clear at the hearing in this case, though, that he was well aware of what the terms of the settlement were, and that there had been a breach in this case.
I mean, that's evident on the record.
I mean, there could not have been a clearer indication from Judge Coyle.
So what we suggest here is that under ancillary jurisdiction in these circumstances, we had a basis for enforcement.
But that's our... that is our initial belief, and we believe it is a basis for why this court has jurisdiction.
There was a question as to why this case was in court?
In was in court under 28 U.S.C. 1331.
We had diversity... there was diversity jurisdiction.
That's the basis for why the case was there.
If, however, the Court believes that there has to be an express statement reserving jurisdiction, we believe that on the facts of this case, that there is sufficient indication in what went on in chambers, in what Judge Coyle said and what he did and the parties' agreement to that.
The parties agreed--
Unknown Speaker: What... if I may interrupt you, what about the fact that he said I don't want to see you back here?
Mr. Morris: --Well, that's an interesting... that's a good question, Justice Souter, because when you first read that you could easily draw the opposite conclusion; go anyplace, but don't come back to my courtroom.
I think, however, if you read the entire transcript of the proceeding before him wherein the settlement was agreed to, that what he makes clear is that he envisioned that any enforcement action would be before him.
At Joint Appendix page 81 he said, I must find out what you people agreed to.
And later on Joint Appendix 81 he said, my concern is you all understood what you've agreed to, and for that reason he brought up one practical matter... I'm quoting... he could see that problem, and he didn't want to see that problem come back, he wanted it resolved now.
And one of our younger colleagues, perhaps a bit more brashly than we would have, at the end of this process said to Judge Coyle, Judge, do you understand?
And the Judge's response, at page 86 of the Joint Appendix, was, oh, I understand.
Unknown Speaker: Then why didn't you ask him to amend his judgment because it failed to embody what he had intended?
You're giving us the legislative history of the judgment here.
Why didn't you just put it in the judgment?
Mr. Morris: Well, in retrospect it clearly would have been better had we done so... in retrospect.
But we believe that it's still capable of being enforced in this case.
Unknown Speaker: But in any of your submissions to the court did you claim that the judgment entered was, in fact, mistaken in failing to embody the settlement--
Mr. Morris: Absolutely not, Your Honor.
Unknown Speaker: --As a result of your conversation... the conversation on the record?
Mr. Morris: No, Your Honor, we did not.
We didn't believe that xx was a mistake.
We didn't anticipate that we would have the problem, but that problem did, in very short order, emerge.
On March 5th the settlement was reached in chambers on the record.
In... by April... by early April... we had the dismissal order April 13th and we had breach in April, and we were back with our motion to enforce... there's no long lapse of time here.
One of the suggestions that's made is, well, you can have a long lapse of time.
We were before Judge Coyle again with a motion filed on May 21st, and we were in hearing before him on June 29th, all these dates of 1992.
So from the date of the agreement, March 5th, until Judge Coyle held our hearing, it was March 5th to June 29th.
That's the modest timeframe that's involved here.
There will be other cases where the timeframe is grossly different and where the district court judge there will rightly choose not to exercise his or her discretion, but we don't believe that this is a case where that's a problem.
Unknown Speaker: I guess this means that a district judge can't avoid getting himself entangled in the future disputes of a settlement agreement, even if he wants to.
I mean it's sort of nice to know the district judge, if he thinks it's a pretty simple settlement that he can police, just put it in his judgment order.
But you say even if he doesn't, he is enmeshed in whatever the parties have agreed to, and they can keep coming back and bothering him about it and saying--
Mr. Morris: That's not our contention, Justice Scalia.
Unknown Speaker: --Why isn't it?
Mr. Morris: In rare circumstances, the facts of the district court's involvement will justify the district court judge making the determination.
Unknown Speaker: Well, he's involved... whenever he's involved in the settlement, which often happens.
No, your position is whenever the settlement... the terms of the settlement are disclosed in court proceedings.
That's your position, isn't it?
It doesn't matter whether the proceeding is in chambers or in the judgment itself.
Mr. Morris: Well, I think--
Unknown Speaker: But the terms of the settlement are... have to be set forth in--
Mr. Morris: --I... because we believe its discretion... I believe it's going to take more, frankly, for the court to decide that it will exercise its discretion than just that it heard the terms.
Justice Coyle has presided over the 3-day trial.
The petitioner comes in and says they want to talk settlement.
Justice Coyle then makes sure that he and the parties, through a negotiation process, understand that.
That is a relatively unusual amount of activity.
Unknown Speaker: --This is discretionary jurisdiction?
The court doesn't have to exercise this--
Mr. Morris: That is correct.
Unknown Speaker: --This ancillary jurisdiction.
Mr. Morris: Ancillary jurisdiction is discretionary.
Unknown Speaker: --Just if it wants to.
Mr. Morris: If it wants to.
And we believe this is a case where--
Unknown Speaker: So this judge could have said, I've presided over dozens and dozens of settlements, I don't remember this one from any other, go away, and you would have nothing to complain about.
Mr. Morris: --Nothing... we would not complain, Your Honor.
We would not complain.
And we believe, as I suggested, that the greater majority of cases, the district court judge is far more likely... because they will not have invested the Federal judicial resources so deeply in the case, that they will say--
Unknown Speaker: Did you say as a form of Federal jurisdiction, that the judge can just decide I don't want to take the case?
Mr. Morris: --Discretionary.
Well, it's discretionary, Your Honor.
Unknown Speaker: --Discretionary jurisdiction.
Mr. Morris: It's ancillary jurisdiction, and if one looks at the historical ancillary precedents, the issue is whether or not the court believes that there is a reason to step back in.
Unknown Speaker: Except, maybe it's not ancillary... yes, ancillary jurisdiction, some of it is discretionary, but if you consider this inherent jurisdiction I think it's a lot harder to run that argument.
Thank you, Mr. Morris.
Mr. Jencks, you have 2 minutes remaining.
Rebuttal of Michael J. Jencks
Mr. Jencks: Thank you, Mr. Chief Justice.
Just a couple of points.
I want to emphasize again the point that came out in the questioning.
The respondent has remedies here.
Statutes haven't run, for example, to pursue a State action.
There's an ongoing State action to enforce the settlement agreement brought by Mr. Kokkonen.
The respondent is appearing and participating in that case, and it's at issue.
There are remedies here.
They made a series of choices, for whatever business purposes, confidentiality and the like, to not have this settlement reduced to writing and not incorporated in an order of judgment of the court.
The dismissal was expressly with prejudice.
That was the stipulation of the parties.
And I think here they're... they have other remedies to pursue.
They may have a 60(B) motion if they can meet some of the time concerns that respondents' counsel discussed with Justice Ginsburg.
They are not without a remedy.
They are not stranded here.
And it's really a situation very much of their own making and choice and tactics, and I don't see that the district court--
Unknown Speaker: From what... from your point of view, having made that concession, what is involved here other than a misnomer?
You go back... you get rid of this proceeding and you go back before Judge Coyle with a 60(b) motion which you will either... which you'll take some position on, no doubt oppose it.
What is this accomplishing, then, other than to get the thing back where it was with a different label on it?
Mr. Jencks: --I think there's a difference whether we choose... whether either of the parties chooses to go back on a 60(b) motion to reopen the previous proceedings, or to enforce the settlement agreement.
Counsel... the enforcement of the settlement agreement may be able to be in Federal court.
It's not directly... there's a State brief here that reads... makes it sound like a turf battle.
It's really not that, because some of these cases will still default to Federal court.
Unknown Speaker: You... as I understand your argument, you say that he can go on 60(b).
But the consequence is not to enforce the settlement agreement, it's just to--
--Go back to reopen the old case.
Right, to reopen the case.
So it is a difference.
Mr. Jencks: Thank you.
Chief Justice Rehnquist: Thank you, Mr. Jencks.
The case is submitted.
Argument of Speaker
Mr. Speaker: Justice Scalia.
Argument of Justice Scalia
Mr. Scalia: I have the opinion of the Court to announce in Kokkonen versus Guardian Life Insurance Company.
That case comes to us on writ of certiorari to the United States Court of Appeals for the Ninth Circuit.
Petitioner, Kokkonen, brought a suit against Guardian Life Insurance Company in State Court alleging state claims arising out of Guardian's termination of him as one of its insurance agents.
Guardian removed the case to the Federal District Court on diversity grounds and filed state law counterclaims.
The parties settled their dispute and, pursuant to Federal Rule of Civil Procedure 4(a)(1)(ii), executed a stipulation and order of dismissal with prejudice signed by the district judge which did not refer to the settlement agreement nor did it reserve District Court jurisdiction to enforce the settlement agreement.
Afterward, a dispute arouse as to Kokkonen's obligations under the settlement agreement and Guardian filed a motion in the Federal District Court to enforce it.
Kokkonen opposed the motion on the ground that the court lacks subject matter jurisdiction.
The District Court entered an enforcement order asserting that it had what it called inherent power to do so.
The Court of Appeals agreed and affirmed.
In the unanimous opinion announced today, we reverse the judgment of the Ninth Circuit.
Federal District Courts possess only that power authorized by Constitution and statute.
No federal statute provides jurisdiction to enforce a settlement agreement merely because that agreement is part of the consideration for dismissal of a federal suit.
The doctrine of ancillary jurisdiction also does not support jurisdiction in this settling.
Since the facts to be determined with regard to the alleged breach of contract are quite separate from the facts that were at issue in the principal suit.
An automatic jurisdiction over such settlement contracts is in no way essential to the conduct of Federal Court business.
If the parties wish to provide for the court's jurisdiction to enforce a settlement agreement that results in dismissal, they can seek to do so.
In the event of dismissal pursuant to Federal Rule of Civil Procedure 41(a)(2), the Court may in its discretion make the parties compliance with the terms of the settlement agreement or retention of jurisdiction over the agreement part of its order.
When dismissal occurs pursuant to Rule 41(a)(1)(ii), as was the case here, the District Court is empowered with the consent of the parties to incorporate the settlement agreements in the order or to retain jurisdiction over the settlement contract itself.
Absent such action, however, enforcement of the settlement agreement is for State Courts unless there is some independent basis for federal jurisdiction.
Accordingly, the judgment of the Court of Appeals is reversed, as I indicated earlier.
The opinion is unanimous.