Court lacks jurisdiction over settlement agreement in the absence of order
Callaway Golf Company v. Acushnet Company, Civ. No. 06-091-SLR, November 10, 2008.
Robinson, J. Defendant’s motion to dismiss breach of contract claim is granted and the grant of summary judgment is vacated.
In 1996, defendant entered into a settlement agreement with plaintiff’s predecessor-in-interest and a related party to resolve patent-related claims in two actions brought in the District of Delaware. The agreement contains a dispute resolution clause and procedures involving negotiations. Thereafter, the parties engaged in two unsuccessful mediations following which defendant filed inter partes reexamination requests with the PTO. Plaintiff filed the instant action and unsuccessfully attempted to stop the PTO’s consideration of the reexamination based on the agreement. Plaintiff then obtained leave to amend its complaint to assert breach of contract. Defendant answered that plaintiff lacked standing. Both parties moved for summary judgment. The parties jointly submitted a proposed pretrial order that included a statement that the Court has jurisdiction over the breach of contract claims pursuant to 28 U.S.C. 1367 and that the Court retained jurisdiction to enforce the settlement agreement based on its jurisdiction over the underlying case. Thereafter, the Court granted plaintiff’s motion for summary judgment of breach of contract. A jury returned a verdict for plaintiff on validity. Defendant now contends that the Court lacks subject matter jurisdiction to hear the breach of contract claim because there can be no supplemental jurisdiction where the patent infringement claims and the breach of contract claim do not share a “common nucleus of operative facts.” The Court agrees and rejects plaintiff’s assertion that a stipulation of dismissal that specifically references a settlement agreement is sufficient to retain federal jurisdiction. The Court finds that the parties’ obligation to comply with terms of the settlement agreement was not made part of an order of dismissal. Kokkonen v. Guardian Life Insurance Company of America requires a court order incorporating the terms of a settlement agreement for jurisdictional purposes. Absent any affirmative indication of the Court’s intent to retain jurisdiction in the record, jurisdiction is lacking. No authority permits the affirmative exercise of supplemental jurisdiction based on equitable principles alone. Supplemental jurisdiction is therefore improper although defendant should have raised this earlier.
