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Miles v. Unified School District No. 500

United States District Court, D. Kansas

June 6, 2018

SUSAN M. MILES, Plaintiff,
v.
UNIFIED SCHOOL DISTRICT NO. 500, KANSAS CITY, KANSAS and VALERIE CASTILLO, Defendants.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge

         The court commends parties who can resolve their litigated differences by settlement. But settlements must be the product of the parties knowingly and voluntarily agreeing to resolve their dispute. Here, plaintiff Susan M. Miles has filed a lawsuit in our court. She has sued her former employer-defendant Unified School District No. 500, Kansas City, Kansas (“School District”)-and her former supervisor-defendant Valerie Castillo. She asserts claims under the Family Medical Leave Act (“FMLA”), the Americans with Disabilities Act (“ADA”), the Employee Retirement Income Security Act (“ERISA”), and certain Kansas state employment laws. See Doc. 1.

         In response, defendants have filed a Motion to Enforce Settlement (Doc. 6). It asks the court to enforce a putative settlement agreement the parties supposedly agreed to before plaintiff filed this case. Defendants' motion also asks the court to dismiss this case. In a separate motion, defendants contend that plaintiff failed to honor Federal Rule of Civil Procedure 11(b)(2) and thus the court should sanction her. See Doc. 13.

         For reasons explained below, the court denies both motions. In part I, the court explains why it denies defendants' Motion to Enforce Settlement. And, in part II, the court explains why it denies the sanctions motion.

         I. Motion to Enforce Settlement

         In their Motion to Enforce Settlement, defendants ask the court to enter an order enforcing a purported settlement agreement. On January 9, 2017, defendants assert, plaintiff and the School District entered a Mutual Release and Separation Agreement (“Settlement Agreement”). As part of this agreement, plaintiff voluntarily resigned her position with the School District and released all claims against the School District and any of its employees- including Ms. Castillo-for any claims arising from her employment.

         Defendants argue that the court “has the power to summarily enforce a settlement agreement while a case is pending before the court.” Doc. 7 at 4 (citing United States v. Hardage, 982 F.2d 1491, 1496 (10th Cir. 1993)). But United States v. Hardage involves a different set of facts than presents itself here. In that case, the United States sued several waste generators and transporters seeking to require them to clean up a Superfund Site. Id. at 1493. The waste generators and transporters, in turn, asserted a Third-Party Complaint against a variety of third-party defendants. Id. While the case was pending before the court, the government settled with the waste generators and transporters and, likewise, the waste generators and transporters settled with the third-party defendants. Id. The parties asked the court to enter a consent decree but one third-party defendant claimed that the settlement between the waste generators and transporters and it did not bind it because the third-party defendant liaison counsel-who was the person who agreed to the settlement-did not have the power to negotiate on that third-party defendant's behalf. Id. The district court disagreed and entered an order approving the consent decree without holding an evidentiary hearing to determine whether the third-party defendant liaison counsel had the authority to agree to a settlement agreement on behalf of a third-party defendant. Id. at 1494.

         The Tenth Circuit then reversed the district court's decision, holding that the district court should have held an evidentiary hearing to determine whether the settlement agreement was enforceable. Id. at 1497. The Circuit explained, “A trial court has the power to summarily enforce a settlement agreement entered into by the litigants while the litigation is pending before it.” Id. (emphasis added). In contrast, defendants, here, assert that the parties entered the Settlement Agreement before this litigation began. Doc. 7 at 1 (“Accordingly, Defendants respectfully request an order from this Court enforcing the settlement which Plaintiff and Defendants entered prior to this litigation . . . .” (emphasis added)).

         A Supreme Court case explains why the court cannot enforce the settlement agreement alleged here. In Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994), the parties settled a lawsuit arising from the termination of an agency agreement while that suit was pending before the district court. Id. at 376. The parties then submitted a Stipulation and Order of Dismissal with prejudice under Fed.R.Civ.P. 41, and the district judge approved it. Id. at 376-77. So, the case was closed. Id. at 377. Shortly afterward, a dispute arose over the settlement agreement and the defendant filed a motion to enforce the settlement agreement with the district court where the case was pending. Id. Plaintiff opposed the motion, arguing that the district court lacked subject matter jurisdiction. Id. The district court granted the motion to enforce, explaining that it had “'inherent power'” to enter such an order. Id. (quoting district court decision). The Ninth Circuit affirmed the ruling because the “ʻdistrict court has jurisdiction to decide the enforcement motion under its inherent supervisory power.'” Id. (alterations omitted) (quoting Ninth Circuit opinion).

         The Supreme Court granted certiorari and reversed the Ninth Circuit. Id. The Court explained its reason for reversing the Circuit, beginning with this well-established principle: “Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute.” Id. The Court held that no Federal Rule of Civil Procedure, federal statute, or constitutional provision authorizes a court to enforce a settlement agreement after the parties to the case have dismissed it. Id. at 378.

         But defendant argued that the district court had “ancillary jurisdiction” to enforce the settlement agreement-that is, jurisdiction over matters that are incidental to matters properly before the court. Id. The Supreme Court disagreed, holding that “ancillary jurisdiction” provides no basis for the court to enforce the settlement agreement at issue in Kokkonen. Id. at 379. Earlier Supreme Court cases, Kokkonen explained, limited federal courts' ancillary jurisdiction to two situations: (1) permitting a court to dispose of claims that are “interdependent;” and (2) allowing a court to manage its own proceedings, defend its authority, and enforce its orders. Id. at 379-80. Kokkonen did not qualify for the first scenario because the dispute over the settlement agreement involved completely different facts than those relied on by the underlying claim. Id. at 380. Specifically, the original dispute arose from the termination of the agency agreement; the settlement dispute arose from obligations purportedly imposed by a settlement agreement. Id.

         Kokkonen didn't qualify under the second scenario either because the settlement agreement did not invoke or affect the district court's authority in any way. Id. at 380-81. The parties already had dismissed the case, so the court lacked any need to manage its own proceedings. Id. at 380. And because the court never had referenced or incorporated the settlement agreement in an order, plaintiff's alleged breach of the settlement agreement did not implicate the court's need to defend its authority or enforce one of its orders. Id. at 381. So, the Supreme Court concluded, the district court lacked subject matter jurisdiction to enforce the settlement agreement.

         Here, the court finds itself in a situation much like the court in Kokkonen. In both cases, the party seeking to enforce the settlement claims the court may use its inherent power to enforce the settlement. And neither party claimed that the Federal Rules of Civil Procedure, a statute in the United States Code, or any provision in the Constitution authorizes enforcement. The court concludes, as did Kokkonen, that it cannot use its inherent power to enforce the Settlement Agreement because failing to enforce it would not invoke or affect the court's authority in any way. Nor is the dispute over the Settlement Agreement interdependent with any claim already pending before the court. The Settlement Agreement claimed by defendants was not formed while the parties' case was pending before our court. So, to enforce it would not help the court manage the proceedings pending before the court. Nor will declining to enforce the purported agreement threaten the court's capacity to manage its proceedings. Likewise, not even defendants claim that the Settlement Agreement is part of some order entered by the court, much like the agreement in Kokkonen. Finally, the parties' dispute about enforcing the purported agreement is unrelated to plaintiff's underlying claims in the case. In short, the court lacks subject matter jurisdiction to enforce the purported settlement.

         Plaintiff's response to defendants' motion suggests a different route. She argues that the court should treat defendants' motion as a motion for summary judgment because defendants' motion asks the court, in effect, to dismiss the case. But, she observes, it relies on materials outside the Complaint. Doc. 8 at 4. In their Reply, defendants merely assert that they haven't made a motion for summary judgment and simply reiterate that the court has the power to enforce a settlement agreement summarily. Doc. 12 at 2. ...


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