Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-00232/USCOURTS-caed-2_07-cv-00232-2/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:501 Copyright Infringement

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

PATRICIA S. KELLEY, dba PKELLEY 

ENTERPRISES, a California 

Company, 

 Plaintiff, 

 v. 

EUROMARKIET DESIGNS, INC., dba 

CRATE & BARREL, INC., et al., 

 Defendants. 

______________________________/

No. Civ. S-07-0232 RRB EFB 

Memorandum of Opinion

and Order

 Before the court is defendant Crate & Barrel Inc.’s (“Crate 

& Barrel”) motion to enforce settlement. Plaintiff Patricia 

Kelley (“Kelley”) opposes the motion. For the reasons stated 

below, the court DENIES the motion.1

 

 

1

 Inasmuch as the Court concludes the parties have submitted 

memoranda thoroughly discussing the law and evidence in support 

of their positions, it further concludes oral argument is 

neither necessary nor warranted with regard to the instant 

matter. See Mahon v. Credit Bureau of Placer County, Inc., 171 

F.3d 1197, 1200 (9th Cir. 1999)(explaining that if the parties 

provided the district court with complete memoranda of the law 

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I. BACKGROUND 

On February 2, 2007, Kelley filed the instant action 

against Crate & Barrel alleging copyright infringement in 

violation of the 1976 Copyright Act of the United States, 17 

U.S.C. § 101 et seq. Compl. Specifically, Kelley alleges that 

Crate & Barrel infringed on her exclusive ownership rights of 

graphic design patterns and related graphic materials by 

incorporating these patterns and materials into its products 

(e.g., gift wrap, ribbon and gift tags) without her permission. 

Compl. ¶¶ 22-42. 

Shortly after commencement of the instant action, the 

parties initiated settlement negotiations. Def.’s Mtn. to 

Enforce Settlement at 2:1-2. On April 17, 2007, counsel for 

defendant, George Gertsman (“Gertsman”) purportedly accepted 

Kelley’s settlement demand of $32,500 based on her agreement to 

dismiss the action with prejudice and execute a release. Id. at 

2:3-6. On April 18, 2007, Gertsman sent a confirming e-mail 

containing this information to plaintiff’s counsel, Pamela 

Bertani (“Bertani”), copying Crate & Barrel’s in-house counsel 

Harvey Silverstone (“Silverstone”). Id. at 2:7-12; Decl. of 

Gertsman, Exh. 1. Later that day, Bertani responded, copying 

 

and evidence in support of their positions, ordinarily oral 

argument would not be required). 

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Kelley and Silverstone, by stating: “I write to confirm receipt 

of your voicemail and corresponding message below. We have a 

deal. I will prepare the settlement agreement and forward the 

agreement to you within the next few days. . . .” Id. at 2:13-

18; Decl. of Gertsman, Exh. 2. Following this exchange, Bertani 

sent Gertsman another e-mail requesting that Crate & Barrel 

provide Kelley with the remaining inventory of the allegedly 

infringing materials instead of destroying them. Id. at 2:19-

22; Decl. of Gertsman, Exh. 3. The e-mail specifically stated: 

“Please advise as to this matter, which will be addressed in the 

settlement agreement.” Decl. of Gertsman, Exh. 3. On April 19, 

2007, Gertsman responded to Bertani’s request by advising her 

that Crate & Barrel did in fact possess inventory of the 

allegedly infringing materials and that Crate & Barrel preferred 

to either donate the materials or destroy them. Decl. of 

Gertsman, Exh. 4. Later that day, Bertani replied to Gertsman 

by requesting that Crate & Barrel provide Kelley with an 

estimate of the remaining inventory as well as verification of 

the gross and net sales information previously provided. Decl. 

of Gertsman, Exh. 5. The e-mail specifically stated: “In order 

to expedite settlement, I recommend that Crate & Barrel agree to 

provide our client with the remaining inventory, and I will 

draft a provision into the agreement confirming the veracity of 

the gross and net sales information you previously provided.” 

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Id. Gertsman responded by stating that Crate & Barrel preferred 

to destroy the remaining inventory and that it had already 

provided Kelley with accurate gross and net sales information. 

Decl. of Gertsman, Exh. 6. On April 24, 2007, Bertani sent 

Gertsman an e-mail stating: “I write to confirm that we will 

prepare and forward the settlement agreement within the next few 

days. Our client will agree to an inventory destruction in lieu 

of an inventory disgorgement provision.” Id. at 3:8-12. 

Bertani never prepared a written agreement memorializing the 

terms of the settlement. 

On May 18, 2007, Silverstone (in-house counsel for Crate & 

Barrel) sent Bertani an e-mail inquiring into the status of the 

settlement negotiations and expressing his belief that the 

parties had already reached an agreement. Decl. of Scott 

Burroughs (“Burroughs”), Exh. 6. This e-mail, however, also 

acknowledged that other issues still existed, such as whether 

the allegedly infringing designs were used on other products, 

and whether the gross and net sales information provided by 

Crate & Barrel was accurate. Id. On May 25, 2007, Bertani sent 

Gertsman an e-mail advising him that she and her client had 

reviewed the “information” sent by Crate & Barrel, and although 

she did not have her client’s authority to settle based on the 

initially discussed parameters, she remained open to discussing 

a reasonable settlement. Decl. of Burroughs, Exh. 7. On 

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May 29, 2007, Gertsman sent Bertani an e-mail stating that Crate 

& Barrel was willing to continue settlement negotiations, even 

though it believed that the parties had already reached an 

agreement. Decl. of Burroughs, Exh. 8. On August 16, 2007, 

Silverstone offered to settle the dispute for $45,000 and an 

apology letter to Kelley. Decl. of Burroughs, Exh. 11. Kelley 

did not accept this offer. 

On November 9, 2007, Crate & Barrel filed the instant 

motion to enforce the alleged settlement agreement on the basis 

that the correspondence between the parties from April 17, 2007 

to April 24, 2007 created an enforceable agreement. 

II. DISCUSSION 

A. Legal Standards 

1. Enforcement of Settlements 

“It is well settled that a district court has the equitable 

power to enforce summarily an agreement to settle a case pending 

before it. However, the district court may enforce only 

complete settlement agreements.” Callie v. Near, 829 F.2d 888, 

890 (9th Cir. 1987) (emphasis in original and citations 

omitted); In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 

(9th Cir. 1994). To be enforced, a settlement agreement must 

meet two requirements. First, it must be a complete agreement. 

Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th Cir. 1994). 

Second, both parties must have either agreed to the terms of the 

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settlement or authorized their respective counsel to settle the 

dispute. Harrop v. Western Airlines, Inc., 550 F.2d 1143, 1144-

45 (9th Cir. 1977).2 “Where material facts concerning the 

existence or terms of an agreement to settle are in dispute, the 

parties must be allowed an evidentiary hearing.” Callie, 829 

F.2d at 890 (emphasis in original). Whether the parties 

intended only to be bound upon the execution of a written, 

signed agreement is a factual issue. Callie, 829 F.2d at 890-

91. In addition to the intent of the parties to bind themselves, 

the formation of a settlement contract requires agreement on its 

material terms. Id. at 891 (emphasis in original). Where 

conflicting evidence exists on this issue, summary enforcement 

is inappropriate. Id.

2. Authority to Settle 

If an action was originally filed in federal court under 

federal question jurisdiction, such as this one, federal common 

law controls an attorney’s actions concerning settlement. See

Michaud v. Michaud, 932 F.2d 77, 80 (1st Cir. 1991) (applying 

federal law to determine extent of attorney’s authority to bind 

client to settlement); Fennell v. TLB Kent Co., 865 F.2d 498, 

501 (2d Cir. 1989) (“where an action is based upon federal law, 

 

2

 See also Ozyagcilar v. Davis, 701 F.2d 306, 308 (4th Cir. 

1983) (where there has been no meeting of the parties’ minds 

sufficient to form a complete settlement agreement, the court 

does not have the power to enforce an agreement). 

 

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the authority of an attorney to settle that action is a federal 

question” and federal law is applied). 

Generally, an attorney has no authority to settle his or 

her client’s case solely by virtue of his or her general power 

to handle the case. Garabedian v. Allstates Engineering Co., 

811 F.2d 802, 803 (3d Cir. 1987). Instead, an attorney can only 

enter a binding compromise if the client has authorized him or 

her to do so. Id.; see Harrop, 550 F.2d at 1145 (a party’s 

attorney may enter into a settlement agreement if he or she has 

the express permission of their client). However, under federal 

common law, there is a presumption that an attorney has 

authority to settle a matter for a client. Garabedian, 811 F.2d 

at 803. Because there is a presumption that an attorney who 

enters into a settlement agreement has the authority to do so, 

to show the attorney had no consent for settlement, a party must 

sustain a “heavy burden” to establish that the attorney acted 

without authority. In re Artha Management, Inc., 91 F.3d 326, 

329 (2d Cir. 1996); Larson v. Heritage Square Assocs., 952 F.2d 

1533, 1537 (8th Cir. 1992); Edwards v. Born, Inc., 792 F.2d 387, 

389-90 (3d Cir. 1986). If the issue of authority hinges upon a 

factual issue and credibility determinations are involved, the 

court should conduct an evidentiary hearing. Garabedian, 811 

F.2d at 803. 

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3. Evaluation of Settlements 

“The construction and enforcement of settlement agreements 

are governed by principles of local law which apply to 

interpretation of contracts generally.” Jeff D. v. Andrus, 899 

F.2d 753, 759 (9th Cir. 1989); see United Commercial Ins. Serv., 

Inc. v. Paymaster Corp., 962 F.2d 853, 856 (9th Cir. 1992) 

(“The construction and enforcement of settlement agreements are 

governed by principles of local law which apply to 

interpretation of contracts generally. This is true even though 

the underlying cause of action is federal.”). 

Under California law, a settlement agreement is a contract, 

and the legal principles which apply to contracts generally 

apply to settlement contracts. See Gorman v. Holte, 164 

Cal.App.3d 984, 988 (1985); United Commercial, 962 F.2d at 856. 

(“A settlement agreement is treated as any other contract for 

purposes of interpretation.”). In California, the intent of the 

parties determines the meaning of the contract. United 

Commercial, 962 F.2d at 856. “The relevant intent is 

‘objective’-that is, the intent manifested in the agreement and 

by surrounding conduct-rather than the subjective beliefs of the 

parties. For this reason, the true intent of a party is 

irrelevant if it is unexpressed.” Id. (citations omitted). In 

other words, the parties’ “outward manifestation or expression 

of assent is controlling.” Binder v. Aetna Life Ins. Co., 75 

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Cal. App. 4th 832, 851 (1999). If there is a manifest intention 

that a formal agreement is not to be complete until reduced to a 

formal writing to be executed, there is no binding contract 

until this is done.” Rennick v. O.P.T.I.O.N. Care, Inc., 77 

F.3d 309, 315 (9th Cir. 1996). An agreement to make an 

agreement, without more, is not a binding contract. Id. 

“‘Whether a writing constitutes a final agreement or merely an 

agreement to make an agreement depends primarily upon the 

intention of the parties. In the absence of ambiguity this must 

be determined by a construction of the instrument taken as a 

whole.’” Id. “‘Preliminary negotiations or an agreement for 

future negotiations are not the functional equivalent of a 

valid, subsisting agreement.’” Id. A contract does not exist 

where the objective manifestations of intent demonstrate that 

the parties chose not to bind themselves until a subsequent 

agreement is made. Id. at 316. 

B. Analysis 

 In the instant motion, Kelley argues that the 

correspondence between the parties did not create an enforceable 

agreement because the parties never entered into a complete 

agreement regarding all the material terms, nor did she ever 

agree to the terms of the alleged agreement or authorize her 

counsel to settle the dispute without her express approval of 

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the final terms.3 In support of her position, Kelley submitted a 

declaration attesting that she never agreed to settle the case 

until all the final terms were reduced to writing, after Crate & 

Barrel provided an accurate sales and inventory accounting. 

Decl. of Kelley ¶¶ 3-5.4

 Kelley further attests that the parties 

never entered into a complete agreement because she never 

approved of a final settlement amount, nor did the parties ever 

reach an agreement on all the material issues (e.g., 

compensation for future infringements, including attorney’s fees 

for such infringements). Id. ¶¶ 7-9. Finally, Kelley attests 

that the parties never entered into a complete agreement because 

Crate & Barrel did not cease selling products containing the 

allegedly infringing designs as it had promised to do by 

December 31, 2006. Id. ¶¶ 9-12.5

 

3

 In particular, Kelley argues that the instant motion 

should be denied because: (1) there was never a draft or final 

written settlement agreement entered into between the parties; 

(2) there was never any proposed language circulated by the 

parties regarding the terms of a settlement; (3) there was never 

a stipulation placed on the record regarding a potential 

settlement agreement; (4) she never authorized any agreement; 

and (5) the agreement did not address all the material issues 

between the parties. 

4

 Kelley attests that an agreement on the final settlement 

amount was contingent upon Crate & Barrel providing her with an 

accurate sales and inventory accounting, which according to 

Kelley, never occurred. Id. ¶ 5. 

5

 Kelley attests that on or about April 25, 2007, she 

discovered that Crate & Barrel was selling products containing 

her designs. Decl. of Kelley ¶¶ 11-12. Kelley further attests 

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 Based on the foregoing, the court concludes that summary 

enforcement of the alleged settlement agreement is 

inappropriate. Kelley’s declaration raises factual issues as to 

the existence and scope of the agreement, which cannot be 

resolved without an evidentiary hearing. In particular, Kelley 

has raised a factual issue as to whether the parties agreed on 

all the material terms, i.e., whether there was a meeting of the 

parties’ minds sufficient to form a complete agreement. 

Additionally, Kelley has raised a factual issue as to whether 

the parties’ intent was to be bound upon the execution of a 

signed, written agreement.6

 Finally, Kelley has raised a factual 

issue as to whether she authorized her attorney to compromise 

her claim without her express approval of the final terms. 

 For these reasons, summary enforcement of the alleged 

settlement agreement is inappropriate. Accordingly, Crate & 

Barrel’s motion to enforce settlement is DENIED. 

// 

// 

// 

 

that as of November 27, 2007, Crate & Barrel continued to sell 

products containing her designs. Id. ¶ 14. 

6

 The correspondence between the parties appears to have 

contemplated that Bertani would draft a written settlement 

agreement memorializing the terms of the settlement. It is 

undisputed that no formal agreement was ever drafted or signed 

by the parties. 

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III. CONCLUSION 

 For the reasons stated above, the motion to enforce 

settlement is DENIED. 

IT IS SO ORDERED. 

 ENTERED this 7th day of January, 2008. 

 s/RALPH R. BEISTLINE 

 United States District Judge 

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