2007 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 6-12-2007 

# S ande r S ales E ntr v

. S aks Inc P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 06-1085

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2007

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

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w Di git al Reposit ory

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w . vi ll anova . e du . Re c omme nde d C it at ion " S ande r S ale s E ntr v

. S ak s Inc " (2007). 2007 D e cisio n s . P ape r 958. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2007/958T he H onor abl e Eugene E. Si l er , J r . , Seni orC i r cui tJ udge forthe U ni t ed St at es * C our tof A ppeal s fort he Si xt h C i r cui t , s i t t i ng bydes i gnat i on. NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

N o. 06- 1085

S ANDE R S AL E S E NT E RP RI S E S , L T D.

A p p e llan t. v. SA K S I N C. ; PRO FFI TTS I N C. ; M c RA E’ S,

A pp el l ees.
O n A p p ea l from the U n it ed S tat es D istri ct C o u rt

f o rt h e D i s t r i c to f

N e w J e r s e y ( D . C . N o. 01- cv- 04794) D i s t r i ctJ udge: H onor abl e W i l l i am G . B as s l er
Subm i t t ed pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

M ar ch 12, 2007

B efore: F U E N T E S , V A N A N T W E R P E N , S ILE R , C i rcui tJudg es. *-2- ( Fi l ed: J une 12, 2007)

OPI NI ON O F THE COURT

FU E N T E S , C i r cui tJ udge. A ft ert he D i s tr i ctC our tdi s m i s s ed the compl ai ntof SanderSal es E nt erpr i s es ( “Pl ai nt i ff” ) pur s uantt o a s et t l ementagr eement , Pl ai nt i ff s oughtt o r ei ns t at e the c o m p lain t b e c a u se o f

a n a lleg e d b re a c h o f

th e a g re e m e n t. H o w e v e r, P lain tiff f a iled to a tten d th e sc h e d u led sta tu s c o n f e re n c e re g a rd in g th e re in sta tem e n t, an d , ac c o rd in g to Saks , I nc. , Pr offi t t s , I nc. , and M cR ae’ s ( col l ect i vel y , “D efe ndant ”) , fai l ed t o t i m el ym ove t o r es t or e i t s cas e t o t he ca l endar . T he D i s t r i ctC our tdeni ed Pl ai nt i ff’ s r eques tforr el i ef f r o m j u d g me n t , a n d we wi l l a f f i r m. I. Pl ai nt i ff, a manufactur erof beddi ng pr oduct s , fi l ed a c om pl ai nti n t he U . S. D i s tr i ct C o u rt f o r th e D istric t o f

N e w Je rse ya lleg in g th a t D e f e n d a n t h a d b re a c h e d a c o n tra c t to payfordel i ver ed goods . T he ca s e w as as s i gned t o a M agi s t r at e J udge and the part i es r eac hed a s et t l ement . T he t erm s of the s ett l ementpr ovi ded thatPl ai nt i ff a nd D efe ndant w oul d agr ee t o “enga ge i n good fai t h di s cus s i ons , i n t he or di narycour s e of bus i nes s , for [Pl ai nt i ff] t o s el l beddi ng pr oduct s t o [D efe ndant ] and for[D efe ndant ] t o buys uch p rod u cts, w ith o u t ob li g ati o n to either p artyto p lace o r ac ce p t an o rde r . . . . ” (A 7 3 . ) ItPl ai nt i ff’ s at t or neycl ai m s he w as nevernot i fi ed of thi s confe r ence . T he 1 s c h e d u lin g o f

th e c o n f e re n c e is lis te d o n th e D is tr ic t C o u rt ’s d o c k e t. ( A 2 6 .)

-3- a lso p ro v id e d th a t, i f

D e f e n d a n t p lac e d a p u rc h a se o rd e r w ith P lain tiff , the m a tter w o u ld be s et t l ed pr ovi ded D efe ndantpai d an addi t i onal $20, 000. I f D efe ndantdi d notpl ace an or der , how ever , Pl ai nt i ff c oul d ei t heracc ept$20, 000 ors eek t o r ei ns t at e the ac t i on. T he par t i es agr eed thatt he ca s e w oul d be “the s ubj ectof a 45 da yC our tO r der , ” underw hi ch th e c a se w o u ld b e d ism iss e d w ith p re ju d ice u n les s th e p a rties n o tifie d th e C o u rt “ in w ri tin g th a t th e m a tte r h a [ d ] n o t b e e n s e ttle d .” (I d .) O n J ul y8, 2004, t he D i s t r i ctC our tdi s m i s s ed Pl ai nt i ff’ s s ui ti n acc or dance w i t h t he s et t l ement , “w i t houtpr ej udi ce t o t he r i ght , upon good caus e s how n w i t hi n 45 day s , or u n til A u g u s t 1 7 , 2 0 0 4 , to re o p e n th e a c tio n if th e s e ttle m e n t is n o t c o n s u m m a te d .” (A 1 .) T he O r ders t at ed thatt he t erm s of the s ett l ementw er e “i ncorpor at ed her ei n byr efe r ence and the C our ts hal l r et ai n j ur i s di ct i on overthe s ett l ementagr eementt o enfor ce i t s t erm s . ” (A 1 .) O n A ugus t16, 2004, t he C l erk’ s O ffi ce f orthe D i s t r i ctof N ew J er s eyr ece i ved a t w o- l i ne l et t erfr om Pl ai nt i ff’ s at t or neys t at i ng: “Pl eas e be a dvi s ed thatthe s ett l ementhas notbeen c ons um m at ed. W e r eques tthatthe ca s e be r es t or ed t o act i ve ca l endarperthe or derof the court . ” ( A 47. ) O n A ugus t19, 2004, the M agi s t r at e J udge s chedul ed a St atus C onfer ence on t he mat t erforSept ember7, 2004. D es pi t e appa r entat t empt s bythe M agi s t r at e J udge t o r eac h Pl ai nt i ff’ s at t orney , Pl ai nt i ff di d notappea ratthe conf er ence . 1-4-

O n February17, 2005— s i x m onths aft eras ki ng the C our tt o r es t or e the ca s e t o t he docket

— Pl ai nt i ff’ s at t or neys enta fol l ow - up l ett ert o t he M agi s t r at e J udge i nqui r i ng w hy the c ase h ad n o t “m o v ed , ” a n d see k ing to “f u ll yrestore the c ase to ac ti v e status.” (A 8 2 . ) O n M a rc h 7 , 2 0 0 5 , the M a g istra te J u d g e h e ld a tele p h o n e c o n f e re n c e a t w h ich sh e to ld Pl ai nt i ff’ s at t or neyt hathe had f ai l ed t o appea ratthe Sept emberconfe r ence and thatt he cas e w as di s m i s s ed pur s uantt o t he C our t ’ s O r derof J ul y8, 2004. O n M ar ch 11, 2005, P lai n ti ff fil ed a f o rm al m o ti o n to reo p en the c ase . A fter o ral argu m en t, the D istri ct C o u rt deni ed Pl ai nt i ff’ s m ot i on, rul i ng t hatPl ai nt i ff ha d fai l ed t o fi l e a pr operm ot i on under L ocal R ul e 41. 1 al l egi ng “good ca us e” t o r eopen, and had f ai l ed t o m eetthe s t andar d for reli ef fro m jud g m en t un d er F ed era l R u le of C ivil P roc ed u re 6 0 (b). O n appea l , Pl ai nt i ff a r gues t hatthe D i s t r i ctC our ts houl d have r ei ns t at ed the ac t i on beca us e the t erm s of the s et t l ementagr eementhad notbeen c ons um m at ed. W e r evi ew t he D i s t r i ctC our t ’ s deci s i ons nott o r ei ns t at e the ca s e and t o denyr el i ef f r om j udgm ent u n d er R u le 60 (b) f

o r ab u se o f d iscreti o n . L o ren zo v . G ri ff ith , 1 2 F . 3 d 2 3 , 2 6 (3d C ir . 1 9 9 3 ). II. O n a p p e a l, P lain tiff

a rg u e s th a t it s A u g u st 1 6 lette r w a s s u f f icie n t o n its o w n to vaca t e the D i s t r i ctC our t ’ s di s m i s s al O r derand t o aut om at i cal l yr es t or e the ca s e t o t he a c tiv e d o c k e t. T h e D istric t C o u rt d isa g re e d , an d w e f in d n o a b u se o f

d isc re tio n in th is det erm i nat i on. I n t he D i s t r i ctof N ew J er s ey , di s m i s s al pur s uantt o a s ett l ement-5-

agreem ent i s gov erned b yL ocal C i vil R ule 41. 1(b), w hich provides: W hen a c as e has been s et t l ed, couns el s hal l pr om pt l ynot i fythe C l erk and t he C our t , t her eaf

t erconfi r m i ng the s ame i n w r i t i ng. W i t hi n 15 day s of s uch not i fi cat i on, couns el s hal l fi l e al l paper s nece s s aryt o t erm i nat e the ca s e. U pon fai l ur e of c ouns el t o do s o, the C l erk s hal l pr epar e an or derfor s ubm i s s i on t o t he C our tdi s m i s s i ng the ac t i on, w i t houtcos t s , and w i t hout prej ud i ce t o the r i gh tt o reope n the act i on w i t hin 60 d ay s upo n g oo d cau se s how n i f the s et t l ementi s notcons um m at ed. B es i des s et t i ng a per i od of 45 day s ( i ns t ead of 60) , the D i s t r i ctC our t ’ s O r derdi s m i s s i ng Pl ai nt i ff’ s act i on m i rr or ed the l anguage of R ul e 41. 1( b) . L i ke the R ul e, the O r der r equi r ed a s how i ng t hatt he s et t l ementw as notcons um m at ed and a s how i ng of “good caus e. ” A l t hough Pl ai nt i ff’ s l et t ers t at ed thatthe s ett l ementhad notbeen c ons um m at ed, i tm ade no ment i on of “good c aus e” f orr eopeni ng the ca s e. T he M agi s t r at e J udge s chedul ed a c onfer ence on t he i s s ue, butPl ai nt i ff w as notpr es entt o offe rfur t her a r g u m e n to n r e i n s t a t e m e n t , a n d w a i t e d s i x m o r e m o n t h s b e f o r e a t t e m p t i n g t o d o s o . We do notbel i eve the D i s t r i ctC our tabus ed i t s di s cr et i on i n det erm i ni ng thatm or e w as req u ir ed o f P lai n ti ff

to reinstate the ca se u n d er L o ca l R u le 41 . 1 (b). N ordo w e bel i eve thatr el i ef f r om di s m i s s al w as r equi r ed. A s w e have expl ai ned pr evi ous l y , Feder al R ul e of Ci vi l Pr ocedur e 60 t akes pr ece dence overl ocal rul es governi ng pet i t i ons t o r ei ns t at e an a ct i on. Saw ka v. H eal t heas t , I nc. , 989 F. 2d 138, 140 ( 3d C i r . 1993) . A ccor di ngl y , “anyt i m e a di s t r i ctcour tent er s a j udgm ent , even one d ism issi n g a c ase b ysti p u lat ion o f th e p arti es, i t r etains, byv irtue o f R u le 60 (b), ju risd ictio n to e n ter tain a late r m o tio n to v a c a te th e ju d g m e n t o n th e g ro u n d s s p e c if ied in-6-

t he rul e. ” I d. ( quot i ng H al derm an v. Pennhur s tSt at e School and H os pi t al , 901 F. 2d 311, 320 ( 3d C i r . 1990) ) ( al t er at i ons om i t t ed) . I n s pi t e of Local R ul e 41. 1( b) , ther efor e, the D i s t r i ctC our tpr oper l ycons i der ed w hetherPl ai nt i ff’ s act i on s houl d be r ei ns t at ed under R ul e 60. A ft erfai l i ng t o appea rata s chedul ed s t atus confe r ence and w ai t i ng an addi t i onal s i x m ont hs befor e t aki ng fur t heract i on, Pl ai nt i ff f i l ed a mot i on underR ul e 60 forr el i ef fr om j udgm ent( atw hi ch poi ntt he j udgm entof di s m i s s al w as m or e than ei ght - m ont hs o ld ). T h e D istric t C o u rt sc h e d u led a h e a rin g th a t p ro v id e d P lain tiff th e o p p o rtu n ityto demonstr at e a ba s i s t o r ei ns t at e the ac t i on. Pl ai nt i ff doe s notchal l enge the D i s t r i ct C our t ’ s t hor ough R ul e 60 ana l y s i s , and w e s ee no r eas on t o di s turb i t . I ns t ead, Pl ai nt i ff ar gues t hatt he br eac h of s et t l ementw as enough, byi t s el f, t o w arr antr el i ef f r om di s m i s s al . I n Sakw a, how ever , w e expl ai ned thata br eac h al one i s i ns uffi ci entt o s et as i de a j udgm entof di s m i s s al , al t hough i tcan pr ovi de a ba s i s fors eeki ng enfor cementof t he s et t l ementagr eement . I d. B yi ncorpor at i ng t he t erm s of the s ett l ementi n i t s di s m i s s al O r der , the D i s t r i ct C our tr et ai ned j ur i s di ct i on overi t s enfor cement . See I n r e Phar - M or , I nc. Secur i t i es L i t i gat i on, 172 F. 3d 270, 274 ( 3d C i r . 1999) ( “[B]yi ncorpor at i ng the t erm s of the s et t l ementagr eementi n t he or der. . . , a br eac h of the agr eementw oul d be a vi ol at i on of t he or der , and anc i l l aryj ur i s di ct i on t o enfor ce the agr eementw oul d t her efor e exi s t . ”) ( quot i ng K okkonen v. G uar di an Li fe I ns ur ance C o. of A m er i ca, 511 U . S. 375, 381T o t he ext entPl ai nt i ff i s di s s at i s fi ed w i t h t he amounti tr ece i ved underthe 2 s et t l ement , t he fa ul tl i es notw i t h t he D i s t r i ctC our t , butw i t h t he pr ovi s i ons of the a g re e m e n t. -7- (1 9 9 4 )). P lain tiff

c h a llen g e s th e e n f

o rc e m e n t o f

th e a g re e m e n t, arg u in g th a t, un d e r its t erm s , a br eac h r equi r ed r ei ns t at ementof the ca s e. A s s tate d in P lain tiff ’s b rie f , the a g re e m e n t re q u ire d th a t “( 1 ) [ D e f e n d a n t] w o u ld p a y[ P lain tiff

] tw e n tyth o u sa n d d o llars ($ 2 0 ,0 0 0 ); a n d (2 ) [ D e f e n d a n t] w o u ld n e g o tiate in good fai t h w i t h [Pl ai nt i ff] t o buybeddi ng pr oduct s undert erm s acc ept abl e t o bot h. ” (S a n d e r’s B r. at 4 .) P lain tiff a ss e rts th a t D e f

e n d a n t n e v e r p lac e d a p u rc h a se o rd e r w ith Pl ai nt i ff a nd neverpai d t he $20, 000. B efor e the D i s t r i ctC our t , D efe ndantexpl ai ned that it h a d n o t p a id th e $ 2 0 ,0 0 0 o n ly b e c a u s e P la in tif f h a d c o n tin u e d to p u rs u e re in s ta te m e n t. A ccor di ngl y , t he D i s t r i ctC our tenfor ced the agr eementbyor der i ng D efe ndantt o payt he $20, 000 ( an or dert hatD efe ndantdoes notchal l enge) . Fur t herm or e, al t hough D efe ndant di d notm ake a pur chas e fr om Pl ai nt i ff, the s ett l ementagr eementdi d notr equi r e i tt o do so ; i t on lyreq u ir ed n eg o ti ati o n s in the o rdin aryco u rse o f b u sine ss. T h e D istri ct C o u rt enfo rced the ag reem ent i n acco rdance w i t h these provi si on s. 2 III . T h e D istric t C o u rt o rd e re d P lain tiff ’s c o m p lain t d ism iss e d w ith o u t p re ju d ice to its m ovi ng t o r eopen w i t hi n 45 day s , as l ong as the s ett l ementw as notcons um m at ed and g o o d c a u se w a s s h o w n . T h e D istric t C o u rt ru led th a t P lain tiff f a iled to sa tisf

yL o c a l R u le 41. 1( b) and fa i l ed t o w arr antr el i ef f r om di s m i s s al underR ul e 60. R et ai ni ng j ur i s di ct i on,-8-

i tenfor ced the agr eementi n acc or dance w i t h i t s appl i cabl e t erm s . Forthe for egoi ng r e a s o n s , we wi l l a f

f i r m.