In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 05-2574, 05-3553 & 06-4256

AMERITECH CORPORATION D/B/A SBC MIDWEST,

 Plaintiff-Appellant,

Cross-Appellee,

v.

INTERNATIONAL BROTHERHOOD OF

ELECTRICAL WORKERS, LOCAL 21,

Defendant-Appellee,

Cross-Appellant.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 04 C 6149—Samuel Der-Yeghiayan, Judge.

____________

ARGUED SEPTEMBER 26, 2007—DECIDED SEPTEMBER 10, 2008

____________

Before MANION, EVANS, and SYKES, Circuit Judges.

SYKES, Circuit Judge. These appeals stem from a drawnout labor dispute between Ameritech and the International Brotherhood of Electrical Workers, Local 21, involving three arbitrations centering on what may fairly be
2 Nos. 05-2574, 05-3553 & 06-4256

described as the same issue. The first and third awards

favored Ameritech; the second favored the Union. The

question now is whether the third arbitration award

trumps the second.

The third arbitration was the product of a settlement

agreement resolving the parties’ first two appeals in this

court. Ameritech had appealed the district court’s order

enforcing the second arbitration award; the Union then

appealed an order denying its motion to enforce that

judgment and hold Ameritech in contempt. In their

settlement the parties agreed to resolve this “protracted

litigation” by submitting their dispute to a third arbitrator

for a “final resolution” via a “special, bifurcated arbitration proceeding.” This third arbitration was held, the

arbitrator sided with Ameritech, and Ameritech sought

to enforce the award by moving to vacate the earlier

judgment pursuant to Rule 60(b) of the Federal Rules of

Civil Procedure. The district court summarily denied this

motion because the first two appeals were still pending

here. Ameritech then appealed this order, and we consolidated all three.

We now dismiss the first two appeals based on the

parties’ settlement. Following the procedure described

in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership,

513 U.S. 18, 29 (1994), and Marseilles Hydro Power LLC v.

Marseilles Land & Water Co., 481 F.3d 1002, 1003-04 (7th Cir.

2007), we reverse the district court’s order denying

Ameritech’s Rule 60(b) motion and remand with instructions to vacate the earlier judgment enforcing the second

award and enter judgment for Ameritech enforcing the
Nos. 05-2574, 05-3553 & 06-4256 3

third arbitration award. Because the parties agreed that

the third arbitration would finally resolve their dispute,

and the third arbitrator’s award is inconsistent with the

second, Ameritech is entitled to relief from the earlier

judgment under Rule 60(b).

I. Background

These three consolidated appeals are the result of a

lengthy and procedurally complex labor arbitration, but

the crux of the dispute is a single provision in the parties’

collective-bargaining agreement. Ameritech and the

Union disagreed over the meaning of § 1.03 in that agreement, which provides as follows:

This Agreement covers the work customarily performed by the employees defined in Section . . . 1.01,

above. However, during the tenure of this Agreement,

[Ameritech] may continue to contract out such work as

is now customarily contracted out and has been

customarily contracted out by [Ameritech] under the

previous collective bargaining agreements . . . represented by [the Union] . . . . If such work to be contracted out will cause layoffs, or part-timing or prevent

the rehiring of employees with seniority standing,

such contracting out of work will be reviewed by

[Ameritech] with the Union and allotted on the basis

of what [Ameritech] is equipped to perform and what

the employees represented by the Union are able

and trained to perform.

Section 1.03 thus governs Ameritech’s ability to contract

out work to nonunion workers and provides the Union
4 Nos. 05-2574, 05-3553 & 06-4256

with the right to review certain layoffs and the allotment

of some of this work. The condition under which the

Union may exercise its review-and-allotment right is the

primary subject of the parties’ dispute.

The genesis of this case was in late 2002, when

Ameritech, facing flagging demand for its products,

announced a plan to lay off some of the Union’s members.

Ameritech believed that it was not required to participate

in the review-and-allotment process specified in § 1.03

because poor economic conditions—not the customary

contracting out covered by § 1.03—had precipitated the

layoffs. The Union maintained that it was entitled to a

formal review and allotment under § 1.03, and when

Ameritech disagreed, the parties proceeded to the first of

the three arbitrations at issue here.

Arbitrator John Flagler concluded this first arbitration

in December 2002, and he resolved the dispute in

Ameritech’s favor. Flagler agreed with Ameritech’s

interpretation of § 1.03, namely, that the Union must first

establish that the layoffs in question were caused by

customary contracting out (as opposed to some other

cause) before being entitled to the review-and-allotment

process. Because Ameritech established that the layoffs

were caused by poor economic conditions (not contracting out), Flagler concluded that the Union was not

entitled to review and allotment.

The Union filed a second grievance in the spring of 2004,

arguing that it was entitled to review and allotment

because Ameritech’s continued use of outside contractors

prevented the rehiring of the laid-off Union members.
Nos. 05-2574, 05-3553 & 06-4256 5

Arbitrator Richard Kasher conducted the second arbitration, and this time the result favored the Union. Kasher

distinguished his postlayoff analysis from Flagler’s

prelayoff analysis and did not require the Union to

first show that continued contracting out had caused

the failure to rehire the laid-off employees. Instead, he

ordered Ameritech to provide the Union with information for a formal review and allotment without that

threshold showing.

The parties then moved their dispute to the District

Court for the Northern District of Illinois. Ameritech

filed a complaint to vacate the Kasher award, and the

Union counterclaimed to enforce the award. On crossmotions for summary judgment, the district court entered

judgment for the Union, upholding Kasher’s decision

based on the broad judicial deference that courts traditionally afford to arbitration awards. See, e.g., United

Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593,

597 (1960) (holding that any award would be enforceable

so long as it “draws its essence from the collective bargaining agreement”); Ethyl Corp. v. United Steelworkers

of Am., 768 F.2d 180, 183-84 (7th Cir. 1985) (same). But

when the court denied the Union’s subsequent motions

to hold Ameritech in contempt, the stage was set for

two cross-appeals. Ameritech appealed the order

denying its motion for summary judgment and granting

judgment for the Union (Appeal No. 05-2574), and the

Union appealed the denial of its motion to enforce

the judgment and hold Ameritech in contempt (Appeal

No. 05-3553).
6 Nos. 05-2574, 05-3553 & 06-4256

The parties were then directed into appellate mediation under Rule 33 of the Federal Rules of Appellate Procedure. They emerged from that process on September 16,

2005, with an agreement to submit their dispute to a third

arbitration, to be conducted in two phases. This third

arbitration was conducted before Arbitrator Robert

Perkovich pursuant to a detailed Joint Pre-Conference

Statement negotiated and signed by the parties. The

statement provided that “this special, bifurcated arbitration proceeding” was “the culmination of protracted

litigation between the parties through two different

arbitrations, and civil actions in the U.S. District Court

and 7th Circuit Court of Appeals.” The statement memorialized that “the parties agreed to resolve their dispute

regarding Article 1.03 through this bifurcated process”

and that this third arbitration would be the “final resolution of the proper interpretation and application of

Section 1.03 of the parties’ Collective Bargaining Agreement relative to [the 2002 layoffs].”

Perkovich’s award favored Ameritech. He held that the

first award (Arbitrator Flagler’s) had been incorporated

into the parties’ collective-bargaining agreement and

was therefore controlling on the proper interpretation of

§ 1.03 and that Arbitrator Kasher had erred by disregarding it. Armed with Perkovich’s award, Ameritech

returned to the district court with a Rule 60(b) motion

seeking to vacate the earlier judgment based on this third

arbitration and the parties’ settlement. The district court

summarily denied this motion, saying only that it could

not consider the motion because the two earlier appeals

were still pending. Ameritech appealed this order (Appeal
Nos. 05-2574, 05-3553 & 06-4256 7

No. 06-4256), and we consolidated all three appeals

for briefing and disposition.

II. Discussion

The parties ask us to reconcile their arbitration trilogy

on the merits, but the proper resolution of these

appeals begins—and ends—with the settlement that

brought about the third arbitration. The parties engaged

in appellate settlement negotiations under Rule 33 of the

Federal Rules of Appellate Procedure and explicitly agreed

to submit their dispute to a third and final arbitration as

a “final resolution” and “culmination” of the “protracted

litigation” between them—i.e., the first two arbitrations,

the district court’s first and second orders, and the first

two appeals in this court.

Rule 33 authorizes the court of appeals to implement

a settlement reached while the case is on appeal.

Herrnreiter v. Chi. Hous. Auth., 281 F.3d 634, 637 (7th Cir.

2002). Unlike in the district court, however, settlement

negotiations in this court are not overseen by a judicial

officer; instead, they are handled by a settlement conference attorney and what occurs during negotiations is not

revealed to the court. Id. We have held that the implementation of a settlement reached on appeal entails the dismissal of the appeal upon the filing of either (a) a

written agreement of the parties dismissing the appeal

under Rule 42(b) of the Federal Rules of Appellate Procedure,

or (b) a motion to dismiss under Rule 42(b) filed by the

appellant. Id.
8 Nos. 05-2574, 05-3553 & 06-4256

Here we have something close to the former. At the

conclusion of their settlement negotiations, the parties

signed a handwritten document agreeing to be bound by

the third arbitration and specifying the questions to be

posed to the arbitrator in the first and second phases of

this arbitration. Later, the parties signed a lengthy Joint

Pre-Conference Statement describing in greater detail

the parameters of the third arbitration. As we have

noted, this statement outlined the “agreement between

the parties to suspend litigation currently pending in the

U.S. Court of Appeals for the Seventh Circuit” for the

purpose of submitting the dispute to a third arbitrator

for “a final resolution of the proper interpretation and

application of Section 1.03 of the parties’ Collective Bargaining Agreement relative to [the 2002 layoffs].” These

documents are properly before this court in connection

with Ameritech’s appeal from the district court’s denial

of its Rule 60(b) motion.

That the parties did not move to dismiss under Rule

42(b)—the proper procedure described in Herrnreiter—does

not mean they retained the right to continue to litigate the

appeal if dissatisfied with the results of the arbitration.

That strikes us as absurd. An agreement to suspend

appellate litigation for the purpose of submitting the

dispute to arbitration as a “final resolution” cannot possibly mean that the loser of the arbitration gets to

disregard the results and continue to litigate the appeal.

Such an agreement would be meaningless, accomplishing

nothing except for delay. We must take the third arbitration for what it was: a settlement finally resolving the

first two appeals.
Nos. 05-2574, 05-3553 & 06-4256 9

The Union maintains that the Perkovich award applies

only to a limited number of subcontracts—not to the

subcontracts primarily at issue on appeal. The third

arbitration was a bifurcated proceeding in which Arbitrator Perkovich was asked first to definitively interpret § 1.03

and then in the second phase apply that interpretation

to a set of “new” subcontracts (new because they were

in addition to those already involved in the parties’

dispute). That structure, the Union argues, means that

Perkovich’s interpretation of § 1.03 applies only to

those subcontracts enumerated in phase two of the third

arbitration.

Notably, however, this suggested limitation is not found

in the parties’ agreement, which nowhere states that

Perkovich’s interpretation of § 1.03 in phase one of the

arbitration is limited to the subcontracts involved in

phase two. Quite the contrary, the parties’ agreement

expressed their intention to bring their prolonged fight to

a close—in their own words, to seek “a final resolution” of

the “protracted litigation” involving the first two arbitrations. We doubt the settlement agreement was intended

only to add yet another layer of complexity to § 1.03 by

creating one more interpretation—one applicable only to

a limited number of subcontracts. Rather, the third arbitration by its terms accomplished two things: first, it

resolved the parties’ dispute over the interpretation of

§ 1.03 and contracting out (necessarily resolving the

issues on appeal), and, second, it applied that resolution

to the new subcontracts identified in phase two.

Perkovich’s decision on § 1.03 was the final one, and

that decision binds the parties.
10 Nos. 05-2574, 05-3553 & 06-4256

This brings us to the third appeal involving Ameritech’s

motion to vacate under Rule 60(b). The district court could

have considered Ameritech’s motion when it was presented with two facially inconsistent arbitration

awards—Kasher’s and Perkovich’s—the latter of which

was in settlement of the dispute over the former. It is

true that a district court is divested of jurisdiction once

a notice of appeal is filed; that has long been procedural

diktat. E.g., Griggs v. Provident Consumer Disc. Co., 459 U.S.

56, 58 (1982); Berman v. United States, 302 U.S. 211, 214

(1937); United States v. McHugh, 528 F.3d 538, 540 (7th Cir.

2008); United States v. Vitek Supply Corp., 151 F.3d 580, 584

(7th Cir. 1998). This rule conserves judicial resources by

preventing overlapping and potentially inconsistent

decisions; whipsawing litigants between two courts is

just as inconvenient for courts as it is for parties.

There are exceptions, however, and this instance is one.

Boyko v. Anderson, 185 F.3d 672, 674 (7th Cir. 1999) (citing

Kusay v. United States, 62 F.3d 192, 194 (7th Cir. 1995)

(listing exceptions)). District courts possess limited authority to deny Rule 60(b) motions while an appeal is

still pending, allowing the court of appeals to make its

resolution a final one, knowing that a district court has

no desire to amend its ruling. This creates no risk of

overlapping decisions, and it has been our practice to

encourage district courts to respond promptly to these

motions because a quick response expedites the resolution of a pending appeal. Brown v. United States, 976 F.2d

1104, 1110-11 (7th Cir. 1992); Graefenhain v. Pabst Brewing

Co., 870 F.2d 1198, 1211 (7th Cir. 1989). Conversely, in the

event a district court is inclined to grant the motion, it can

make us aware of its intention and we will remand the
Nos. 05-2574, 05-3553 & 06-4256 11

entire case for that purpose. See 7TH CIR. R. 57; Boyko, 185

F.3d at 675; see also Brown, 976 F.2d at 1110-11; Graefenhain,

870 F.2d at 1211. We may also employ a limited remand

to a district court, permitting it to conduct a hearing

before ruling on the merits of the Rule 60(b) motion in

this situation. Boyko, 185 F.3d at 675.

So the district judge had an option other than a summary denial of Ameritech’s Rule 60(b) motion based on

the still-pending appeals. In the circumstances here—

where the parties agreed to settle the case through a final

arbitration and the ensuing arbitration award was inconsistent with the prior judgment—the district judge had

the authority under Circuit Rule 57 to advise us whether

he was inclined to grant the Rule 60(b) motion.

We have previously noted that the use of Rule 60(b) in

this situation is appropriate. Marseilles Hydro Power, 481

F.3d at 1003 (suggesting the applicability of Rule 60(b)(6)

after a settlement on appeal). However, it is for the

district court, not us, to vacate the prior judgment in

light of a settlement on appeal. The general rule is that

we can enforce settlement agreements reached on appeal by dismissing the appeal, but not by vacating the

underlying judgment. Bonner Mall, 513 U.S. at 29;

Herrnreiter, 281 F.3d at 638. That is, settlements on

appeal generally result in the dismissal of an appeal.

Herrnreiter, 281 F.3d at 638.

The Supreme Court explained in Bonner Mall that the

parties to an appeal generally relinquish their right to

challenge the judgment below when they agree to settle

their dispute during their appeal. 513 U.S. at 29. Vacatur is

a remedy rooted in equity, and where an appeal is dis-
12 Nos. 05-2574, 05-3553 & 06-4256

missed as moot, vacatur traditionally requires some

happenstance or fortuity that prevents a party from

obtaining a review of a judgment’s merits (i.e., circumstances unattributable to the parties or when mootness

results from the unilateral action by the prevailing party

below). Id. at 23. That has been the rule since United

States v. Munsingwear, Inc., 340 U.S. 36, 40 (1950), and the

Court in Bonner Mall held that mootness due to an appellate settlement was not the sort of “vagar[y] of circumstance” justifying a reviewing court’s use of vacatur

on the judgment of a lower court. 513 U.S. at 25.

But we do have the power to remand for the district

court to vacate the inconsistent judgment under Rule 60(b).

Id. at 29; Marseilles Hydro Power, 481 F.3d at 1003.

Ameritech tried the Rule 60(b) route, and its appeal of

the district court’s denial of that motion is here, along

with the first two. The parties settled the first two

appeals by way of the third arbitration; the resulting

award favored Ameritech and was inconsistent with

the prior judgment for the Union. This is a proper

ground for relief from that judgment under Rule 60(b)(6).

Marseilles Hydro Power, 481 F.3d at 1003. Accordingly, in

light of the appellate settlement, we DISMISS the crossappeals (Nos. 05-2574 & 05-3553); on Ameritech’s appeal

of the denial of its Rule 60(b) motion (No. 06-4256), we

REVERSE and REMAND to the district court with instructions to vacate the judgment enforcing the second arbitration award and enter judgment enforcing the third arbitration award.

9-10-08