Source: https://www.calmediation.org/arbitration-section-6646/
Timestamp: 2019-04-19 03:33:06+00:00

Document:
Because Federal Courts Are Courts Of Limited Jurisdiction, The Procedures Differ.
We posted on December 4, 2017, about Sayta v. Chu, A148823 (1/5 11/29/17) (published), an opinion that "offers an object lesson on the requirements to invoke [Cal. Code of Civ. Proc.] section 664.6 and the consequences of failure to comply with those requirements." Section 664.6 enables a California state court to enforce a settlement agreement in a case that it has dismissed, by retaining jurisdiction to do so. The obvious advantage for the party seeking to enforce a settlement is that it need not file a new lawsuit to enforce the settlement.
In order to rely on 664.6, the parties to a stipulated settlement need to request the court to retain jurisdiction over the parties to enforce the settlement, if the parties have requested the court for this specific retention of jurisdiction prior to dismissal. In Sayta, enforcement went sideways because the parties failed to request the court to retain jurisdiction to enforce the settlement before dismissal, and thus the court lost jurisdiction.
Federal court is somewhat different. The key case is Kokkonen v. Guardian Life Insurance Company of America, 511 U.S. 377 (1994) (Scalia, author). Because a federal court is one of limited jurisdiction, meaning there must be a basis for federal jurisdiction, bare enforcement of most settlement agreements, which after all are merely contracts, will very likely not create a basis for federal jurisdiction.
However, there are two or three ways to skin this cat. Federal Rule of Civil Procedure 41(a) allows the parties to voluntarily dismiss by a stipulation of dismissal signed by all parties who have appeared, and it also allows for dismissal by court order by plaintiff on terms the court considers proper. If the parties wish to provide for the court's jurisdiction to enforce a dismissal-producing settlement via the stipulation route, they can do so, if the district court embodies the settlement contract in its dismissal order as a condition to dismissal, or the court retains jurisdiction to enforce the settlement agreement, and the parties so agree. And if the dismissal is, pursuant to plaintiff's instance, by court order, it must be done "upon order of the court and upon such terms and conditions as the court deems proper," which means the court can require the parties' compliance with the terms of the settlement contract or provide for the court's "retention of jurisdiction" over the settlement contract.
PRACTICE TIP: In federal court, the Stipulation and proposed Order language should indicate that the parties request that the district court retain jurisdiction to enforce the settlement -- and the Order will recite that the district court retains jurisdiction to enforce the settlement agreement. But the settlement agreement itself need not be put before the Court. This is our conclusion, based on the alternative language in Kokkonen, that "the court is authorized to embody the settlement contract in its dismissal order (or, what has the same effect, retain jurisdiction over the settlement contract) if the parties agree." (Italics added).
HAT TIP to Gail Killefer, the director of the ADR program for the USDC, Central District, for bringing to the attention of panel mediators the distinction between federal and state retention of jurisdiction to enforce a settlement agreement.
NOTE: This post has been revised, and the Practice Tip added, after comment from Gail Killefer. Any mistakes are entirely my own.
As we have blogged before, relying on important electronic transactions without dotting all the I’s and crossing all the t’s is risky business. See April 30, 2014 blog post.
In our next case, the factors supporting enforceability of a settlement agreement provide a roadmap for drafting an enforceable agreement.
Defendants appealed two identical judgments entered in related lawsuits, arguing that the trial court should have not enforced a settlement agreement because, among other things, it was too uncertain. Hiatt v. Elite Leather Company and Huntington Industries, Inc. v. Elite Leather Company, Case No. G047980 consolidated with G047980 (4th Dist. Div. 3 Dec. 19, 2013) (Rylaarsdam, Acting P.J., author) (unpublished).
A settlement agreement is enforceable under CCP section 664.6 only if the parties agreed to all material settlement terms. Plaintiffs argued the settlement agreement was not uncertain as to material terms, whereas defendants argued that the agreement was uncertain and just an “agreement to agree” that was never sufficiently nailed down.
Here, the agreement contained a procedure for choosing a forensic accounting expert; a methodology; a provision for what would happen if either party disputed the finding on what was owed under an asset purchase agreement; binding arbitration if a party rejected the accountant’s conclusion; an agreement to confer with the mediator concerning selection of an accountant; and a provision that the agreement was enforceable even without further written provisions. That was sufficient to concluded the agreement was not void for uncertainty as to material settlement terms.
The opinion is particularly helpful for a discussion of cases in which an agreement has failed or succeeded to be enforced under 664.6.
The trial court enforced a settlement agreement, under Cal. Code Civ. Proc. section 664.6, resulting in a binding mediation award in favor of plaintiffs. Defendant appealed, contending that it never agreed to resolve the dispute through “binding mediation”, that the agreement was uncertain, and that binding mediation is not among the constitutionally and statutorily permissible means of waiving jury rights. Bowers v. Raymond J. Lucia Companies, Inc., Case No. D059333 (4th Dist. Div. 1 May 30, 2012) (McConnell, P.J., author) (certified for publication).
So, unless “binding mediation” is truly an oxymoron in all circumstances, Bowers is indeed distinguishable from Lindsay, and hence, the result is different.
Enforcement of Settlement Agreement: Second District, Division 8 Holds Settlement Enforceable Against Employer Under CCP section 664.6 in Wage and Hours Case.
Court Rejects Employer’s Arguments That Agreement Lacked Material Terms and Was Obtained Through Fraud.
Mejia v. Jhan, Inc., No. B230818 (2nd Dist. Div. 8 January 10, 2012) (unpublished), involved an overtime dispute between the employee, Mejia, and the employer, Jhan, Inc. The parties entered into a settlement agreement calling for the employer to make a lump sum payment of $25,000, without admission of liability, and for the parties to execute a further long form agreement, a common term in short form agreements.
You guessed it: the employer did not pay $25,000, claimed that the agreement was unenforceable for lack of material terms, argued that it had been obtained through fraud and argued that the employee had breached a confidentiality agreement.
“The Stipulation satisfies the statutory prerequisites of section 664.6. It is a written agreement duly executed by all parties. Moreover, paragraph 6 of the Stipulation expressly provides that "[t]his mediation settlement agreement is intended to be binding and enforceable and is effective this 13th day of Oct., 2010, and reflects the final agreement between the parties to this dispute, and each of them, pursuant to Evidence Code Section 1123. This stipulation for settlement is admissible and subject to disclosure, despite the otherwise enforceable requirements of confidentiality, solely for the purpose of establishing in court that an agreement has been reached by the parties for purposes of enforcing and interpreting that agreement."
Evidence of fraudulent inducement was lacking, and even if the employee had breached a confidentiality term, that did not render the agreement unenforceable.
Result: Affirmed on appeal. Justice Grimes authored the opinion, in which Justices Rubin and Flier concurred.

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