Opinion ID: 2974361
Heading Depth: 3
Heading Rank: 3

Heading: Consent Judgment versus Settlement Agreement

Text: Plaintiffs argue that because the settlement was formalized in a consent judgment, as opposed to a settlement agreement, the language stipulating that it was a “final order of the court, disposing of all remaining claims” did not encompass their “collateral” claim for attorney fees. Plaintiffs assert that this language has a specialized (and different) meaning in the context of a consent judgment because settlement agreements do not implicate the same concerns about finality as consent judgments. As we see it, the question is simply whether the parties intended their settlement, however formalized, to leave the claim for attorney fees unresolved or to constitute a settlement in full. It is true, as plaintiffs observe, that a request for attorney fees presents collateral issues that are “not inherently or necessarily subsumed by a decision on the merits.” White v. N. H. Dep’t of Employment Sec., 455 U.S. 445, 451 n.13 (1982). As a result, a decision on the merits will be “final” for purposes of appeal whether or not a request for attorney fees remains for adjudication. Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202-03 (1988). Thus, a voluntary dismissal under Fed. R. Civ. P. 41(a) does not deprive the court of jurisdiction to consider the imposition of sanctions, costs, or attorney fees. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393-94 (1990); Brown v. Local 58 Intern. Bhd. of Elec. No. 05-2057 10 Workers, 76 F.3d 762, 766-67 (6th Cir. 1996). Plaintiffs point to our statement in Brown, a case brought under the LMRDA, that the plaintiffs did not have to reserve the right to seek attorney fees in voluntarily dismissing the action. Id. at 767. However, the issue in Brown, whether an express reservation of the court’s jurisdiction was required, is separate from the question of whether the parties’ settlement included any claim to attorney fees. Accord Young v. Powell, 729 F.2d 565, 566 (8th Cir. 1984) (“The decisions holding that a claim for attorney’s fees is separable from the principal claim after a judgment on the merits do not hold that such a claim is not a disputed issue in the particular case.”).2 Taking a different tack, plaintiffs argue that this court’s decisions in Jennings and Toth are not controlling because neither case involved the interpretation of a consent judgment. However, nothing in either case suggests that the form of the settlement would have made a difference with respect to the issue of waiver. Conceding as much, plaintiffs rely on the Eighth Circuit’s unexplained distinction between a settlement agreement and a settlement finalized by consent decree. See Cody v. Hillard, 304 F.3d 767, 778 (8th Cir. 2002); Wray, 151 F.3d at 809; Young, 729 F.2d at 566-67. The court in Young observed in dicta that “[t]he case before us does not involve a situation wherein a settlement was finalized by a consent decree or wherein the parties 2 The award of fees in Brown was nonetheless reversed because plaintiffs had not shown that they were prevailing parties under the so-called catalyst theory. The Supreme Court has since clarified that to be “prevailing,” there must be a judicially sanctioned change in the legal relationship of the parties—such as a settlement agreement enforced through a consent decree. Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health and Human Res., 532 U.S. 598, 605 (2001). No. 05-2057 11 stipulated to a dismissal, reserving the question of attorney fees.” 729 F.2d at 566 (footnotes omitted). No explanation was given for how or why a settlement by consent decree should be treated differently, and the cases cited in the supporting footnote actually address whether a plaintiff may be a prevailing party when a case has been settled by consent decree. See, e.g., Maher v. Gagne, 448 U.S. 122, 124 (1980); see also id. at 129 (“Nothing in the language of § 1988 conditions the District Court’s power to award fees on full litigation of the issues or on a judicial determination that the plaintiff’s rights have been violated.”). As noted earlier, the court in Young declared that the parties to a settlement should not stipulate to dismissal without reserving any unresolved issues or indicating such an intention in some way. 729 F.2d at 567 n.3. In Cody, this holding was interpreted to create a presumption that a settlement of all claims precludes an award of attorney fees absent an express reservation to the contrary. Because of the distinction noted in Young, however, the court also found that no similar presumption would arise when a consent decree had been entered. The court explained as follows: Wray and Young imply that if the parties to a civil rights litigation enter into a settlement agreement before entry of an enforceable judgment or consent decree, and the agreement purports to resolve all issues in the case, then it will be presumed to exclude an award of attorneys’ fees to plaintiff unless the parties expressly provide to the contrary. This rule has added force after Buckhannon, since that case clarifies that a plaintiff is rarely, if ever, legally entitled to court-awarded fees unless he or she has gained a consent decree or judgment. However, no presumption against fees applies here. The settlement we interpret was reached after the class won a consent decree, clearly establishing its status as a prevailing party. In addition, the agreement here, unlike the agreements at issue in Wray and Young, nowhere purports to resolve all disputed issues. We must therefore determine the parties’ intent from other No. 05-2057 12 features of the agreement. Cody, 304 F.3d at 778. Nothing in these cases persuades us that the approach we adopted in Jennings should not apply when a settlement of all claims is formalized by consent judgment. Significantly, none of the Eighth Circuit cases actually involved the interpretation of a settlement finalized by consent judgment. In fact, Cody stands for the proposition that a presumption of waiver (which has not been adopted in this circuit) does not apply when a settlement agreement is preceded by a consent decree. Also, unlike this case, the settlement in Cody did not purport to dispose of all claims.