Rolex Watch, U.S.A., Inc. v. Bulova Watch Co.

820 F. Supp. 60, 26 U.S.P.Q. 2d (BNA) 1951, 1993 WL 133809, 1993 U.S. Dist. LEXIS 5502
CourtDistrict Court, E.D. New York
DecidedApril 22, 1993
DocketNo. 83 C 2191
StatusPublished
Cited by4 cases

This text of 820 F. Supp. 60 (Rolex Watch, U.S.A., Inc. v. Bulova Watch Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rolex Watch, U.S.A., Inc. v. Bulova Watch Co., 820 F. Supp. 60, 26 U.S.P.Q. 2d (BNA) 1951, 1993 WL 133809, 1993 U.S. Dist. LEXIS 5502 (E.D.N.Y. 1993).

Opinion

MEMORANDUM AND ORDER

NICKERSON, District Judge:

Plaintiff Rolex Watch U.S.A., Inc. (Rolex) initially brought this action in 1983 alleging that defendant Bulova Watch Company, Inc. (Bulova) had copied the trade dress of Rolex watches, in violation of the Lanham Act and state law. Both parties are citizens of New York.

On November 18, 1983 the parties entered into a settlement agreement in which Bulova was permitted to sell off its existing inventory of offending watches, but would cease all sales of such watches after March 31, 1985.

[61]*61On November 22, 1983 the court “so ordered” a “Stipulation and Order” which provided in full that:

IT IS HEREBY STIPULATED AND AGREED by and between counsel for the parties, subject to the approval of this Court, that the Complaint herein be dismissed with prejudice and that the Counterclaim herein be dismissed with prejudice all without costs to either party as against the other.

The court did not review the settlement agreement, incorporate it into a consent order, nor retain jurisdiction to enforce the agreement.

Rolex now reports, some ten years later, that Bulova has deliberately breached the settlement agreement and is selling watches virtually identical to those prohibited by the agreement. Rolex moves for an order restoring the case to the court’s active docket and summarily enforcing the settlement agreement.

Bulova contends solely that the court lacks subject matter jurisdiction to consider what it characterizes as a state law contract dispute over the settlement agreement.

I

The question is whether a federal district court has the power to enforce a settlement agreement in a dismissed action where (i) the agreement was not incorporated into a court order, (ii) the court did not deliberately retain jurisdiction by either issuing an injunction or explicitly stating that jurisdiction was retained for a particular purpose, and (iii) an independent ground for subject matter jurisdiction, such as diversity of citizenship, is lacking.

A

There are reasons suggesting that the court should exercise ancillary jurisdiction.

The court has an interest in promoting settlement of litigation before it. The adoption of a jurisdictional rule preventing the court from enforcing agreements leading to the dismissal of an action may serve to discourage settlements.

The court also has an interest in protecting the institutional integrity of the federal judicial process. There is something unseemly about a federal court absolving itself from the task of implementing the complete disposition of a case where jurisdiction is based solely on a federal question and remitting the case to a state court because one of the parties has repudiated the settlement agreement.

It seems wasteful to require a federal court to focus in every settled case on whether it wishes to retain jurisdiction when “so ordering” a dismissal. It would be more efficient to have the court decide whether to retain jurisdiction only in those few instances in which a dispute arises.

As a matter of convenience, economy, and comity, it seems unwise to adopt a rule requiring non-diverse parties to present federal claims in a federal forum but settlement disputes in a state forum. In many instances (though not here), the federal court may have become familiar with the facts and issues before the parties reached a settlement, an investment in time and effort wasted if duplicated by a state court. Moreover, because the underlying issue is governed by federal law, the state courts is called on to resolve disputes that, at bottom, implicate federal interests.

It is hard to see any reason in policy why dismissal of the root claim should bar jurisdiction over an ancillary matter that arises at a later time. Courts within this circuit have the power to decide attorney fee disputes after the root claim has been decided or dismissed. See, e.g., Chesley v. Union Carbide Corp., 927 F.2d 60, 64-65 (2d Cir. 1991).

If a federal court has that power, logic suggests it ought to have power to enforce the outcome of litigation embodied in an agreement. The court would thereby provide an effective forum for the full resolution of disputes involving federal issues.

Article III of the Constitution authorizes federal courts to decide entire “cases” and “controversies” not merely claims. As Chief Justice John Marshall recognized, “when a question to which the judicial power of the [62]*62Union is extended by the constitution, forms an ingredient of the original cause of action, it is in the power of Congress to give the Circuit Courts jurisdiction of that cause, although other questions or fact or law may be involved in it.” Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 823, 6 L.Ed. 204 (1824).

Although Congress had not in terms authorized supplemental jurisdiction when this action was filed in 1983, courts have construed the Constitution and statutes as authorizing such jurisdiction when faced with a compelling need. See, e.g., United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). See also Erwin Chemerinsky, Federal Jurisdiction 276 (1989) (“allowing all aspects of a case to be tried in federal court preserves the attractiveness of the federal forum for litigants”).

B

Nevertheless, every Circuit Court that has examined the present issue has held that a district court lacks jurisdiction to enforce settlement agreements in these circumstances. See, e.g., Sawka v. Healtheast, Inc., 989 F.2d 138, 141 (3d Cir.1993); United Steelworkers of America v. Libby, McNeill & Libby, Inc., 895 F.2d 421, 423-24 (7th Cir. 1990); Adduono v. World Hockey Ass’n, 824 F.2d 617, 621-22 (8th Cir.1987); Hinsdale v. Farmers National Bank & Trust Co., 823 F.2d 993, 995-96 (6th Cir.1987); Londono v. Gainesville, 768 F.2d 1223, 1227 (11th Cir. 1985); Fairfax Countywide Citizens Ass’n v. County of Fairfax, 571 F.2d 1299, 1303 (4th Cir.), cert. denied, 439 U.S. 1047, 99 S.Ct. 722, 58 L.Ed.2d 706 (1978). Cf. Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1371-72 (6th Cir.), cert. denied, 429 U.S. 862, 97 S.Ct. 165, 50 L.Ed.2d 140 (1976) (enforcing settlement agreement only where court had discretion, under Fed.R.Civ.P. 60(b), to reopen litigation).

The Second Circuit has not addressed the question.

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Bluebook (online)
820 F. Supp. 60, 26 U.S.P.Q. 2d (BNA) 1951, 1993 WL 133809, 1993 U.S. Dist. LEXIS 5502, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rolex-watch-usa-inc-v-bulova-watch-co-nyed-1993.