Opinion
James M. Amend, Barry F. Irwin, G. Courtney Holohan, Kirkland & Ellis, Chicago, IL, for Plaintiff.
James Andrew Klenk, Carol Ann Been, Francisco Antonio Rubio-Campos, Keith Jeremy Berets, Sonnenschein, Nath & Rosenthal, Chicago, IL, Edward H. Rice, Sonnenschein & Nath, St. Louis, MO, for Defendant.
MEMORANDUM OPINION AND ORDER
KENNELLY, District Judge.
In 1999, the Blue Cross and Blue Shield Association sued American Express Company, seeking an injunction barring American Express from using and promoting a credit card called " Blue" on the ground that this infringed various service marks held by Blue Cross. The action was based primarily on the Lanham Act, though diversity of citizenship also existed.
In November 1999, the Court denied Blue Cross' motion for a preliminary injunction, finding that Blue Cross had failed to establish the requisite likelihood of success on the merits. Blue Cross and Blue Shield Ass'n v. American Express Co., No. 99 C 6679, 1999 WL 1044825 (N.D.Ill. Nov. 16, 1999). Blue Cross appealed the Court's ruling. Several months later, the parties settled the case pursuant to a written settlement agreement in which, among other things, American Express agreed to various restrictions on its use of the term " Blue."
Paragraph one of the settlement agreement provided that
[w]ithin five days after the Effective Date [of the agreement], the Association will file a dismissal, with prejudice, of the Litigation and will dismiss the appeal pending in the Litigation. The parties agree that the District Court will retain jurisdiction to enforce this Agreement in the event of an allegation of its breach. ...
Motion for Reconsideration (etc.), Ex. A ¶ 1 (emphasis added). The Court was advised of this term of the agreement and entered an order which stated as follows:
Stipulated motion for dismissal with prejudice, pursuant to Federal Rule of Civil Procedure 41(a)(1), and with each party bearing its own costs and attorney's fees is granted. This Court shall retain jurisdiction over this matter for purposes of enforcing the terms of the settlement agreement.
Id., Ex. B (Order of May 23, 2000) (emphasis added).
In September 2004, Blue Cross filed a motion seeking to enforce the settlement agreement, alleging that American Express was violating the agreement by marketing a new credit card bearing the word " Blue" on its face. American Express objected, arguing that the Court lacked jurisdiction to enforce the settlement agreement as part of this case and that if it wished to enforce the agreement, Blue Cross had to file a separate lawsuit. The Court agreed in an oral ruling made on November 3, 2004. The Court acknowledged that the Supreme Court, in Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994), appeared to hold that language of the type included in the dismissal order in this case was sufficient to permit a district court to retain jurisdiction following a dismissal to enforce a settlement agreement. But the Court, relying on several recent decisions by the Seventh Circuit, including Jessup v. Luther, 277 F.3d 926 (7th Cir.2002), concluded that the Seventh Circuit requires more than " retaining jurisdiction" language in order to permit continuing jurisdiction after dismissal to enforce a settlement. The Court therefore denied Blue Cross' motion to enforce the settlement agreement, leaving it to Blue Cross to file a separate lawsuit.
Blue Cross then moved to reconsider, arguing that this Court was required to follow Kokkonen. The Court orally denied this motion on the day it was presented. But Blue Cross' motion included an alternative request, made under Federal Rule of Civil Procedure 60(a)-that the Court amend the May 2000 dismissal order to conform to the parties' intention, including whatever language was necessary to allow the Court properly to retain jurisdiction to enforce the settlement agreement. For the reasons stated below, the Court grants Blue Cross' Rule 60(a) motion.
Discussion
Rule 60(a) provides that " [c]lerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time of its own initiative or on the motion of any party." Fed.R.Civ.P. 60(a). Not all errors in judgments can be corrected under Rule 60(a). " If the flaw lies in the translation of the original meaning of the judgment, then Rule 60(a) allows a correction; if the judgment captures the original meaning but is infected by error, then the parties must seek another source of authority to correct the mistake." United States v. Griffin, 782 F.2d 1393, 1396-97 (7th Cir.1986).
It is beyond question that a court may retain jurisdiction to enforce a settlement following dismissal, so long as the dismissal includes the proper language. Kokkonen makes this clear:
If the parties wish to provide for the court's enforcement of a dismissal-producing settlement agreement, they can seek to do so. When the dismissal is pursuant to Federal Rule of Civil Procedure 41(a)(2), which specifies that the action " shall not be dismissed at the plaintiff's insistence save upon order of the court and upon such terms and conditions as the court deems proper," the parties' compliance with the terms of the settlement contract (or the court's " retention of jurisdiction" over the settlement contract) may, in the court's discretion, be one of the terms set forth in the order. Even when, as occurred here, the dismissal is pursuant to Rule 41(a)(1)(ii) (which does not by its terms empower a district court to attach conditions to the parties' stipulation of dismissal) we think 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.
Kokkonen, 511 U.S. at 381-82, 114 S.Ct. 1673. The Seventh Circuit likewise has stated that by incorporating a settlement agreement into a dismissal order, the district court may properly retain jurisdiction to enforce the agreement's terms. See Abbott Laboratories v. CVS Pharmacy, Inc., 290 F.3d 854, 857 (7th Cir.2002).
In this case, it is undisputed that both Blue Cross and American Express intended for this Court to retain jurisdiction to enforce their settlement agreement. Their agreement in this regard was clear and unambiguous: " [t]he parties agree that the District Court will retain jurisdiction to enforce this Agreement in the event of an allegation of its breach." Motion for Reconsideration (etc)., Ex. A ¶ 1.
The Court, however, did not properly translate the parties' intention when it entered the dismissal order. As the Court noted in its oral ruling denying the motion to enforce the settlement, we relied on Kokkonen, believing that it was sufficient simply to include language retaining jurisdiction. But as the Court later ruled, subsequent developments have revealed that our belief was incorrect.
The Court finds that this is an error that may be corrected under Rule 60(a). That Rule does not permit " ‘ changes that alter the original meaning to correct a legal or factual error,’ " but it authorizes " ‘ changes that implement the result intended by the court at the time the order was entered.’ " Kokomo Tube Co. v. Dayton Equipment Servs. Co., 123 F.3d 616, 623 (7th Cir.1997) (quoting Wesco Prods. Co. v. Alloy Automotive Co., 880 F.2d 981, 984 (7th Cir.1989)). The amendment of the May 2000 dismissal order requested by Blue Cross falls into the latter category. Blue Cross simply wants to fix the dismissal order so that it provides what both parties and the Court intended at the time: retention by this Court of jurisdiction to enforce the settlement agreement.
There is, as the Court has pointed out to Blue Cross, some risk that the Seventh Circuit will not see it the same way as this Court does if there is ultimately an appeal. If so, all of Blue Cross' efforts will be for naught, as jurisdiction will be found lacking, and Blue Cross will be forced to go back to square one. But Blue Cross is entitled to bear that risk if it so chooses. The relief it seeks is appropriate under Rule 60(a), and accordingly, the Court grants the motion to amend the judgment.
Conclusion
For the reasons stated above, the Court grants plaintiff's motion to amend the judgment [docket # 57-2]. The Clerk is directed to enter an amended judgment stating as follows:
Nunc pro tunc May 23, 2000, the stipulated motion for dismissal with prejudice, pursuant to Federal Rule of Civil Procedure 41(a)(1), and with each party bearing its own costs and attorney's fees is granted. The parties are directed to comply with the terms of the settlement agreement, which is hereby incorporated into the judgment. The Court shall retain jurisdiction over this matter for purposes of enforcing the terms of the settlement agreement.