Opinion
No. 3:17-CV-1883 (VLB)
2020-05-20
Rebecca M. MURILLO, Plaintiff, v. A BETTER WAY WHOLESALE AUTOS, INC. and Westlake Services, LLC, Defendants.
Daniel S. Blinn, Kenneth A. Votre, Michael S. Taylor, Brian Lewis Bromberg, Bromberg Law Office, P.C., NYC, Brendan Lorenz Mahoney, Scott T. Garosshen for Plaintiff. Brendan H. Little, Sean M. O'Brien, Kellen Patrick Coppola, Lippes Mathias Wexler, Friedman LLP, Buffalo, NY, for Defendant.
Daniel S. Blinn, Kenneth A. Votre, Michael S. Taylor, Brian Lewis Bromberg, Bromberg Law Office, P.C., NYC, Brendan Lorenz Mahoney, Scott T. Garosshen for Plaintiff.
Brendan H. Little, Sean M. O'Brien, Kellen Patrick Coppola, Lippes Mathias Wexler, Friedman LLP, Buffalo, NY, for Defendant.
MEMORANDUM OF DECISION DENYING CONSENT MOTION TO VACATE JUDGMENT
Vanessa L. Bryant, United States District Judge
Before the Court is the parties’ joint motion [Dkt. 91] to vacate the Court's judgment in favor of Plaintiff [Dkt. 84] and certain rulings, including the Court's decision confirming the arbitration award [Dkt. 58] and reaffirmation of that decision on reconsideration [Dkt. 71]. During the pendency of their appeal, the parties reached a settlement contingent on vacatur of the judgment and certain rulings. [Dkt. 91 (Mot. to Vacate J.) at 1]. The Court has jurisdiction over the parties’ motion for vacatur because the appeal has been dismissed without prejudice to reinstatement pursuant to the parties’ stipulation. See [Dkt. 88 (2d Cir. Order granting stipulation)]. For reasons set forth herein, the Court DENIES the parties’ motion to vacate the judgment.
Background
The Court assumes the parties’ familiarity with the underlying facts and need not rearticulate them. In short, Plaintiff, a consumer, claimed that Defendants, a used automobile dealership and a financing company, engaged in unfair and deceptive trade practices in violation of state and federal law in connection with the sale and financing of a used automobile. [Dkt. 1 (Compl.)]. The Defendants moved to stay the proceeding and compel arbitration, then sought to vacate the award after the arbitrator found in Plaintiff's favor and awarded her, inter alia , punitive damages in the amount of twenty-five times her compensatory damages. See [Dkt. 71 (Order on Recons.) at 2]. The Court affirmed the arbitration award pursuant to § 9 of the Federal Arbitration Act, 9 U.S.C. § 9. [Dkt. 58 (Ord. granting Mot. to Affirm Arbitration; denying Mot. to Exclude; denying Mot. to Strike)]. The Defendants’ then filed a motion for reconsideration that repeated verbatim the exact same arguments which it previously argued and on which the court had already ruled. [Id. at 8-10]. The Second Circuit lifted the abeyance of Defendant's appeal [Dkt. 76] and judgment entered for Plaintiff on December 11, 2019. [Dkt. 84].
Legal Standard
Fed. R. Civ. P 60(b) sets forth the grounds on which a court, in its discretion, can rescind or amend a final judgment or order. It provides, in pertinent part:
On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence ...; (3) fraud ..., misrepresentation, or other misconduct by an adverse party; (4) the judgment is void; (5) the
judgment has been satisfied, released, or discharged, ...; or (6) any other reason justifying relief from the operation of the judgment.
Properly applied Rule 60(b) strikes a balance between serving the ends of justice and preserving the finality of judgments. Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986). Motions for vacatur following a post-judgment settlement are addressed under the residual clause, Fed. R. Civ. P. 60(b)(6). Since Fed. R. Civ. P. 60(b)(6) seeks extraordinary relief, it may only be invoked under exceptional circumstances. Id.
In United States Bancorp Mortg. Co. v. Bonner Mall P'ship , the Supreme Court held that "exceptional circumstances do not include the mere fact that [a] settlement agreement provides for vacatur." 513 U.S. 18, 28, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994). When a case is settled, "the losing party has voluntarily forfeited his legal remedy by the ordinary processes of appeal or certiorari, thereby surrendering his claim to the equitable remedy of vacatur." Id. at 25, 115 S.Ct. 386. In so ruling, the Bancorp court noted that "[j]udicial precedents "are presumptively correct and valuable to the legal community as a whole," and "are not merely the property of private litigants." Id. at 26, 115 S.Ct. 386 (internal quotations and citations omitted). As a result, "to allow a party who steps off the statutory path to employ the secondary remedy of vacatur as a refined form of collateral attack on the judgment would—quite apart from any considerations of fairness to the parties—disturb the orderly operation of the federal judicial system." Id.
While Bancorp held that "mootness by reason of settlement does not justify vacatur of a judgment under review," conceivable cases exist where exceptional circumstances warrant vacatur as a matter of equity. Id. at 29, 115 S.Ct. 386. "Exceptional circumstances, however, do not include "the mere fact that the settlement agreement provides for vacatur—which neither diminishes the voluntariness of the abandonment of review nor alters any of the policy considerations ..." Id. at 29, 115 S.Ct. 386.
"[W]hen a judgment is mooted by settlement, vacatur is usually not justified because the social value in preserving precedents is not outweighed by equitable considerations." Major League Baseball Properties v. Pacific Trading Cards, Inc. , 150 F.3d 149, 151 (2d Cir. 1998).
Discussion
Following the Court's entry of judgment, the parties participated in the Second Circuit's civil mediation program and reached a confidential financial resolution contingent on the Court granting vacatur. [Dkt. 91 at 2-3]. The parties argue that the Defendants are primarily concerned with the precedential effect of the decision. [Id. at 3.]
In support of vacatur, the parties argue that Motta v. District Director of INS , 61 F.3d 117 (1st Cir. 1995) and Major League Baseball Properties, Inc. , 150 F.3d 149 stand for the proposition that exceptional circumstances exist when parties reach a settlement through participation in a judicial mediation program, both parties desire vacatur, vacatur is an essential term of the settlement, and the only damage to the public interest is the loss of the precedential effect of the lower court's decision. [Id. at 6-9]. The Court disagrees because this case is unexceptional. "Where the Second Circuit has seen fit to vacate district court judgments, the parties have faced truly unusual or severe hardships," none of which are presented here. Lucy v. Bay Area Credit Serv., LLC , No. 3:10-CV-1024 (JCH), 2011 WL 13344168, at *2 (D. Conn. Dec. 27, 2011). Major League Baseball Properties, Inc., 150 F.3d at 152 presented unusual circumstances: plaintiff appealed the denial of injunctive relief in a trademark case to preserve its marks against future infringers and defendant could not await the outcome of the appellate decision without risking bankruptcy. Motta v. Dist. Dir. of I.N.S. , 61 F.3d at 118 also involved the grant of preliminary injunctive relief, where the district court stayed deportation during the pendency of the Board of Immigration Appeal's proceeding. In contrast to preliminary injunctive relief, this case was decided on the merits.
While Motta and Major League Baseball Properties, Inc. both involved the appellate courts’ initiation of settlement discussions, these cases do not establish a general safe harbor providing for vacatur whenever parties reach a mutually satisfactory resolution through judicially encouraged settlement discussions on appeal. Such a broad interpretation of these decisions would run contrary to the Supreme Court's holding in Bancorp . "Since Major League Baseball , far more district courts within this Circuit have issued decisions denying vacatur than approving it, both in circumstances where the settlement was conditioned on vacatur and where vacatur was sought subsequent to the settlement." Young v. Cooper Cameron Corp. , No. 04 CIV. 5968 LTSGWG, 2008 WL 1748462, at *3 (S.D.N.Y. Apr. 15, 2008) (citing examples).
As other district courts have recognized, the Second Circuit has not defined what constitutes "exceptional circumstances." Pitterman v. Gen. Motors LLC , No. 3:14-CV-00967 (JCH), 2018 WL 6435902, at *2 (D. Conn. Dec. 7, 2018). On the contrary, "[b]y nature, circumstances that are "exceptional" elude such limits or classification." Microsoft Corp. v. Bristol Tech., Inc., 250 F.3d 152, 155 (2d Cir. 2001).
Here, the equities militate in favor of denying vacatur. The sole private interests advanced by the parties in favor of vacatur is the desire to avoid appellate costs and the defendant's desire to avoid the preclusive effect of the judgment. But the private considerations of mutual benefits and the desire to avoid adverse precedential decisions exist in virtually all post-judgment settlements and do not constitute "exceptional circumstances." Lucy , 2011 WL 13344168, at *2. Nor have the parties offered any particularly unusual hardships arising out of the preclusive effect of the judgment.
Moreover, unlike Microsoft Corp. v. Bristol Tech., Inc., 250 F.3d 152, 155 (2d Cir. 2001), where the district court's decision concerned questions of state law, the Court's opinion builds upon federal decisional law and addressed a constitutional issue raised by the Defendants, which are of vital importance to the public. Even though the district court decision is not binding precedent, "even if this case were reversed on appeal, it would serve the salutary function of leading to an appellate decision that would, unlike this court's decision, supply binding precedential effect." Aetna Cas. & Sur. Co. v. Home Ins. Co. , 882 F. Supp. 1355, 1358 (S.D.N.Y. 1995) (denying vacatur).
Apart from jurisprudential considerations, vacatur in this instance would not promote judicial efficiencies. At issue was the interpretation of a form arbitration provision contained in the purchase order and retail installment contract. [Dkt. 58 at 1, 9]. When requesting a stay of enforcement of the judgment, Defendant asserted that "ABW is a large car dealer conducting business in Connecticut. It sells nearly 5,000 cars per year and generates revenues of over $75,000,000 per year. It is financially strong and can pay the judgment if necessary. It maintains a stock of over 700 vehicles." [Dkt. 60 (Def. Mot. to Stay) at 3]. Defendant A Better Way Wholesale, Inc. is a frequent party to consumer litigation in this District, having defended at least eighteen separate matters. The Court's brief review of cases filed within the last year shows that Defendant has sought arbitration in two other cases. See, e.g. Shohan v. A Better Way Wholesale Autos, Inc. , 3:19-cv-00374-AVC, Story et al. v. A Better Way Wholesale Autos, Inc. et al. , 3:18-cv-01955-MPS. It appears to the Court that, in all likelihood, the interpretation of these arbitration provisions will appear before the judges of this District again and the courts and future litigants should not be made to relitigate the issue.
The maxim that ‘he who seeks equity must do equity’ is apt here. The Defendants, who now seek relief from the preclusive effect of the judgment in future matters, litigated this case in a protracted manner. It is telling that the parties’ requested vacatur is not limited to the judgment but includes three separate written opinions, including the Court's ruling on Defendant's frivolous motion for reconsideration [Dkt. 71]. The Defendants had ample opportunity to resolve the claims prior to entry of the judgment. This "wait and see" strategy was contemplated in Bancorp , 513 U.S. at 28, 115 S.Ct. 386, predicting that some parties will choose to "roll the dice rather than settle in the district court, or in the court of appeals, if, but only if, an unfavorable outcome can be washed away by a settlement-related vacatur." The outcome of this choice does not constitute "exceptional circumstances" to warrant disturbing the orderly operation of the federal judicial system. As such, there is no basis for vacatur, and the parties’ motion must be denied.
Conclusion
For the above stated reasons, the parties’ joint motion for vacatur of the judgment and other rulings is DENIED with prejudice.