Alliance for Water Efficiency v. James Fryer, 808 F.3d 1153

Alliance for Water Efficiency (AWE) hired consultant James Fryer to analyze urban water demand elasticity during droughts; several sponsors funded the project.
AWE disliked Fryer’s draft and sued to prevent publication; California Department of Water Resources (DWR), a sponsor, supported Fryer presenting findings under DWR’s sponsorship.
At a March 13, 2014 hearing the parties (and the magistrate) announced a binding settlement core: Fryer would remove AWE’s name from his report and could issue a report for DWR; AWE would issue its own report for remaining sponsors.
Parties failed to execute a complete written agreement; disputes arose when Fryer circulated a report naming organizations that had worked with him through AWE.
The magistrate judge entered an injunction broadly restricting Fryer from naming Project Advisory Committee members and other entities unless those entities proactively consented, and imposing other publicity-related restrictions on both sides.
The Seventh Circuit vacated the injunction: federal jurisdiction over the original copyright claim was lacking, diversity jurisdiction supported enforcement of the settlement, but the injunction exceeded the parties’ March 13 agreement and thus could not stand; remedies for breach are damages per the settlement terms.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Federal-question jurisdiction via Copyright Act	AWE: report is a "work made for hire," giving AWE copyright ownership and federal jurisdiction	Fryer: no written signed instrument making the work "for hire"; thus no federal copyright claim	No federal-question jurisdiction: AWE failed to allege statutory "work for hire" requirements
Diversity jurisdiction and enforceability of settlement	AWE: corporation is plaintiff; amount > $75,000; federal court may enforce settlement	Fryer: AWE is merely conduit for sponsors; individual grants don't exceed $75,000 so no diversity	Diversity exists between AWE (IL) and Fryer (CA) and amount in controversy satisfied; federal court may enforce settlement under Kokkonen
Scope of injunctive relief (prior restraint)	AWE: injunction needed to prevent implication that AWE sponsored Fryer’s report; restrict naming of entities that worked through AWE	Fryer: injunction is a prior restraint on speech and exceeds parties’ agreement; he only agreed to remove AWE’s name	Court declined to decide First Amendment issue; injunction vacated because it imposed terms beyond the March 13 settlement
Available remedy for alleged breach	AWE: sought injunctive enforcement of broader written draft terms	Fryer: only bound by March 13 terms; other draft terms unsigned and unenforceable	Breach remedies limited to damages (or suit per settlement venue clauses); injunction vacated

PFT Roberson, Inc. v. Volvo Trucks N. Am., 420 F.3d 728 (7th Cir. 2005) (court may not supply contested contract terms when parties have not agreed)
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994) (federal courts may enforce settlement agreements under their ancillary jurisdiction)
Snepp v. United States, 444 U.S. 507 (1980) (post‑publication damages/restraint principles for secret‑agent nondisclosure; prior restraints disfavored)
Bell v. Hood, 327 U.S. 678 (1946) (failure on merits does not deprive district court of jurisdiction over properly pleaded federal claim)
Snyder v. Harris, 394 U.S. 332 (1969) (separate persons' claims cannot be aggregated to meet diversity jurisdiction amount requirement)