Plant Food Systems, Inc. v. Foliar Nutrients, Inc.
6:11-cv-01880
M.D. Fla.Oct 3, 2012Background
- Settlement dispute arises from prior patent litigation and a June 2005 Settlement Agreement between Foliar Nutrients and Plant Food Systems.
- The Patent case was dismissed with prejudice; the Court did not reserve jurisdiction to enforce the Settlement Agreement.
- Plaintiff filed this action in 2011 seeking declaratory judgment, breach, and reformation related to the Settlement Agreement.
- Foliar counterclaims for breach, breach of implied covenant, and fraud were filed; Plaintiff alleged jurisdiction based on federal questions or diversity.
- Court questioned subject matter jurisdiction because the operative claims are contractual/state-law in nature and there was no complete diversity or clear federal question.
- Court examines Kokkonen requirements and Eleventh Circuit guidance on when a settlement agreement can create or retain federal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has subject matter jurisdiction over the Amended Complaint. | Plaintiff asserts federal question/diversity jurisdiction. | Foliar contends no independent basis exists for jurisdiction. | No federal subject matter jurisdiction over the Amended Complaint. |
| Whether the Settlement Agreement or Kokkonen permits federal jurisdiction to adjudicate enforcement. | Settlement terms and jurisdiction clause purportedly confer federal jurisdiction. | No order retaining jurisdiction; Kokkonen required a court order to enforce. | Settlement not part of a court order; no jurisdiction retained. |
| Whether leave to amend could cure jurisdictional defects. | Rule to amend to plead proper jurisdiction; possibly add patent-related theories. | Amendment would be futile or improper; jurisdiction not established. | Leave to amend denied; amendments would not establish jurisdiction. |
| Whether the counterclaims provide independent federal jurisdiction or save the case through realignment. | Counterclaims may arise independently; could provide federal basis. | Counterclaims are not independent of the main claim and lack jurisdictional basis. | Counterclaims do not independently create jurisdiction; case remains lacking jurisdiction. |
Key Cases Cited
- Kokkonen v. Guardian Life Insurance of America, 511 U.S. 375 (1994) (enforcement of settlement requires a court order to retain jurisdiction)
- Anago Franchising, Inc. v. Shaz, LLC, 677 F.3d 1272 (11th Cir. 2012) (mere party agreement insufficient; court must retain jurisdiction by order)
- Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988) (§1338 jurisdiction requires patent-law centrality in each theory)
- Horton v. Liberty Mut. Ins. Co., 367 U.S. 348 (1961) (Horton discusses use of counterclaims for jurisdiction; not conclusive here)
- Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805 (11th Cir. 2003) (declaratory judgment amount in controversy; need independent jurisdictional basis)