Silver Dream LLC v. 3MC, Inc.
2:10-cv-03658
E.D. La.Sep 8, 2011Background
- Silver Dream owns the copyright to a Saints-themed fleur-de-lis design; Silver Salon sells a knock-off in New Orleans.
- Plaintiff filed a copyright infringement and unfair competition suit on Oct 16, 2010.
- Parties negotiated a Settlement Agreement in early Dec 2010 with Louisiana law governing interpretation, including monetary payment and affidavits detailing manufacture, sales, inventory, and a permanent injunction.
- On Dec 20, 2010, Chen defendants paid $1,850, produced settlement affidavits, surrendered infringing inventory, and agreed to a consent injunction, but Silver Dream did not dismiss the case.
- In Feb 2011 Silver Dream terminated the settlement under Paragraph 7, claiming false statements in the affidavits; Malibu International was identified as the supplier, later added as a defendant.
- The court granted the defendants’ motion to enforce the settlement, dismiss the case, and award fees; Silver Dream was authorized to enforce the injunction and potentially pursue termination if falsity of facts were established.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the settlement against Silver Dream | Silver Dream contends the agreement is enforceable and may terminate only if false facts are shown. | Defendants argue the settlement should be enforced and dismissed, with termination only if material facts are proven false. | Settlement enforced; agreement remains binding. |
| Proper standard to terminate under Paragraph 7 | Silver Dream can terminate if it demonstrates any material fact in the affidavits is false. | Termination requires proof of material falsity supported by competent evidence. | Termination right requires genuine dispute supported by competent evidence; not shown. |
| Admissibility of challenged evidentiary materials | Receipts and emails undermine the affidavits by showing different sales or wholesalers. | Receipts are unsworn/hearsay or insufficient without admissible form; not competent to create dispute. | Challenged materials deemed inadmissible or insufficient to create a genuine issue. |
| Application of Louisiana contract law to the settlement | Contract should be construed to allow termination for false affidavits. | Contract, read plainly, requires proving material falsity with admissible evidence; otherwise enforce. | Louisiana law governs; agreement enforced as written; no basis to void it. |
Key Cases Cited
- Bell v. Schexnayder, 36 F.3d 447 (5th Cir. 1994) (court has inherent power to recognize and enforce settlement agreements)
- Lefevre v. Keaty, 191 F.3d 596 (5th Cir. 1999) (Louisiana law governs settlement interpretation in diversity cases)
- Rivett v. State Farm Fire and Casualty Co., 508 So.2d 1356 (La. 1987) (essential elements of a compromise; mutual intent and reciprocal concessions)
- Hebert v. Webre, 982 So.2d 770 (La. 2008) (contract interpretation; enforce written agreements when clear)
- Preston Law Firm, L.L.C. v. Mariner Health Care Mgmt. Co., 622 F.3d 384 (5th Cir. 2010) (writing may be satisfied by emails to form a valid compromise)