Streeteasy, Inc. v. Chertok, 752 F.3d 298

StreetEasy sued Chertok and co-founders over 2006-2007 corporate actions and domain control; StreetEasy sought declaratory relief, breach of fiduciary duty, and Anticybersquatting claims.
Parties reached a settlement on January 24, 2012 during a settlement conference with Judge Peck; transcript described terms and dismissal with prejudice.
The dismissal order did not expressly retain jurisdiction or incorporate the settlement terms.
Post-settlement, StreetEasy sought signatures on Series A documents; Proskauer opinion and certificates surfaced, prompting Chertok to challenge the actions as unauthorized.
Chertok moved under Rule 60(b) to vacate the dismissal; the district court later enforced the settlement, sanctioned Chertok, and held him in contempt; sanctions and fees were awarded, then vacated or remanded on appeal.
Court vacates enforcement of the settlement, vacates sanctions, and remands for reconsideration of monetary sanctions in light of jurisdictional and notice defects.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court had jurisdiction to enforce the settlement	StreetEasy asserts ancillary jurisdiction via dismissal incorporating the settlement	Chertok argues no retention or incorporation in dismissal order	No ancillary jurisdiction; vacate enforcement order
Whether Rule 11 sanctions were proper	StreetEasy contends sanctions warranted for unfounded contentions	Chertok contests the basis and notice for some sanctions	Sanctions vacated in part; remand for reconsideration amount
Whether notice and process for sanctions complied with due process	StreetEasy's Rule 11 motion gave sufficient notice of sanctioned conduct	Chertok lacked notice for one asserted sanctionable representation	Due process not satisfied for the non-noticed representation; vacate related sanction
Whether settlement was properly treated as binding by the court	Settlement transcript made the agreement binding without a written document	Settlement not binding without writing	District court erred in sanctioning for mischaracterization of binding status; remand for reconsideration
Scope of enforcement and contempt remedies absent proper jurisdiction	Enforcement aligned with settlement and court’s authority	Lack of jurisdiction invalidates contempt	Remand to determine proper sanctions amount; enforcement orders vacated

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (U.S. 1994) (federal dismissal lacks retention of settlement enforcement absent incorporation)
In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d 113 (2d Cir. 2011) (settlement enforcement depends on retention or incorporation in dismissal)
Perez v. Westchester County Dep’t of Corr., 587 F.3d 143 (2d Cir. 2009) (settlement enforcement via ancillary jurisdiction when incorporated)
Roberson v. Giuliani, 346 F.3d 75 (2d Cir. 2003) (enforcement of settlement as ancillary jurisdiction)
Williams v. United States, 947 F.2d 37 (2d Cir. 1991) (subject-matter jurisdiction cannot be created by estoppel or consent)
In re PharMor, Inc. Sec. Litig., 172 F.3d 270 (3d Cir. 1999) (dismissal references to settlement do not automatically incorporate)
Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170 (2d Cir. 2012) (objective standard for Rule 11 sanctions; notice requirements)
Kiobel v. Millson, 592 F.3d 78 (2d Cir. 2010) (sanctions standards for factual contentions)
Ted Lapidus, S.A. v. Vann, 112 F.3d 91 (2d Cir. 1997) (due process notice requirement for sanctions)
Ciaramella v. Reader's Digest Ass’n, Inc., 131 F.3d 320 (2d Cir. 1997) (contextual consideration of settlement terms and binding effect)