Larry McCALL-BEY, Plaintiff-Appellee, Cross-Appellant, v. Gayle FRANZEN, et al., Defendants-Appellants, Cross-Appellant
Nos. 85-2415, 85-2501
United States Court of Appeals, Seventh Circuit
Argued and Decided Sept. 20, 1985. Opinion Nov. 13, 1985.
Rehearing and Rehearing En Banc Denied Feb. 12, 1986.
777 F.2d 1178
Perhaps even more troubling, a government may find itself under the sway of the very people whose criminal activities produced the loss from which it suffers. RICO was directed in part against the infiltration of governments by organized criminals. Those who bend the government to their ends may also be able to prevent it from filing suit. The machinations of the wrongdoers, combined with the difficulty of inducing agents of the government to exact maximum effort at all times, may counsel permitting suits by indirect victims more freely in RICO cases than in the law of antitrust.
The Court anticipated a similar possibility in Illinois Brick. It said that an indirect purchaser may sue “where the direct purchaser is owned or controlled by” the wrongdoer. 431 U.S. at 736 n. 16, 97 S.Ct. at 2070 n. 16. See In re Midwest Milk Monopolization Litigation, 730 F.2d 528 (8th Cir.1984); Arizona v. Shamrock Foods Co., 720 F.2d 1208 (9th Cir.1984). Doubtless indirectly injured parties could recover under RICO when they show that the directly injured party was under the continuing control or influence of the defendant or his henchmen. The plaintiffs in this case have not offered to show this, however, and they could not: the County has filed its own suit.
As a rule it is for the County rather than the federal courts to decide how best to induce its agents to protect the interests of the people. The County might establish qui tam actions in state court or offer bonuses to those who prosecute suits. It could authorize derivative litigation by private attorneys general if the proper authorities decline to act. And perhaps, whether or not the County adopts such devices, the attorneys who initiate enforcement through suits such as this one are entitled to fees under the “common fund” doctrine of Trustees v. Greenough, 105 U.S. (15 OTTO) 527, 26 L.Ed. 1157 (1881). None of these possibilities need detain us. No matter what the best way to motivate suit may be, only the County is entitled to prosecute under RICO this claim for lost taxes. The plaintiffs here do not act for or in the right of the county, so their suit was properly dismissed.
AFFIRMED.
James A. Geocaris, Jenner & Block, Chicago, Ill., for plaintiff-appellee, cross-appellant.
Before ESCHBACH and POSNER, Circuit Judges, and SWYGERT, Senior Circuit Judge.
POSNER, Circuit Judge.
The defendants, who are corrections officials of the State of Illinois, appeal under
We address two questions. The first is whether the district judge had jurisdiction to adjudicate a dispute arising under the settlement agreement; the second is whether, if so, his resolution of that dispute in the plaintiff‘s favor can be sustained. The jurisdictional issue is extremely—unnecessarily—difficult; although concluding ultimately that the judge did have jurisdiction, we think that a full examination of the issue may serve to prevent similar issues from arising in the future.
The plaintiff filed his original suit in 1980. The suit was under section 1 of the Civil Rights Act of 1871, now
On December 13, 1984, five days after the settlement agreement had been signed, the district judge dismissed the plaintiff‘s suit in an order that reads in its entirety, “Order cause dismissed pursuant to stipulation of the parties.” The record does not indicate that the judge, when he signed the order, had ever seen either the settlement agreement or the parties’ stipulation. The stipulation carries no date of execution, but it was not filed with the district court till December 18, five days after the court had dismissed the suit. It states that the parties “by and through their respective counsel, . . . hereby stipulate pursuant to Rule 41(a) of the Federal Rules of Civil Procedure to dismissal of this cause according to the terms and conditions of the [settlement agreement] entered into by the parties. Said dismissal shall be with prejudice and without costs.” The judge was, however, aware that settlement negotiations were in progress, and we may assume was advised when he signed the order dismissing the case that a settlement had been reached, as indeed it had been. The settlement agreement had been signed as we said on December 8, five days before the order was issued and ten days before the stipulation referred to in the order was filed.
When the settlement agreement was signed, the plaintiff was no longer in the work-release program, having been sent to a regular prison the previous month because he had violated the rules of the work-release center. But on February 18, 1985, roughly two months after the suit was dismissed, the plaintiff wrote a letter to the district judge, stating, “I now would like to file a Petition for Writ of Habeas Corpus alleging that I am being detained under an unconstitutional disciplinary action.” The judge treated this as a petition to enforce the settlement agreement, ordered the defendants to respond (which they did), concluded that the defendants had indeed violated the settlement agreement by failing to give the plaintiff due process of law in the disciplinary proceeding that had resulted in the revocation of his work release, and ordered the defendants to put the plaintiff back into the work-release program.
The prison disciplinary committee had found that the plaintiff had committed five disciplinary infractions in the course of refusing to take off his undershorts to allow a guard to search for drugs. The judge found that the committee had not explained the grounds for its decision adequately, at least with respect to four of the five infractions charged. The judge said, “the report [of the committee] states that plaintiff admitted not removing his shorts [and thus disobeying a direct order—one of the infractions charged], but says nothing about the remaining charges and the evidence relied upon to find the plaintiff guilty as charged.” He added, “the only violation possibly supported by the evidence of this record is plaintiff‘s violation of DR-403, ‘Disobeying a Direct Order.‘” Among other things the judge ordered the defendant to expunge from the record any reference to the charges, except disobeying a direct order; the main relief ordered, however, was to transfer the plaintiff back into the work-release program, and that is the only part of the order that the defendants have appealed from.
Regarding jurisdiction to enforce the settlement agreement, the judge said only that the plaintiff had “moved this Court for an order to enforce settlement pursuant to the Court‘s dismissal of this cause on September 4, 1984 and the Court‘s retention of
When an equity case ends in a permanent injunction, the trial court, with or without an explicit reservation of jurisdiction, retains jurisdiction to enforce the injunction, as by contempt proceedings. See, e.g., Suntex Dairy v. Bergland, 591 F.2d 1063, 1068 (5th Cir.1979); In re Corrugated Container Antitrust Litigation, 752 F.2d 137, 142 (5th Cir.1985). No one wants an injunction that cannot be enforced, or that can be enforced only by bringing a fresh suit, which might have to be in a different court; for a change in a party‘s residence, or other changes, might divest the original court of jurisdiction of the second action—if an independent basis of jurisdiction for that action were necessary. An injunction is supposed to be a swift and effective remedy, summarily enforceable through contempt or other supplementary proceedings in the court that issued the injunction. It would make no difference that the injunction had been issued pursuant to a settlement, as in the Corrugated Container case. But no consent decree or other injunction was issued in this case.
When a court grants a voluntary dismissal of a case under
We state our position in this wishy-washy manner with “could be argued‘s” and “perhaps‘s” because the issue of the specific enforceability of terms and conditions imposed under
We are therefore not surprised to have found no case where the order of dismissal imposed conditions in the plaintiff‘s favor (unless, of course, what was being dismissed was a counterclaim, so that the plaintiff was really the defendant). It is because the provision in
As this point and the language and history of
Such conditions will, if violated, normally just convert a dismissal without prejudice into a dismissal with prejudice. Neither the language nor history of the rule suggests that it empowers the judge to order specific performance of the parties’ undertakings in the settlement agreement. As we have said,
Before exploring that basis we shall note as an aside, but one important for future reference in this and possibly other cases, that although the parties wanted the
One might argue that since the judge‘s order does not mention
It might however be argued that the plaintiff‘s case had actually been dismissed by stipulation—by a stipulation that recited that dismissal was with prejudice—before the judge issued his order, so that the order was a nullity. Although filed in court after the order of dismissal, the stipulation has no date of execution on it and may for all we know have been executed before December 13. But this would make no difference.
The requirement that the stipulation be filed in court is not merely a technicality, though treated as one in Oswalt v. Scripto, Inc., 616 F.2d 191, 194-95 (5th Cir.1980). It provides a permanent record that facilitates the application of the doctrine of res judicata to subsequent related litigation in those cases where (as here) the stipulation recites that dismissal is with prejudice, and it provides information essential to the management of a judicial docket. If parties did not have to notify the court that they had ended their dispute, the court would have no idea of the size of its backlog without inquiring into the status of every inactive case. We need not consider whether the requirement of filing may be waived in particular cases if necessary to prevent injustice, as none of the parties asks that it be waived here. They treat the judge‘s order, rather than the stipulation, as the terminating event of the litigation, and the order necessarily was made under
There is a further point, which gets us back on the main track of our analysis. If indeed the case was dismissed under
The picture is blurred slightly by a qualification implicit in Gully, emphasized in Harms, and repeated by us in Bernstein: that resolution of the contract dispute not require an interpretation of the federal law from which the contract right descends. Maybe the settlement agreement in this case, in allowing the defendants to expel the plaintiff from the work-release program for disciplinary infractions, should be read to bring in (implicitly) the principles of due process of law to guide the disciplinary proceedings; if so it might seem that the qualification would come into play and there would be federal jurisdiction. But we think not. If two street vendors signed a contract which provided that it could not be terminated except for cause as determined in a hearing conforming to the standards of the due process clause of the Fourteenth Amendment, a breach of the provision could not be sued on in federal court. There would be no federal interest in such a suit. Cf. Currie, The Federal Courts and the American Law Institute: Part II, 36 U.Chi.L.Rev. 268, 277 (1969); Estate of Watson v. Blumenthal, 586 F.2d 925, 929 (2d Cir.1978). The parties would be engaged in a transparent attempt to confer federal jurisdiction over local contract disputes by agreement. They cannot do that.
Another interpretation of the plaintiff‘s petition, but one that also cannot help him, is that it was intended to invoke the district judge‘s power under
We thus reject the view taken by the Sixth Circuit in Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1371 (6th Cir.1976), that federal courts have an inherent power to enforce settlements of litigation before them, in favor of the contrary view of the Fourth Circuit in Fairfax Countywide Citizens Ass‘n v. County of Fairfax, supra. Speaking with great respect, we think the Sixth Circuit in Aro confused the power of a district judge under
Although this court recently cited Aro with approval, see Sudeikis v. Chicago Transit Authority, 774 F.2d 766, 768 (7th Cir.1985), it did so in a case where it was affirming the dismissal of the enforcement action, and it did not discuss the jurisdictional question, or the Fourth Circuit‘s answer to it in Fairfax. An earlier Sixth Circuit decision on which the court in Aro relied, Kukla v. National Distillers Products Co., 483 F.2d 619 (6th Cir.1973), is not in point; the court had entered a final judgment based on a settlement, and one of the parties challenged the judgment on the ground that he had not agreed to the terms of the settlement. There was no issue of jurisdiction; the issue was the district court‘s authority to base its judgment on the settlement agreement.
An example will indicate why we doubt the far-reaching power claimed for federal judges by the Sixth Circuit in Aro (and only in Aro). Suppose the parties to a diversity suit move for dismissal under
In emphasizing that unless jurisdiction is retained the settlement agreement requires an independent basis of federal jurisdiction in order to be enforceable in federal rather than state court, we wish to make clear that we are not suggesting that such agreements are not enforceable. The issue of concern here is whether a settlement agreement is enforceable in federal district court without an independent jurisdictional basis; enforceable, that is, as if the district judge had retained jurisdiction to enforce it, whether or not he did so. As an illustration of the difference between the issue of jurisdiction to enforce a settlement agreement and the issue of the enforceability of such an agreement in a case over which the court has jurisdiction, consider Lyles v. Commercial Lovelace Motor Freight, Inc., 684 F.2d 501 (7th Cir.1982). The parties made an oral agreement to settle their case, and the district court dismissed the case in reliance on it, but with leave to reopen. Later the plaintiff sought to reopen the case because he had decided that he didn‘t want to settle it. The district court refused, on the ground that the plaintiff was bound by his oral agreement. This court affirmed. There was no question of federal jurisdiction over the plaintiff‘s suit, which was not a suit to enforce the settlement agreement but a civil rights suit (like the original suit of the plaintiff in this case). This was true whether one viewed the effort to reopen as a motion under
In Cummins Diesel Michigan, Inc. v. The Falcon, 305 F.2d 721, 723 (7th Cir.1962), the issue was again whether a party could back out of the settlement agreement that it had made, and this court held that it could not, and upheld a decree based on the agreement. Again there was no question of the court‘s jurisdiction, since the plaintiff‘s action (a maritime action) had not been dismissed; the question was the effect of the settlement on that action. It is as if the plaintiff in this case brought a new civil rights suit and the defendants set up in bar of it the settlement agreement which they had made with him. There would be no question of jurisdiction to consider the impact of the agreement on the plaintiff‘s rights. But what a plaintiff may not do is to obtain enforcement in a federal court of a settlement agreement after the litigation in which that agreement was made has been unconditionally dismissed, unless there is an independent basis of federal jurisdiction over a suit for breach of the agreement.
In United States v. Orr Construction Co., 560 F.2d 765, 768-69 (7th Cir.1977), finally, the settlement agreement was made, interpreted, and enforced all as part of a single litigation over which the district judge unquestionably had jurisdiction, and the challenge to his interpretation was made on appeal from his final judgment in the case, just as in Kukla.
To summarize, we have expressed profound doubts that
The order of dismissal states that it is pursuant to the parties’ stipulation; the stipulation states that the dismissal is pursuant to the terms and conditions in the settlement agreement; and one of those terms is the sentence, quoted earlier, which confers (we are assuming) a right to petition the court to enforce the agreement, and which can certainly be read to request
But this interpretation of the judge‘s order would be somewhat unrealistic in the circumstances, and we reject it. We know that the judge had been kept apprised of the settlement negotiations over a period of many months; we know that settlements between prisoners and prison officials often contemplate a continuing supervisory role for the federal court; and we know that when the plaintiff wrote his letter to the judge, the judge forthwith characterized it as a petition to enforce the agreement and proceeded to do so. The judge would not have been likely to grant such a petition in a case over which he had no jurisdiction because he had dismissed the case outright months earlier. His response is therefore some evidence that he had indeed intended to make his dismissal, though outright in form, conditional in substance; that in referring to the as yet unfiled stipulation in his order of dismissal, the judge, perhaps fully aware of the tenor and progress of the settlement negotiations and the provision in the settlement agreement for petitioning the court to enforce it, intended to honor that provision, and to this end decided to retain jurisdiction of the litigation for the very purpose of responding to the type of petition that the plaintiff filed. It would of course have been much better if the judge had made all this clearer, but we conclude that the plaintiff has shown—if barely—that the judge did retain jurisdiction of the case.
In suggesting that the district judge would have been well advised to disclose his intention to retain jurisdiction more clearly, we do not mean to suggest that to retain jurisdiction to enforce a settlement agreement a judge must make the agreement a part of the record of the case. Such a requirement would discourage settlements, at least settlements the terms of which are judicially unenforceable without the filing of a new suit, because the parties to settlements frequently do not want the terms to be made public. It would be quite enough if the judge, having read the settlement and satisfied himself that specific enforcement of its terms would not be contrary to public policy, issued an order retaining jurisdiction to enforce the settlement. We point out in this connection that
To recapitulate our discussion of jurisdiction briefly, we have suggested that
We come at last to the merits. Here we can be extremely brief. We may assume with the district judge that in conditioning the plaintiff‘s participation in the work-release program on his complying with the rules of the work-release center, the parties to the settlement agreement did not mean to give the defendants carte blanche to decide whether the plaintiff had violated those rules. The defendants were constrained by the agreement to observe proper procedures in making any determination that the plaintiff had violated a rule. We may also assume without having to decide that the district judge was correct to find that they failed to do this with regard to four of the five violations. But we think that having found that they properly determined the plaintiff to have violated the rules of the work-release center by disobeying a direct order, the judge was required to conclude that the plaintiff had violated a condition of participation in the work-release program.
Although the judge‘s order is not so clear as it might have been, we think it unlikely, to say the least, that he would have allowed the disobedience infraction to remain on the plaintiff‘s record if he had thought that the defendants had failed to observe required procedures in finding that infraction. The evidence of that infraction is far more than is necessary under the standards applicable to judicial review of prison disciplinary proceedings. See Superintendent, Massachusetts Correctional Institution v. Hill, U.S. , 105 S.Ct. 2768, 2774, 86 L.Ed.2d 356 (1985). The truth is that there isn‘t the slightest doubt that the plaintiff disobeyed a direct order and thereby violated a rule of the work-release center; and once such a conclusion is made, it follows as the night the day that the plaintiff is not entitled to participate in the work-release program. This is not to excuse the defendants’ own violations of the settlement agreement, if violations there were; but we do not think it possible to read the settlement agreement to mean that if the plaintiff violated a rule of the work-release center he could not be expelled from the work-release program if the defendants committed procedural errors in processing his alleged violations of still other rules. Otherwise there would be the curious result that the more rules the plaintiff violated, the less likely it would be that he could be expelled from the program, since the more likely it would be that in processing charges of violation the defendants would stub one of their procedural toes. An interpretation of the agreement that encourages such conduct is unreasonable, and must be rejected.
The provision that entitles the defendants to remove the plaintiff from the work-release program if he violates the rules of the work-release center is designed to protect the public safety, since a work-release program allows the convicted criminal to move about with many fewer restraints on his freedom than the ordinary prisoner; permitted this plaintiff for example to attend college in downtown Chicago. A judge may not in construing a consent decree or settlement agreement constraining public officials lightly assume that in settling the lawsuit those officials trifled with the public safety. See Alliance to End Repression v. City of Chicago, 742 F.2d 1007, 1013-15, 1020 (7th Cir.1984) (en banc).
So the order to return the plaintiff to the work-release program must be set aside. But this does not conclude the proceeding in the district court, or even our consideration of the appeal. The plaintiff‘s letter, which the district court treated as a
On remand, the district judge will have to decide whether there is any other basis on which the order that we have vacated can be sustained. We hold only that he erred in concluding that the settlement agreement entitled the plaintiff to be returned to the work-release program.
The plaintiff‘s cross-appeal seeking attorney‘s fees is dismissed. Having failed, thus far at least, to obtain any of the relief he sought by petitioning the district court, he has no legal entitlement to an award of attorney‘s fees for time incurred in those efforts. See Hensley v. Eckerhart, 461 U.S. 424, 435, 440, 103 S.Ct. 1933, 1940, 1943, 76 L.Ed.2d 40 (1983).
ORDER VACATED; CROSS-APPEAL DISMISSED.
SWYGERT, Senior Circuit Judge, dissenting.
The court today limits the authority of the district courts of this circuit to enforce settlement agreements terminating litigation pending before them. Henceforth, a district court will retain jurisdiction to enforce such agreements only if the court succeeds in evidencing an intention to retain jurisdiction. Concluding that the district court did, “if barely,” retain jurisdiction over this case, the court proceeds to reach the merits and reverses the district court‘s explicit finding that the defendants, and not the plaintiff, violated the settlement agreement. I dissent. Because it is impossible to discern from the majority‘s opinion exactly what happened a review of the relevant facts follows.
I
Larry McCall-Bey is a prisoner incarcerated at the Pontiac Correctional Facility of the Illinois Department of Corrections (“DOC“). In May 1980 McCall-Bey filed a civil rights action,
On October 29, 1984, while drafting of the final settlement documents continued, McCall-Bey received a Resident Disciplinary Report (“RDR“) charging him with violations of the following DOC Disciplinary Rules (“DR“): DR-102, assaulting any person; DR-105, dangerous disturbance; DR-203, drugs and drug paraphernalia; DR-206, intimidation or threat; and DR-403, disobeying a direct order. The district court‘s description of the events leading up to the charge follows:
During a routine search of plaintiff at the Metro, plaintiff was told to “drop his pants below his knees.” Plaintiff was then told to “reach inside the crotch of his shorts and turn it inside out.” Plaintiff refused. After being informed that he would be subject to a complete search by Metro officials, the report states that plaintiff “reached inside of his underwear crotch and removed an object covered with paper.” Plaintiff then “put the item in the commode and flushed it.” While the officer attempted to retrieve the item, the officer states that plaintiff “started wrestling with me to keep me from retrieving the item.” Plaintiff then flushed some cigarette papers down the drain and a “scuffle” ensued between plaintiff and the officer. Plaintiff was then handcuffed.
On November 1, 1984 the prison Adjustment Committee found McCall-Bey guilty of the charges. The Committee‘s statement of reasons, in its entirety, is as follows: “[Illegible] besides Disciplinary Report. Admission of Resident not taking off his shorts, when ordered by CRC Doby lead the Committee to believe that violation was committed as charged.”4
On November 23, 1984 McCall-Bey submitted a motion to reinstate the case which was granted the same day. Preparation of settlement documents nevertheless continued and the General Release and Settlement of Claims was executed by the parties on December 8, 1984.5 On December 13, 1984 the district court again dismissed the case “pursuant to stipulation of the parties.” The stipulation was not filed until December 18, 1984. The stipulation purported to dismiss the suit “pursuant to Rule 41(a),” “according to the terms and conditions” of the settlement, and “with prejudice.”
The settlement provided, inter alia, that the plaintiff would be assigned to a work-release program in order that he could attend college. In exchange, the plaintiff agreed to obey “all rules and regulations of the work release program, as well as all Illinois Department of Corrections rules.” The plaintiff further agreed that if he was disciplined for violating any of the terms or conditions of the agreement or any rule or regulation of the work release program his
On August 1, 1985 the district court denied the defendants’ motion to vacate, amend, or stay the judgment. The defendants’ emergency motion to stay the order of the district court and to expedite appeal to this court was granted on August 15, 1985. Oral argument was heard on September 20, 1985. On the same day this court issued an order, from which I dissented, vacating the district court‘s order for reasons to be explained in an opinion to follow. The mandate of this court issued on October 16, 1985.
II
I turn first to the merits of the plaintiff‘s case. The majority holds that even though the district court properly exercised jurisdiction over the plaintiff‘s motion to enforce the settlement agreement it nevertheless erred in ruling that the defendants breached the agreement. The majority holds instead that the plaintiff breached the agreement by violating a prison disciplinary rule. This holding is based on an erroneous reading of the district court‘s decision below. The majority contends that the district court found in its order of June 27, 1985, that McCall-Bey had violated DR-403, disobeying a direct order. The district court made no such finding. The district court concluded that the only violation ”possibly supported” by the record was a violation of DR-403. This qualified statement is not an explicit holding that a violation occurred. The court, however, permitted the violation of DR-403 to remain in McCall-Bey‘s record and ordered the defendants to recalculate his punishment within DR-403‘s limits.7
It is no easy matter to harmonize the district court‘s decision to permit the alteration of the plaintiff‘s record and the recalculation of his punishment with its explicit holding that the defendants breached the settlement agreement. The district court noted that the punishment imposed on McCall-Bey exceeded the maximums for a violation of DR-403 established by DOC regulations, but it is not clear why this fact, standing alone, establishes that the defendants breached the settlement. The defendants’ argument nevertheless begs the question.
In executing the settlement agreement, McCall-Bey agreed to abide by all applicable DOC rules and regulations. DOC rules mandate that prisoners in DOC custody obey all orders given by prison corrections
The Adjustment Committee report refers to the RDR, but the allegations set forth in that document are not discussed. There is no discussion of the charges and the evidence against McCall-Bey except that the report does mention McCall-Bey‘s “admission” that he did not remove his shorts. The truth is that a reader of the Adjustment Committee report would know next to nothing about the substance of the charges against the prisoner. Even if the Due Process Clause of the Constitution does not require more, the DOC‘s own regulations certainly demand more of the Adjustment Committee.
The district court cannot decide whether prison disciplinary procedures comport with constitutional, statutory and, in this case, contractual requirements unless the Adjustment Committee report provides “a record for a reviewing court to exercise its minimal review of that record to determine whether the actions of the disciplinary committee were arbitrary, capricious or an abuse of discretion.” Hanrahan v. Lane, 747 F.2d 1137, 1140 (7th Cir.1984). An Adjustment Committee report “helps to insure that prison administrators will act fairly” and “serves as the basis for federal court review.” 747 F.2d at 1141. These concerns are embodied in the DOC regulations which provide that the Adjustment Committee “shall consider all material which is relevant to the issue of whether or not the committed person committed the offense.” Simply put, the Adjustment Committee report in this case evidences no such consideration.
McCall-Bey was thus denied a hearing that comported with the procedural requirements of the DOC. The next issue we must address is whether the district court‘s finding that the disciplinary procedures utilized below against McCall-Bey were deficient should affect its determination of whether McCall-Bey or the defendants breached the settlement agreement. Even within the confines of a prison, allegations of wrongdoing must be proven in a proceeding that comports with some minimal sense of due process and fairness before they are taken as true.
The majority dismisses this concern. “The truth is that there isn‘t the slightest doubt that the plaintiff disobeyed a direct order and thereby violated a rule of the work-release center; and once such a conclusion is made, it follows as the night the day that the plaintiff is not entitled to participate in the work-release program.” It is astonishing that the majority can assert that there is not the “slightest doubt” of the plaintiff‘s guilt when there has never been a hearing of his guilt or innocence that satisfied the most minimal notions of due process and, more importantly, the requirements of the DOC itself. The charges against McCall-Bey have not been proved even under the less-than-stringent procedural requirements of the DOC. For purposes of determining who initially breached the agreement, the alleged events of October 29, 1984 simply did not occur, they are non-events. Without a proper adjudication of the charges against McCall-Bey the RDR is merely a series of unproven allegations. Therefore, the district court was clearly correct in ignoring the only “possible” rule violation in determining that the defendants breached the agreement.
The majority also suggests that the procedural errors it concedes occurred in the prison administrative hearing below can be
In addition the majority‘s contention that the violation of DR-403 must stand, even though the four other rule violations fall, strains credibility. All five charges arose out of the same incident, all five were made in the same RDR. All five charges were processed together, all five formed the basis of the defendants’ disciplinary actions. The entire disciplinary process was invalidated by the Adjustment Committee‘s violation of DOC regulations.
The district court‘s opinion is not a model of clarity. Fortunately, our limited task as an appellate court is to determine whether the district court‘s actions constituted an abuse of discretion. The district court had this case on its docket for more than five years and was intimately familiar with its facts and circumstances. Its precise holding may be somewhat obscure, but it is clear that the district court believed that the defendants, and not the plaintiff, were in breach of the agreement. I am unable to say that the district court‘s holding that the defendants breached the settlement agreement was an abuse of discretion. To reverse under these circumstances would be to convert this court into a trier of fact. We owe the district court as much deference when it rules for a prisoner as when it rules against. I would affirm the district court‘s decision that the defendants breached the settlement agreement.8
III
I turn to the jurisdictional issues raised by this case. Judge Posner, writing for the majority, has conceded that the district court “if barely” retained jurisdiction to enforce the settlement agreement. Inexplicably, however, he launches into an analysis obviously designed to support a holding that the court lacked jurisdiction. This is disturbing for several reasons. First, given this court‘s actual holding, the bulk of his analysis is dicta. Second, by employing an analysis calculated to justify a reversal rather than an admonishment of the district judge, this court ensures that the district judges of the circuit as well as the Bar will be confused rather than enlightened. A district judge reading today‘s decision will not be certain of what is required of him or her in the future because the majority opinion criticizes the conduct of the district judge while simultaneously permitting it. The majority gives back with the left hand what it has taken away with the right. Finally, the majority‘s jurisdictional analysis with its grudging concession places me in the awkward position of having to decide whether to retain or discard my own jurisdictional analysis. Despite the concession, I have chosen to discuss the jurisdictional issue in order to clarify the settled authority of district courts to enforce settlement agreement.
IV
Settlement agreements are highly favored and will be enforced whenever possible. Williams v. First National Bank, 216 U.S. 582, 595, 30 S.Ct. 441, 445, 54 L.Ed. 625 (1910); Metropolitan Housing Development v. Village of Arlington Heights, 616 F.2d 1006, 1013 (7th Cir.1980); Pearson v. Ecological Science Corp., 522 F.2d 171, 176 (5th Cir.1975), cert. denied sub nom. Skydell v. Ecological Science Corp., 425 U.S. 912, 96 S.Ct. 1508, 47 L.Ed.2d 762 (1976); Kohr v. Allegheny Airlines, Inc., 504 F.2d 400
In Lyles v. Commercial Lovelace Motor Freight, 684 F.2d 501 (7th Cir.1982) (Eschbach, J.), the plaintiff had orally agreed to settle his claim against the defendant four days before the scheduled trial date. The district court was informed of the parties’ intention to settle the lawsuit two days later. The defendant submitted written settlement documents to the plaintiff, but not to the court. These documents were never executed. “[N]o further communication was received by the court from any of the litigants.” 684 F.2d at 503. Nearly eight months later, on the basis of this information, the district court dismissed the case without prejudice to the right of either party to reopen the action within thirty days if the settlement was not consummated. More than thirty days after the district court‘s dismissal order, the plaintiff moved to reopen the case stating that the settlement agreement tendered by the defendant was unacceptable. The district court ruled that the parties were bound by the oral settlement agreement and refused to reopen the case holding that the nine-month delay between the time of the settlement and the motion to reopen had prejudiced the defendant.10
This court affirmed the district court‘s finding that the parties were bound by the settlement agreement. “An oral agreement to settle the claims asserted by [the defendant] is enforceable under federal law.” 684 F.2d at 504. At no time was a written settlement agreement presented to the district court for none was ever executed by the plaintiff. There is no indication that the district court was even aware of the terms of the agreement. The court dismissed on the basis of the parties’ mere intention to settle. The agreement at issue in the instant case, though never submitted to the district court, was properly executed in written form. The parties do not contest the validity of the agreement, nor do they disagree over the meaning of the agreement‘s basic terms.
In Cummins Diesel Michigan v. Falcon, 305 F.2d 721, 723 (7th Cir.1962), the parties orally agreed at a pretrial conference held before the district court to settle their dispute. Three weeks later the court was informed that one of the parties had repudiated the settlement agreement. The court entered summary judgment in accordance with the agreement. The court stated that “. . . a settlement agreement or stipulation voluntarily entered into cannot be repudiated by either party and will be summarily enforced by the court.”
In Debose v. Mueller, 552 F.Supp. 307, 308 (N.D.Ill.1982), the parties reached an oral settlement agreement in the presence of the court. The case was dismissed pursuant to the agreement. The defendant refused to honor the agreement and the plaintiffs moved to enforce the settlement. The court granted the motion. Until today, the inherent authority of district courts to enforce settlement agreements had never been seriously questioned in this circuit.
The majority attempts to distinguish Lyles by asserting that in that case “there was no question of federal jurisdiction” “just as there is no issue of enforceability of the settlement agreement in this case.” The court in Lyles, however, held that the agreement at issue was enforceable under federal law. The majority implies that the critical distinction between Lyles and the present case is that in Lyles the motion before the district court was a motion to reopen the case, whereas here, the motion at issue is a motion to enforce the settlement agreement. I suggest that the majority has missed the point entirely.
In Lyles the moving party was the plaintiff. Because the plaintiff sought to repudiate the agreement he moved to reopen the case. This sequence of events, however, is merely fortuitous. Under the majority‘s analysis, if the defendant in Lyles had filed a motion to enforce the settlement before the plaintiff had filed his motion to reopen, the district court‘s jurisdiction would have been problematic.
I can thus only assume that had the district court construed McCall-Bey‘s letter of February 18, 1985 as a motion to reopen the case rather than as a motion to enforce the settlement, the court‘s retention of jurisdiction would not have troubled this court. There is, of course, no fundamental difference between reopening a case because a contract has been broken, and enforcing the contract. In both cases the contract dispute is a direct consequence of the amicable resolution of a dispute properly before the district court. In both cases the resolution of the contract dispute is “logically dependent” on the underlying federal claim. See Owen Equipment & Erection Co. v. Kroger. 437 U.S. 365, 376, 98 S.Ct. 2396, 2403, 57 L.Ed.2d 274 (1978).
This circuit does not stand alone in rejecting the position advanced by the majority today. In Green v. Lewis, 436 F.2d 389, 390 (3d Cir.1970), the parties orally agreed to settle the pending claim. The parties announced their agreement to the court. It approved the settlement. The plaintiff later rescinded the agreement and moved to reopen the proceedings. The district court entered judgment for the defendant in accordance with the terms of the settlement agreement. The court of appeals affirmed stating that: “An agreement to settle a lawsuit, voluntarily entered into, is binding upon the parties, whether or not made in the presence of the court and even in the absence of a writing.” See also Good v. Pennsylvania RR, 384 F.2d 989, 990 (3d Cir.1967); Main Line Theatres v. Paramount Film Distributors, 298 F.2d 801, 802 n. 1 (2d Cir.), cert. denied, 370 U.S. 939, 82 S.Ct. 1585, 8 L.Ed.2d 807 (1962).
In Fulgence v. McDermott, 662 F.2d 1207, 1209 (5th Cir.1981), the parties had orally settled their dispute. Upon reading the written settlement documents prepared after the oral agreement the plaintiff refused to execute the agreement. The district court granted the defendant‘s motion to enforce the settlement agreement. The
Today‘s decision calls into question the well-established practice of federal trial courts as well. District courts have long assumed that they have the inherent authority to enforce settlement agreements. See Allen v. Alabama State Board, 612 F.Supp. 1046 (M.D.Ala.1985); Echols v. Nimmo, 586 F.Supp. 467, 469 (W.D.Mich.1984); Bergstrom v. Sears, Roebuck & Co., 532 F.Supp. 923, 932 (D.Minn.1982); Morris v. Gaspero, 522 F.Supp. 121, 124 (E.D.Pa.1981); United States for Use of Harter Concrete Products v. Buckner & Moore, 505 F.Supp. 409, 410 (W.D.Okla.1979); Dependahl v. Falstaff Brewing, 448 F.Supp. 813, 815 (E.D.Mo.1978); Gliniecki v. Borden, 444 F.Supp. 619, 622 (E.D.Wisc.1978); Read v. Baker, 438 F.Supp. 737, 741 (D.Del.1977), aff‘d, 577 F.2d 728 (3d Cir.), cert. denied, 439 U.S. 869, 99 S.Ct. 197, 58 L.Ed.2d 180 (1978); Reid v. Graybeal, 437 F.Supp. 24, 27 (W.D.Okla.1977).12
In Fairfax Countywide Citizens Ass‘n v. County of Fairfax, 571 F.2d 1299 (4th Cir.1978), the plaintiffs sought to reopen their case more than three years after the order of dismissal. In the instant case the motion to enforce the settlement agreement was filed less than three months after the order of dismissal. Moreover, in Fairfax the parties’ stipulation of dismissal did not refer at all to the settlement.
More importantly, Fairfax is an isolated case. No other circuit has adopted the Fourth Circuit‘s approach to this issue. In In re Corrugated Container Antitrust Litigation, 752 F.2d 137, 142 (5th Cir.1985), for example, the Fifth Circuit observed that the Fairfax decision “may be contrary to the Fifth Circuit opinions concerning the inherent power of a district court to enforce an agreement settling litigation pending before the court.” Indeed, the status of the Fairfax case even within the Fourth Circuit is questionable. In United States v. Newport News Shipbuilding & Drydock, 571 F.2d 1283, 1286 (4th Cir.), cert. denied, 439 U.S. 875, 99 S.Ct. 212, 58 L.Ed.2d 189 (1978), a case decided one week prior to Fairfax, the court stated that parties to contractual negotiations may enter into an enforceable oral contract to settle where the parties intend that their agreement should later be reduced to writing. The circuit has continued to cite the general principle of Aro approvingly. Ozyagcilar v. Davis, 701 F.2d 306, 308 (4th Cir. 1983); Millner v. Norfolk & Western RR, 643 F.2d 1005, 1009 (4th Cir.1981).
Even if Fairfax were controlling, the district court here successfully retained jurisdiction by indirectly incorporating the settlement agreement into the order of dismissal. The dismissal order was issued pursuant to stipulation; the stipulation was executed pursuant to the settlement. This chain of incorporation, as the majority concedes, satisfies the procedural requirements of Fairfax.
The majority has given us an extensive discussion of the applicability of
In support of its position the majority cites
In any event I agree with the Fifth Circuit in Oswalt v. Scripto, 616 F.2d 191, 195 (5th Cir.1980), that
District courts are entitled to rely on the representations of counsel that a stipulation of dismissal will soon be filed. They need not delay their disposition of cases pending before them until physically presented with a written stipulation comporting with the requirements of
The majority illustrates the consequences it fears may result if we were to hold that the district court had the inherent authority to enforce the settlement agreement with a hypothetical. In the majority‘s hypothetical a defendant is forced into federal court on an action to recover a $500 unpaid tuition balance on a college education he agreed to provide as part of a ten-year-old settlement agreement. The majority‘s hypothetical is not this case. Moreover, nothing compels district courts to enforce absurd or grossly inequitable agreements. Trial judges rarely exercise jurisdiction in cases that are inappropriate for federal jurisdiction. Should an errant district court exercise jurisdiction in a particularly inappropriate situation, this court, as always, retains the power to reverse its actions under an abuse of discretion standard. Under the majority‘s rationale, the plaintiff in its hypothetical need only persuade the district court to attach a copy of the settlement agreement to its dismissal order in order to cause the district court to evidence an intention to retain jurisdiction.14
V
There has been much concern expressed in recent years over the “crisis” in the federal court system caused by the apparent “explosion” in federal litigation. This court has been at the forefront of efforts to alleviate the “burden” on the federal courts. Today‘s decision, while effectively removing this case from the appellate dock-
It will now be more difficult for litigants to avail themselves of a proven means of avoiding “the expense and delay incidental to litigation.” Autera, 419 F.2d at 1199. The ability of district courts to enforce settlement agreements is often a crucial factor in litigants’ decisions to settle and dismiss pending lawsuits. No longer, however, will trial courts be able to dismiss cases the moment they are informed that the parties have agreed to settle. District courts must now make certain they take steps to evidence an intention to retain jurisdiction before dismissing. Henceforth, district courts may insist that the parties first prepare a written settlement document. Conceivably, courts may decide to hold a hearing to determine whether its understanding of the proposed agreement corresponds to that of the parties.
Experience has shown that it may be months before an agreement in principle to settle is translated into an executed settlement document. Because an agreement not incorporated into a dismissal order may not be enforceable, the period between agreement in principle and final execution will tend to decrease the chances of amicable settlement of disputes.
In addition, there are many instances in which litigants desire that the terms of settlement agreements not be disclosed. The agreement in this case, for example, contains a non-disclosure provision. By requiring the district court to clearly indicate its intention to retain jurisdiction over settlement agreements, today‘s decision creates an incentive to make all such agreements part of the public record and frustrates litigants’ desire for confidentiality.
VI
One of the stated goals of the criminal justice system is to rehabilitate offenders and facilitate their integration into the mainstream of our society. The Administrative Regulations of the Illinois Department of Corrections, for example, declare that the “goals and purposes” of the regulations “involve programming residents to their greatest potential of self-development.” McCall-Bey, nearing the end of his sentence, has evidenced a desire to educate and improve himself. McCall-Bey waived a claim for damages against the State and asked only that he be permitted to attend school. Today, this court slams the door in his face.
I would affirm the district court.
LUTHER M. SWYGERT
SENIOR CIRCUIT JUDGE
Notes
The following language from a recent Fourth Circuit decision is instructive:
Gamewell Mfg., Inc. v. HVAC Supply, Inc., 715 F.2d 112, 115 (4th Cir.1983).Settlements and releases assertedly entered into in respect of federal litigation already in progress implicate federal procedural interests distinct from the underlying substantive interests of the parties. Once a claim—whatever its jurisdictional basis—is initiated in the federal courts, we believe that the standards by which that litigation may be settled, and hence resolved short of adjudication on the merits, are preeminently a matter for resolution by federal common law principles, independently derived.