No. 90 C 6933.
July 10, 2002
The parties have filed a joint motion asking me to inform the court of appeals that I am inclined to modify the judgment under appeal. See Circuit Rule 57.
According to the motion, the parties have reached a settlement that is conditioned on vacatur of the district court's judgment. But U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994), and In re Memorial Hospital of Iowa County, Inc., 862 F.2d 1299 (7th Cir. 1988), hold that a settlement does not support vacatur except under extraordinary circumstances. The principal reason for this rule is that the district court's judgment is the product of a substantial investment of public resources and may have value to third parties. That value is not the parties' property and should not be used as a bargaining chip in settlement.
U.S. Bancorp allows that a court has discretion under unusual circumstances to vacate a judgment when the public interest so requires. The parties try to take advantage of this opening, arguing for example that they can save the expense of briefing and arguing the appeal, which they desire to do because the concrete dispute — the copyrightability of "Mara" — is no longer important to them in light of business developments. (Perhaps "Mara," "Liza," and their derivatives have been replaced by newer models.) But the expense of litigation is a perfectly normal circumstance. It is the other end of the spectrum from of the "extraordinary" conditions to which the Supreme Court referred. No one is compelled to pursue an appeal that has become unimportant. Pivot Point can drop the appeal and save its resources. What is more, the parties are free to contract not to enforce the judgment that has been entered.
What differentiated a private agreement not to enforce a judgment from a judicial order vacating the judgment is that the latter may have effects on third parties. From the parties' papers, potential third-party effects appear to be important. A cover letter to the joint motion informs me that the defendant in another pending case has argued that the judgment here blocks Pivot Point (via issue preclusion, also known as collateral estoppel) from enforcing its asserted copyright in a different product. Pivot Point wants to rid itself of the risk that it will lose this new case under the doctrine of preclusion, and presumably it has agreed to compensate Charlene Products for the assistance. Effects on third parties are the circumstance that counsel most strongly against vacating a judgment. So I exercise whatever discretion I possess (and U.S. Bancorp holds that this is not very much discretion) to deny the motion.
Settlement is an end worth pursuing. It will save time for the court of appeals and money for these litigants. The parties remain free to settle on terms that include a covenant not to enforce the judgment between themselves. But they are not free to bargain with the rights of litigants in other cases. I do not know what preclusive effect this judgment legitimately carries for the other pending suit — that is a subject for another judge in another court — but it is an effect that Pivot Point must live with.
The motion is denied.