Vacating District Court Opinions for Settlement

Since most cases are settled, and at various stages of their litigation life, it is not surprising that there are an appreciable number where the court has already issued at least one opinion. That opinion may well have been the spur to the settlement. Can the parties agree to have the opinion vacated as part of their settlement? The answer is of course, yes, but the parties' agreement is in no way binding on the court. In light of this, parties usually make the settlement contingent on the court agreeing to vacate its opinion. District court judges' views of such motions to vacate vary, and may vary within the same court depending on the posture of the case: an opinion issued on a preliminary injunction motion at the very outset of the case with a scant record is likely to be regarded differently than an opinion issued after bench trial.

Occasionally, parties settle while the case is on appeal; this creates further problems, because the district court is usually ousted of jurisdiction by virtue of the appeal, and at such a late stage would, in any event, be even less likely to vacate if it could. Finally, pursuant to FRCP Rule 60(b)(6), the decision to vacate is discretionary, presenting very narrow circumstances in which to compel a vacatur. (It is something of an open question whether review of such a motion is de novo, see Major League Baseball Properties, Inc. v. Pac. Trading Cards, Inc., 150 F.3d 149, 151 (2d Cir. 1998)).

Yet, in Mattel, Inc. v. Goldberger Doll Mfg. Co., No. 04-6432-cv (2d Cir. Nov. 2, 2006), the parties managed to get the Second Circuit to order vacatur, reversing the district court which had twice denied such a motion. (Jeff Conciatori, Kathleen Sullivan, Michael Zeller, and Partha Chattoraj of Quinn Emanuel were the successful attorneys handling the vacatur motions). The court of appeals had earlier reversed the trial court's grant of summary judgment to defendants and remanded for trial, 365 F.3d 133 (2d Cir. 2004). The panel, per the legendary Judge Pierre Leval, had written in part at that time:

"The district court granted the defendant's motion for summary judgment. The court assumed for the purposes of the summary judgment motion that the defendant had copied the Rockette doll's eyes, nose, and mouth from Barbie. It concluded, however, “When it comes to something as common as a youthful, female doll, the unprotectible elements are legion, including, e.g., full faces; pert, upturned noses; bow lips; large, widely spaced eyes; and slim figures” (internal quotation marks omitted). Believing that copyright protection did not extend to Barbie's eyes, nose, and mouth, the court excluded similarity as to those features from the determination whether there was substantial similarity between plaintiff's and defendant's dolls. It concluded in comparing the other parts of the respective heads that there was no substantial similarity and therefore entered summary judgment for the defendant. Mattel, Inc. v. Radio City Entm't, 2002 WL 1300265, at *1 (S.D.N.Y. June 12, 2002). The court's conclusion that the eyes, nose, and mouth of the registered Barbie faces were not protected by copyright was erroneous."


On remand, a one day bench trial was held; an opinion in favor of defendant was issued on November 20, 2004 and judgment entered on December 7, 2004. An appeal was taken, and Mattel's opening brief was filed. Mattel then learned that there was another doll which it believed infringed.The parties entered into negotiations, and ultimately entered into a "global" settlement, which included the doll that was the subject of the appeal as well as the new one. The settlement was contingent on the district court vacating the opinion adverse to Mattel. The parties moved the district court for vacatur, a motion the court denied on December 12, 2005 for lack of jurisdiction. The parties then obtained a limited remand from the circuit for consideration of the vacatur motion. On April 3, 2006, the district court took the opportunity to issue (for it) a lengthy opinion explaining why it was denying the motion again, this time on the merits. Mattel then reactivated its appeal, and pursant to 28 USC 2106, sought vacatur, which the court of appeals granted.

There are good reasons not to vacate an opinion in such circumstances. As the Supreme Court held in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 23 (1994), "Judicial precedents are presumptively correct and valuable to the community as a whole. They are not the property of private litigants and should stand unless a court concludes that the public interest would be served by a vacatur." Thus, the court seemingly limited vacaturs to "exceptional circumstances."

Mattel successfully overcame these circumstances (and quite easily it seems given the terse nature of the Second Circuit's order), by pointing to the public interest served by quelling problems with future enforcement efforts, the uncertainties in appeal, and by arguing that the trial court's opinion had only limited precedential value. Given that the issue of vacatur is not uncommon, the Second Circuit's quick and decisive action is important to note.