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PETERSEN v. GIBSON

September 27, 2005.

DEBORAH PETERSEN, Plaintiff,
v.
OFFICER BYRON GIBSON, OFFICER JEFF FRITZ, VICTORIA KNAUF, JOANN HUBRICH, JOHN BILLIANSI, and MARIO TRICOCI HAIR COMPANY-BLOOMINGDALE, d/b/a MARIO TRICOCI SALON, an Illinois corporation, Defendants.



The opinion of the court was delivered by: JAMES ZAGEL, District Judge

MEMORANDUM OPINION AND ORDER

On remand, I am to consider whether the term "prevailing" has "a different meaning in the context of costs as opposed to attorneys' fees" and, if so, whether Petersen is a prevailing party for the purpose of assessing costs. Petersen v. Gibson, 372 F.3d 862, 867-68 (7th Cir. 2004). In her motion for costs, Petersen also seeks a more extraordinary remedy: she asks that pursuant to Fed.R.Civ.P. 60(b)(6), I enter a final judgment incorporating the jury verdict, the parties' subsequent settlement, and clarify my "implicit finding that the settlement reflects the damages actually sustained by plaintiff and was not a nuisance settlement to avoid the expense of a second trial." On appeal, the Seventh Circuit observed that while "a settlement short of a consent decree may qualify" a party as prevailing, Petersen's settlement lacked any judicial imprimatur that could support her status as a prevailing party. Petersen, 372 F.3d at 866-67. The court stated that "the settlement in this case clearly falls on the short side. There is in fact no order that we can find in the record, and none provided by the parties, concerning the settlement at all, and thus no judicial imprimatur whatsoever under Buckhannon." Id. at 867. The court found that the "only judgment in this case is a determination that Petersen's rights were violated," which was insufficient to support prevailing party status. Id. at 866. Petersen now seeks relief from the judgment of record, so as to establish her status as a prevailing party eligible for attorneys' fees.

Fed.R.Civ.P. 60(b)(6) is a catch-all provision that permits a party to seek relief from a final judgment. It is a provision grounded in principles of equity, and to qualify for its relief a party must show "extraordinary circumstances that create a substantial danger that the underlying judgment was unjust." Margoles v. Johns, 798 F.2d 1069, 1073 (7th Cir. 1986) (citations omitted). Petersen claims that the judgment in this case — one entered after trial and reflecting Gibson's liability, but one that did not reflect my conclusion that the subsequent settlement agreement reflected Petersen's actual damages — is now manifestly unjust in light of the Seventh Circuit's unexpected application of the Buckhannon decision to the settlement. Petersen observes that neither party addressed Buckhannon's applicability to the case in their briefing to the Seventh Circuit, and states that, "prior to the oral argument . . . Petersen had no hint that the Seventh Circuit would extend Buckhannon to hold that in a case in which plaintiff won a verdict on liability and [established that] defendant's wrongful conduct caused her `substantial actual injury,' the lack of a final judgment incorporating the subsequent settlement was fatal to her fee petition." (Pl. Mem. at 11).

  In fact, neither Buckhannon nor T.D. v. La Grange Sch. Dist. No. 102, 349 F.3d 469 (7th Cir. 2003),*fn1 involved settlements reached subsequent to judicial findings of liability. Buckhannon established the principle that a party seeking attorneys fees must establish a "judicially sanctioned change in the legal relationship of the parties." Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 605 (2001). Such change is found, for example, in an enforceable judgment on the merits or through a court-ordered consent decree. Id. at 603-04. A private settlement followed by dismissal of the suit does not confer prevailing party status. T.D., 349 F.3d at 478-79. Of course in T.D., the private settlement did not follow a verdict of liability and an order directing a trial on damages; there was no judgment whatsoever prior to the parties' private agreement.

  The importance of clear final orders in post-Buckhannon cases involving settlements was recognized in Sonii v. General Electric Co., 359 F.3d 448, 449 (7th Cir. 2004).*fn2 In Sonii, the parties settled the case and sought attorneys' fees. The district court denied the request for fees, and the parties appealed before there was a final order in the district court. The Seventh Circuit found lack of jurisdiction to consider the appeal. The Court expressed concern that the details of the absent final order "could affect the question whether plaintiffs are prevailing parties." Sonii at 449. Rather than rule, the Court remanded the case to avoid guessing as to the intended nature of the district court's disposition. The Court observed that in dismissing the case, the district judge could implement the parties' settlement agreement in at least three ways: "(1) a one-line order of dismissal; (2) a dismissal reserving jurisdiction to enforce the underlying contract; (3) a dismissal incorporating the settlement contract as a judgment of the court." Id. Judge Easterbrook indicated that the first option would clearly establish that the plaintiff was not a prevailing party, while the third option would clearly render the plaintiff a prevailing party, and that the second option would be "ambiguous." Id. No such remand was entered in this case; rather, the Seventh Circuit found the absence of a final order subsequent to the settlement a clear indication that the settlement bore no judicial imprimatur of a change in legal status between the parties.

  I believe I can state with certainty that in this case, neither I nor the parties anticipated the basis for the outcome on appeal. Gibson argues that whatever our surprise, Petersen's Rule 60(b)(6) is improper; but, should I find that she is entitled to seek such relief, her petition must be denied on the merits because the parties never intended that I lend a "judicial imprimatur" to the settlement agreement — though it is clear to me, at least, that I would have done so. Gibson's argument that the motion is improper is threefold: first, that Petersen is attempting to re-litigate the merits of this issue in flat defiance of the law of the case doctrine; second, that Petersen is attempting to undo her "deliberate choice" not to seek a final judgment incorporating the settlement; and third, that Plaintiff is impermissibly relying on a mistake of law to pursue relief.

  Gibson objects to Petersen's motion on the ground that she is raising arguments now that she could have raised on appeal, a fact that evidences a lack of extraordinary circumstances. Gibson relies on Bell v. Eastman Kodak Co., 214 F.3d 798, 801 (7th Cir. 2000) for this proposition. However, the Bell Court held that a party may not seek to set aside a judgment under Rule 60(b) if that party is attempting to do so on a ground that could have been used to obtain a reversal on appeal. In this case, Gibson appealed my award of attorneys' fees, though not on the ground that Petersen was not a prevailing party under Buckhannon; Petersen's cross-appeal simply protested my decision to reduce the attorneys' hourly rates. Bell, therefore, is inapposite to the unique circumstances of this case, in which the reviewing court applied, sua sponte, the principles of Buckhannon, a case Petersen had no reason to address on appeal as I had granted the vast majority of the relief she sought. Gibson's reliance on Ben-Shalom v. Secretary of Army, 826 F.2d 722, 724 (7th Cir. 1987), which prohibits efforts to re-litigate a case under Rule 60(b)(6), is also inapposite. See Ben-Shalom, 826 F.2d at 724 (denial of Rule 60(b) motion proper when motion was effort to re-litigate case after party intentionally abandoned appellate process).

  Gibson also bases his claim of "re-litigation" on the fact that Petersen's present arguments mirror those presented in her Petition for Panel Rehearing and Suggestion for Rehearing En Banc. That Petition was the first time Petersen could reasonably be expected to attempt (and did attempt) to raise the issue of her status as a prevailing party under Buckhannon. Her Petition was summarily denied. Gibson cannot rely on that denial as defining the scope of the law of the case so as to deny Plaintiff Rule 60(b) relief.

 
[B]ecause a summary denial of a petition for rehearing does not explain the bases for the denial, it is insufficient to confer any implication or inference regarding a court's opinion relative to the merits of a case . . . summary denial of [a party's] petition for rehearing did not create law of the case . . .
Moore v. Anderson, 222 F.3d 280, 284 (7th Cir. 2000) (internal quotation and citation omitted).

  However, Moore also instructs that "when a court of appeals has reversed a final judgment and remanded the case, the district court is required to comply with the express or implied rulings of the appellate court," although "[o]n remand, the district court retains the authority to dispose of other issues not addressed." Id. at 283 (quoting Waid v. Merrill Area Pub. Sch., 130 F.3d 1268, 1272 (7th Cir. 1997) and citing Sprague v. Ticonic Nat'l Bank, 307 U.S. 161 (1939)). The law of the case doctrine is the best ground for protesting the invocation of Rule 60(b) on remand. The Seventh Circuit reversed my award of attorneys' fees and remanded solely for consideration of costs because the Court could find no order in the record concerning the settlement. Absent such an order, the settlement was simply a private agreement among the parties that lacked any judicial imprimatur sufficient to confer "prevailing party" status. Petersen, at 867.

  Petersen contends that her Rule 60(b) request for a final judgment that would incorporate the jury verdict on liability, the settlement agreement, a statement of my intent and a new award of costs, raises "issue[s] not addressed" by the Court of Appeals. See Moore, 222 F.3d at 283. Yet the consequence of that request opens the door to the issue of Plaintiff's status as a prevailing party — an issue clearly addressed on appeal. Plaintiff's statement that she does not seek to re-litigate the merits of any ruling of the Seventh Circuit "on the record it had before it" acknowledges that her request could alter the record so as to subsequently challenge the basis of the appellate court's decision. (Pl. Rep. at 8.)*fn3 Petersen's pursuit of an order that "affirms what actually happened in this case" (Pl. Rep. at 9) would establish grounds to subsequently reconsider and potentially alter the law of the case as articulated by the appellate court.

  No matter how sympathetic I am to the situation in which Petersen (or, more appropriately, Petersen's counsel) now finds herself, the doctrine of the law of the case bars arguments for reconsideration "based not on intervening authority, new (and heretofore undiscoverable) evidence, or other changed circumstances that justify waiver of the doctrine . . . but on considerations of fact or law that were available when the previous appeal was argued." Vidimos, Inc. v. Wysong Laser Co., 179 F.3d 1063, 1065 (7th Cir. 1999). Whatever facts or legal arguments the parties might have raised on appeal, there is no question that the Seventh Circuit knew of and considered the following facts: Petersen secured a verdict of liability and nominal damages; I vacated the nominal damages award and ordered a new trial on damages; the parties subsequently settled for $10,000; and I awarded attorneys' fees to Petersen. Petersen, 372 F.3d at 864. The Seventh Circuit also had before it the opinion in which I explained why I considered Petersen a prevailing party. While the Court perhaps took a more prudent course by remanding, rather than ruling, in Sonii, the settlement in that case pre-dated Buckhannon, and Judge Easterbrook recognized that the district court might wish to enter a form of judgment that vindicated pre-Buckhannon expectations. 359 F.3d at 450.

  In this case, Petersen seeks to vindicate not pre-Buckhannon expectations, but pre-Petersen expectations. Petersen established a new rule: parties seeking damages after securing judgments of liability, but who settle before damages are awarded, are not prevailing parties absent a court order that imposes a judicial imprimatur on the terms of the settlement.*fn4 372 F.3d at 866-67. The procedure adopted by the parties and by this court did not satisfy that standard. Id. ("Because Petersen received no relief from the judgment of the court, and because the settlement was not a `judicially sanctioned' change in the legal relationship of the parties, Petersen was not a prevailing party under § 1988"). In light of that ruling, rather than a decision to remand on this issue, and based on my review of the law, I find ...


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