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Cunningham v. POSnet Services

April 1, 2008

WILLIAM R. CUNNINGHAM AND CUNNINGHAM ELECTRONICS CORPORATION, PLAINTIFFS/COUNTERDEFENDANTS,
v.
POSNET SERVICES, LLC, DEFENDANT/COUNTERPLAINTIFF, AND MARK SMITH, DEFENDANT.
POSNET SERVICES, LLC, PLAINTIFF,
v.
WILLIAM R. CUNNINGHAM AND CUNNINGHAM ELECTRONICS CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: J. Phil Gilbert District Judge

MEMORANDUM AND ORDER

This matter comes before the Court on the Report and Recommendation ("Report") (Doc. 128) of Magistrate Donald G. Wilkerson recommending that the Court deny the motion to reinstate this case filed by plaintiffs/counterdefendants William R. Cunningham ("Cunningham") and Cunningham Electronics Corporation ("CEC") (Doc. 116), grant the motion to enforce the settlement agreement and its supplement filed by defendant Mark Smith ("Smith") (Docs. 120 & 123), deny the motion to strike filed by defendant/counterplaintiff POSnet Services, LLC's ("POSnet") (Doc. 124), deny as moot the motion to join the motion to strike (Doc. 125) and order enforcement of the settlement agreement.*fn1

I. Report and Recommendation Review Standard

After reviewing a magistrate judge's report and recommendation, the Court may accept, reject or modify, in whole or in part, the findings or recommendations of the magistrate judge in the report. Fed. R. Civ. P. 72(b). The Court must review de novo the portions of the report to which objections are made. Id. "If no objection or only partial objection is made, the district court judge reviews those unobjected portions for clear error." Johnson v. Zema Systems Corp., 170 F.3d 734, 739 (7th Cir. 1999).

II. Background

The Court has fully set forth the crux of the main disputes in this case in prior orders and need not do so again here. The matter at hand is collateral to the issues in the pleadings, for it stems from an August 7, 2007, written agreement to settle those disputes ("Memorandum of Settlement"). The settlement was contingent on the successful test of the defendants' software that they were obliged to license to the plaintiffs. The Memorandum of Settlement contained the following statement:

The Settlement Agreement shall be contingent upon the verification by Matra [sic] and Arroway (or another third-party acceptable to the parties) that: (a) the Software accepts CPG Manufacturer offer details in to a central repository and is sent electronically to the retailer store locations; (b) the Software communicates with the Redemption Engine that triggers discounts to consumers by validating that UPC's associated with promoted products have been purchased; (c) the communications described in 7(b) above occur in commercially reasonable time frames; and (d) the Software eliminates the need for CEC to provide an in-store processor at retail store locations to maintain a coupon offer registry.

Memorandum of Settlement Ex. A, Terms of License, ¶ 7.

In light of the settlement agreement, on August 13, 2007, the Court entered an order giving the parties 60 days to consummate the settlement before the Court would dismiss the case with prejudice (Doc. 115). A month and a half after the Court entered its order, Cunningham and CEC moved to reinstate the case on the grounds that the software testing had not yet occurred and might not before the 60-day period expired and because they had some nebulous "concerns" about the defendants' truthfulness in the settlement process (Doc. 116). POSnet responded that the motion is unsupported by any reason to reinstate the case and should therefore be denied (Doc. 118).

Defendant Smith, for his part, filed a motion to enforce the August 7, 2007, settlement agreement (Doc. 120). The motion noted that, at that point, the parties had scheduled the software test for October 8, 2007, and the test was the only remaining obstacle to consummating the settlement. The software test, indeed, occurred on October 8, 2007.

The day after the software test, on October 9, 2007, Cunningham and CEC filed a reply brief in support of their motion to reinstate the case (Doc. 121) and a response to Smith's motion to enforce the settlement agreement (Doc. 122). Attached to the reply and response was an affidavit of John Bigler ("Bigler"), a CEC officer, stating that the software test was unsuccessful and implying that the MATRA observer of the test was not qualified to evaluate the test. The reply and response also noted that a third party's software was used during the software test and was required to make POSnet's software function properly.

About 30 minutes after the plaintiffs filed their reply and response briefs, Smith filed a supplement to his motion to enforce the settlement agreement (Doc. 123). The supplement attached a declaration from the MATRA software test observer certifying that the software satisfied the requirements of ¶ 7 of the Terms of License. It also attached a pre-test e-mail from Bigler stating that the plaintiffs were not going to have Arroway present at the software test.

On October 12, 2007, POSnet responded to Smith's supplement and moved to strike Bigler's affidavit (Doc. 124). The filing pointed out that the software license was to be granted "as is" if the software satisfied the conditions of ¶ 7 of the Terms of License. It also asks the Court to strike Bigler's affidavit as irrelevant. Smith has asked the Court to join POSnet's motion to strike Bigler's affidavit (Doc. 123).

On October 22, 2007, Cunningham and CEC filed a response to Smith's supplement to his motion to enforce the settlement agreement (Doc. 126) complaining that the MATRA declaration was not sworn under penalty of perjury and reiterating its prior arguments in opposition to settlement enforcement. In response, the defendants ...


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