United States District Court, C.D. Illinois, Rock Island Division
DARROW UNITED STATES DISTRICT JUDGE.
the Court is the parties' Joint Stipulation of Dismissal,
ECF No. 6. For the following reasons, the request is DENIED.
argument or analysis, and without submission of their
confidential settlement agreement to the Court, the parties
have requested that the Court “retain jurisdiction to
enforce the terms of the settlement agreement.” Joint
Stip. 1. Such a request must be filed with a memorandum of
law justifying the request. See C. D. Ill. L. R.
7.1(B)(1) (“Every motion raising a question of law . .
. must include a memorandum of law including a brief
statement of the specific points or propositions of law and
supporting authorities upon which the moving party relies,
and identifying the Rule under which the motion is
Legal Standard on a Motion Requesting Retention of Federal
are three common ways parties end the substantive litigation
when a settlement is reached: (1) notice or stipulation of
dismissal; (2) Rule 68 offer and acceptance; or (3) proposed
a plaintiff may file a notice of dismissal or the parties may
file a stipulation of dismissal, which closes the case and
requires no further action by the court. Fed.R.Civ.P.
41(a)(1)(A)(ii). Some parties ask the court to stay the case
and file the dismissal once the settlement terms are fully
performed. If the settlement is breached, the court may lift
the stay and restart the litigation process. Others file the
dismissal shortly after settlement is reached, fully aware
that if one of the parties breaches it, the forum for that
breach of contract dispute is state court (unless a new suit
could be brought on the basis of diversity of citizenship or
some other source of federal jurisdiction). Lynch, Inc.
v. SamataMason Inc., 279 F.3d 487, 489 (7th Cir. 2002)
(“A settlement agreement [absent additional measures]
is enforced just like any other contract.” (citing
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 380-81 (1994)). Ordinarily, parties who have settled and
wish to dismiss the case with finality will do so, pursuant
to Rule 41(a)(1)(A)(ii), by providing that the dismissal is
with prejudice. See McCall-Bey v. Franzen, 777 F.2d
1178, 1184 (7th Cir. 1985).
parties may reach a settlement by way of Rule 68(a). Once an
offer from the defending party is accepted and proof is filed
on the docket, the clerk must enter judgment. Fed.R.Civ.P.
68(a). A plaintiff who intends to use the judgment to collect
on a breach of the settlement may prefer this option.
Additionally, a defendant may seek a satisfaction of judgment
once the debt has been paid in full. Fed.R.Civ.P. 60(b)(5).
the parties may enter into a settlement agreement, request
the court to enter a “consent decree”-an
injunction binding the parties pursuant to the requirements
enunciated by Rule 65(d), and dismiss the case without
prejudice. Kokkonen, 511 U.S. at 377-82. This
procedure is necessary because federal courts are courts of
limited jurisdiction, and cannot simply “retain
jurisdiction” by a mere statement that they intend to
enforce a settlement agreement. See Blue Cross & Blue
Shield Ass'n v. Am. Express Co., 467 F.3d 634, 636
(7th Cir. 2006) (holding that district court's order that
it “retained jurisdiction” to enforce settlement
agreement was ineffectual after a dismissal of the underlying
claim because the order intended to bind the parties and thus
was an injunction, but did not comply with Rule 65(d),
“compliance with which would have made the continuance
of federal jurisdiction clear[.]”). Rather, it is clear
in the Seventh Circuit that a district court's order
declaring an intent to retain jurisdiction over a case after
the original case or controversy has been resolved in a
dismissal or judgment must comply with rule 65(d); doing so
permits the Court to act to enforce the settlement pursuant
to its original source of jurisdiction. See Id. at
638 (“Indeed, if the settlement had been entered as a
consent decree, as it should have been, the original
federal-question jurisdiction would have sufficed.”);
Kokkonnen, 467 F.3d at 377 (“Federal courts
are courts of limited jurisdiction. They possess only that
power authorized by Constitution and statute . . . which is
not to be expanded by judicial decree[.] (citations
utilizing this option, the parties' proposed consent
decree must comply with the requirements for an injunction
laid out in the Federal Rules. That is, the proposed order
must: “(a) state the reasons why it [should be] issued;
(b) state its terms specifically; and (c) describe in
reasonable detail-and not by referring to the complaint or
other document-the act or acts restrained or required.”
Fed.R.Civ.P. 65(d). Once the decree is entered, the case may
be dismissed by the parties pursuant to Rule 41(a)(1);
alternatively, if the parties have moved for the Court's
dismissal of the claims pursuant to Rule 41(a)(2), the decree
may itself also dismiss the claims. See Kokkonnen,
511 U.S. at 381-82 (countenancing dismissal with jurisdiction
retained at parties' request pursuant to either Rule
41(a)(1) or 41(a)(2)). Because the terms of the settlement
have been drafted into a court order, the court may then
enforce the settlement by way of contempt proceedings (or
whatever else the decree authorizes the court to do in light
of a breach).
for this final method is helpful. As indicated above, federal
courts have limited jurisdiction and cannot enforce
settlement agreements after a case has been dismissed just
because the parties agree to it. Kokkonen, 511 U.S.
at 377. In Kokkonen, the parties reached a
settlement and orally provided its terms to the district
court before dismissing the case. The Supreme Court held its
limited jurisdiction precluded it from enforcing the
The situation would be quite different if the parties'
obligation to comply with the terms of the settlement
agreement had been made part of the order of dismissal-
either by separate provision (such as a provision
“retaining jurisdiction” over the settlement
agreement) or by incorporating the terms of the settlement
agreement in the order. In that event, a breach of the
agreement would be a violation of the order, and ancillary
jurisdiction to enforce the agreement would therefore exist.
That, however, was not the case here. The judge's mere
awareness and approval of the terms of the settlement
agreement do not suffice to make them part of his order.
Kokkonen, 511 U.S. at 381.
Lynch, Inc. v. SamataMason Inc., the parties reached
an oral settlement in the judge's presence but later
disagreed over its terms. On appeal, the Seventh Circuit held
that a “settlement agreement, unless it is embodied in
a consent decree or some other judicial order … is
enforced just like any other contract.” Lynch,
279 F.3d at 489 (citing Kokkonen, 511 U.S. at
380-81). Similarly, in Shapo v. Engle, 463 F.3d 641,
643 (7th Cir. 2006), the court sought to retain jurisdiction
to enforce a settlement agreement after dismissing the case
Seventh Circuit reiterated its Lynch holding,
stating that “a district judge cannot dismiss a suit
with prejudice, thus terminating federal jurisdiction, yet at
the same time retain jurisdiction . . . . (An exception is
the inherent power of a court that has issued an injunction,