Can a Promulgated Court Opinion in a Qui Tam Case be Vacated Upon the Parties’ Request in Order to Facilitate a Settlement? Part II

By Sherrie Savett

In Part I of this blog series, we established that Courts have discretion to vacate, but it should not be used “absent exceptional circumstances.”  Amaefule v. Exxonmobil Oil Corp., 630 F. Supp. 2d 42, 43 (D.D.C. 2009) (quoting U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 26 (1994)).

Courts Evaluate Whether There is Public Interest Involved in Resolving Legal Issues

The 7th, D.C. Circuit, 10th and Second Circuits, and many district courts have addressed this issue and come out against vacatur of opinions.

Various courts have recognized that opinions serve an important public interest in resolving legal issues, i.e. that opinions have significance beyond the relationship between the private litigants.  As the Supreme Court describes, “[j]udicial precedents are presumptively correct and valuable to the legal community as a whole. They are not merely the property of private litigants and should stand unless a court concludes that the public interest would be served by a vacatur.” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 26 (1994) (internal quotation marks omitted).  Put differently, there is a substantial public interest in “the development of decisional law” given “the importance of published opinions to other courts and future litigants.” United States v. Reid, 2000 WL 1843291, at *3 (E.D.N.Y. Oct. 31, 2000).

The seminal case on this issue is the Seventh Circuit’s decision in Matter of Mem’l Hosp. of Iowa Cty., Inc., 862 F.2d 1299 (7th Cir. 1988). In it a bankruptcy court held a party in contempt of court, and the district court affirmed the bankruptcy court’s decision in a published opinion.  The losing party appealed to the Seventh Circuit.  During the pendency of the appeal, the parties reached a settlement agreement, and the parties filed a motion asking the Seventh Circuit to vacate the district court’s opinion.   The Seventh Circuit denied the parties’ request in explaining:

Litigants who settle their dispute while an appeal is pending often file a joint motion asking us not only to dismiss the appeal but also to vacate the opinion and judgment of the district court. We always deny these motions to the extent they ask us to annul the district court’s acts, on the ground that an opinion is a public act of the government, which may not be expunged by private agreement. History cannot be rewritten. There is no common law writ of erasure. . . .  When a clash between genuine adversaries produces a precedent, however, the judicial system ought not allow the social value of that precedent, created at cost to the public and other litigants, to be a bargaining chip in the process of settlement. The precedent, a public act of a public official, is not the parties’ property. We would not approve a settlement that required us to publish (or depublish) one of our own opinions, or to strike a portion of its reasoning . . . The opinions written in this case record two judges’ solutions to a legal problem. These opinions may be valuable for other litigants and judges . . . They will be left as they are. The parties may be free to contract about the preclusive effects of these decisions inter se . . . [but] they are not free to contract about the existence of these decisions.

Id. (emphasis added). Notably, in In re U.S., 927 F.2d 626 (D.C. Cir. 1991), the D.C. Circuit adopted the reasoning of Matter of Mem’l Hosp. and denied the parties’ request to vacate an opinion after the parties reached a settlement agreement.

In Oklahoma Radio Assocs. v. F.D.I.C., 3 F.3d 1436, 1436 (10th Cir. 1993), the Tenth Circuit issued an opinion, and the losing party filed a motion for rehearing en banc.  Before the Tenth Circuit ruled on that motion, the parties reached a settlement agreement; one of the conditions of the settlement agreement was the parties would ask the Tenth Circuit to vacate its opinion.  Thus, the parties filed a joint motion asking the Tenth circuit to “vacate its . . .  opinion and remand the case to the District Court with instructions to vacate the Judgment.”  Id. at 1436.   The Tenth Circuit rejected the parties’ motion on public policy grounds:

The furthering of settlement of controversies is important and desirable, but there are significant countervailing considerations which we must also weigh. A policy permitting litigants to use the settlement process as a means of obtaining the withdrawal of unfavorable precedents is fraught with the potential for abuse. Moreover, the reasoning in the published opinion “may be helpful to other courts to the extent that it is persuasive. . . . [T]he instant case the joint motion and joint memorandum clearly indicate that vacatur of our . . .  opinion . . .  was an important consideration in the settlement. For the reasons we have given, we are unwilling to vacate our opinion to accommodate the parties in accord with their settlement.

Id. at 1444-45 (internal quotation marks and citation omitted).

In Fed. Ins. Co. v. Hanover Ins. Co., 2013 WL 6403189 (N.D. Tex. Nov. 27, 2013), a district court explained that “[i]n connection with the parties’ settlement of this lawsuit, they have filed a . . .  motion to withdraw opinion, in which they request that the court withdraw its . . . memorandum opinion and order.”  The court agreed with the request: “Although the court is not obligated to withdraw an opinion, it has done so to facilitate settlement and where matters of public interest were not involved.” Id. at *1 (emphasis added).

Vacatur is Not Appropriate to Serve a Private Litigant’s Interest to Remove Adverse Precedent

In a somewhat similar public policy vein, courts have also been cognizant of large corporate parties’ attempts to eliminate adverse precedent by “buying off” a smaller party. For example, in Manufacturers Hanover Trust Co. v. Yanakas, 11 F.3d 381, 382 (2d Cir. 1993), the Second Circuit affirmed in part and reversed in part a district court’s decision and remanded the case to the district court for further proceedings.  The parties then reached a settlement agreement, which was conditioned upon the Second Circuit’s agreement to vacate its opinion. The parties consequently filed a joint motion asked the Second Circuit to vacate its opinion.  The Second Circuit denied the parties’ motion:

Nor do we view the granting of such a motion as a wise exercise of discretion, for vacatur of the appellate court’s judgment would facilitate two abuses. First, it would allow the parties to obtain an advisory opinion of the court of appeals in a case in which there may not be, or may no longer be, any genuine case or controversy; the federal courts of course have no jurisdiction to render such opinions. Second, even where there was a genuine case or controversy, it would allow a party with a deep pocket to eliminate an unreviewable precedent it dislikes simply by agreeing to a sufficiently lucrative settlement to obtain its adversary’s cooperation in a motion to vacate. We do not consider this a proper use of the judicial system.

Id. at 384 (emphasis added).

Likewise, a district court explained that “[v]acatur is requested almost exclusively by repeat-player litigants who have the greatest incentive to remove adverse precedent from the books. The repeat player, as opposed to the one-shot litigant, is principally concerned with the long-range effects of the judgment.”  McMellon v. United States, 528 F. Supp. 2d 611, 614 (S.D.W. Va. 2007).

Vacatur is Not Appropriate Where the Decision Addresses Significant or Novel Legal Issues

Courts appear more willing to grant a parties’ request to vacate an opinion where the opinion did not address novel or important legal issues.  For example, in granting a request to vacate a previously-issued order, one court noted that the opinion “d[id] not involve novel or controversial applications of the law.” BMC, LLC v. Verlan Fire Ins. Co., 2008 WL 2858737, at *2 (W.D.N.Y. July 22, 2008).  Similarly, vacatur is more appropriate when a decision presented “a fact-specific inquiry” rather than threshold legal issues, i.e. vacatur is more appropriate when the decision addressed factual issues that only affect the parties rather than legal issues that could be significant to non-parties. McKinney v. Philadelphia Hous. Auth., 2010 WL 2510382, at *2 (E.D. Pa. June 16, 2010).

On the other hand, courts have rejected parties’ requests to vacate decision that address important or novel legal issues. See e.g. Obrycka v. City of Chicago, 913 F. Supp. 2d 598, 602 (N.D. Ill. 2012) (describing the decision as addressing “a novel situation”); Barry v. Atkinson, 193 F.R.D. 197, 200 (S.D.N.Y. 2000) (addressing the “significance” of a decision in deciding whether to grant the parties’ request to vacate the decision to facilitate a settlement agreement); In re Aden, 2013 WL 4513838, at *2 (D. Idaho Aug. 23, 2013) (similar); Bashkin v. Keisler, No. 06 C 2518, 2008 WL 4866352, at *4 (N.D. Ill. June 13, 2008) (“While we agree with plaintiffs that other courts and litigants are interested in the matters addressed in our September 20, 2007 opinion, this only strengthens our view that our decision should be left intact.”) (footnote omitted).

Vacatur is Not Appropriate Simply to Facilitate a Settlement Agreement

Courts have also rejected parties’ arguments that vacatur of a decision to facilitate a settlement agreement is necessary to promote the important interests served by settlement agreements.  For example, in Amaefule v. Exxonmobil Oil Corp., 630 F. Supp. 2d 42, 43 (D.D.C. 2009), the only case that research reveals in the District of the District of Columbia to address this issue, the parties reached a settlement agreement, and in connection with that settlement agreement, asked the district court to “vacat[e] the oral rulings issued . . . in connection with the preliminary injunction and . . . on the parties’ summary judgment motions such that the rulings could not be cited as precedent and would carry no precedential value.”  Id. at 42.  The district court denied the parties’ motion.  The district court rejected the parties’ argument that vacatur was necessary to promote a policy of encouraging settlements:

The parties argue that “vacatur is necessary to uphold this District’s longstanding policy of encouraging the amicable termination of litigation.” They cite to no precedent, though, establishing any longstanding practice in this District of encouraging settlement by vacating court decisions.1 Indeed, a court encourages settlement by ruling on parties’ dispositive motions so that parties know where they stand when they engage in settlement discussions about surviving claims. Similarly, a court encourages settlement by making available its reasoning for litigants in similar actions to rely upon when assessing whether settlement is the preferable resolution to a dispute. Nevertheless, neither party has demonstrated any exceptional circumstances justifying deviating from longstanding policy in this circuit against vacatur following settlement. Nor have the parties argued that the previous rulings in this action were erroneous. Having expended the time and effort to resolve the parties’ motions and create precedent which may be of value to other courts and litigants, this court finds no basis for vacating the previous rulings in this action. (Emphasis added)

Id. at 43-44.

Put differently, as another district court explains, “[t]he policy in favor of settlement did not vest in the parties to this case the authority to decide which judicial orders they wish to remain good law.” Predator Int’l, Inc. v. Gamo Outdoor USA, Inc., 2014 WL 4057118, at *3 (D. Colo. Aug. 14, 2014); see also McMellon v. United States, 528 F. Supp. 2d 611, 614 (S.D.W. Va. 2007) (denying a motion to vacate a decision and explaining that “[s]ettlements are desirable, yet are not the sole concern of the judicial system”); Allen-Bradley Co., LLC v. Kollmorgen Corp., 199 F.R.D. 316, 320 (E.D. Wis. 2001) (similar).

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By | 2018-03-25T14:00:29+00:00 July 19th, 2017|False Claims Act Information|