Settlement Agreement Moots an Action, Even If It Requires Future Performance

The district court granted a party’s motion for summary judgment of noninfringement—after the parties had entered into a settlement agreement.  The Federal Circuit vacated and remanded in Serta Simmons Bedding, LLC v. Casper Sleep Inc., Nos. 19-1098, 19-1159 (Feb. 13, 2020).

Serta alleged that Casper infringed its mattress patents.  Casper moved for summary judgment of noninfringement.  On June 18, 2018, with those motions still pending, the parties entered into a settlement agreement that, among other things, required Casper to stop manufacturing and marketing certain products by mid-July and pay a settlement amount by June 28, 2018.  Two days later, without mentioning the settlement, the court granted Casper’s summary judgment motions.  Casper then refused to pay. 

The district court denied Serta’s subsequent motions to enforce the settlement agreement, finding that the case was not moot upon its signing because the parties intended to fulfill their obligations under the agreement in the future.  Further, because the court believed that it had entered final judgment before Serta filed its motion to enforce, the court held that it lacked jurisdiction to enforce the agreement.  Serta appealed.

The Federal Circuit vacated the district court’s grant of summary judgment, holding that a binding settlement agreement moots an action even if that agreement requires future performance.  The Court noted that in some circumstances, a court may refuse to enforce such agreements, for example if they are against public policy.  Because neither party indicated such circumstances existed in this case, the Court found that the agreement was enforceable, and thus the case was rendered moot when the parties entered the agreement.

The Federal Circuit also held that a district court has jurisdiction to enforce a settlement agreement so long as the motion to enforce is filed before the case has been dismissed.  The Court thus directed the district court to enforce the parties’ agreement upon remand.