[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
APRIL 23, 2012
No. 10-15098
JOHN LEY
________________________
CLERK
D.C. Docket No. 0:08-cv-61445-MGC
ANAGO FRANCHISING, INC.,
llllllllllllllllllllllllllllllllllllllll Plaintiff -
llllllllllllllllllllllllllllllllllllllll Counter-Defendant -
llllllllllllllllllllllllllllllllllllllll Appellee,
versus
SHAZ, LLC,
llllllllllllllllllllllllllllllllllllllll Defendant -
llllllllllllllllllllllllllllllllllllllll Counter-Claimant -
llllllllllllllllllllllllllllllllllllllll Appellant,
ECO BUILDING SERVICES LLC,
llllllllllllllllllllllllllllllllllllllll Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(April 23, 2012)
Before WILSON and COX, Circuit Judges, and RESTANI,* Judge.
WILSON, Circuit Judge:
This case arises out of an alleged breach of a settlement agreement signed in
a franchise dispute. The district court found that it had never dismissed the case
and retained jurisdiction to decide the motion to compel compliance with the
settlement agreement. After careful consideration and briefing by the parties, we
find that the parties dismissed the case by filing a stipulation in accordance with
Federal Rule of Civil Procedure 41(a)(1)(A)(ii) and that the district court did not
retain jurisdiction to enforce the settlement agreement. The court was therefore
without jurisdiction to consider the motion to compel. We remand this case to the
district court to dismiss it for lack of jurisdiction.
I. FACTS AND PROCEDURAL HISTORY
Anago Franchising, Inc. (“Anago”), a Florida corporation, is a commercial
cleaning services franchisor. Shaz, LLC (“Shaz”) was its subfranchisor in the state
of Utah and was obligated under the Subfranchise Rights Agreement to sell a
certain number of unit franchises each year within its territory. Shaz members
separately own and operate Eco Building Services, LLC (“Eco”), a Utah limited
*
Honorable Jane A. Restani, Judge, United States Court of International Trade, sitting by
designation.
2
liability corporation unaffiliated with Anago. In the underlying case, Anago
terminated Shaz’s Subfranchise Rights Agreement for failure to meet the minimum
annual performance requirement. Eco then began to service Shaz’s former clients’
cleaning needs, and Anago filed suit against both Shaz and Eco. Shaz
subsequently filed counterclaims against Anago. On February 3, 2009, Shaz, Eco,
and Anago resolved their dispute in mediation and entered into a final mediated
settlement agreement (“the Settlement Agreement”) containing a confidentiality
clause.1 The next day, a managing member of both Shaz and Eco made a
disclosure that Anago alleges is a material breach of the Settlement Agreement’s
confidentiality clause. Despite the alleged breach, both parties continued to
perform under the terms of the Settlement Agreement.
On February 27, 2009 the district court administratively closed the case and
requested that the parties file “a Stipulation for Final Order of Dismissal within
fifteen days.” It noted that after the stipulation was filed, it would enter an order
dismissing the case with prejudice. Pursuant to the Settlement Agreement, on
March 2, 2009, Anago, Shaz, and Eco filed a Stipulation for Dismissal with
1
We note that the settlement agreement has been filed under seal. Although Shaz and
Eco filed their briefs and record excerpts under seal, Anago did not file its brief under seal and
disclosed various terms of the agreement therein. The parties also discussed specific terms of the
Settlement Agreement at oral argument and did not request any part of the hearing be kept
confidential. Out of abundance of caution, we refer only to facts in the unsealed record.
3
Prejudice in district court. The Stipulation referenced Federal Rule of Civil
Procedure “41(a)(1)(ii) and (2),”2 stated that all parties agreed to dismiss the entire
matter with prejudice, and asserted “that the Court shall reserve jurisdiction to
enforce the settlement between the parties pursuant to the terms contained therein.”
The Stipulation was signed by the attorneys representing each of the parties. That
day the parties also filed a Joint Motion for Entry of Final Judgment by Consent.
The district court never filed an order dismissing the case with prejudice.
On March 20, 2009 Anago sent Shaz and Eco a letter indicating that the
February 4 disclosure constituted a breach of a material term of the Settlement
Agreement which allowed them to forego any obligation to make future payments.
On March 26, 2009, the district court signed the consent final judgment that
had been attached to the parties’ March 2 joint motion. The final judgment did not
mention the March 2 Stipulated Dismissal or the Settlement Agreement, and it did
not explicitly dismiss the case.
In July 2009, after months of nonpayment, Shaz and Eco filed a motion in
district court seeking to compel Anago’s compliance with the Settlement
Agreement. The district court referred the case to a magistrate judge who found
2
The 2007 changes to the Federal Rules of Civil Procedure reorganized Rule 41(a)(1),
and the provision previously found in Rule 41(a)(1)(ii) is now contained in Rule 41(a)(1)(A)(ii).
The new rule is substantively the same as the old, as noted in the Advisory Committee Notes to
the 2007 amendments. For clarity we cite to the new rule throughout this opinion.
4
continuing jurisdiction to consider the motion because the district court had never
dismissed the case—it had only administratively closed it. The magistrate judge’s
jurisdictional analysis focused on the text of the final judgment. Because the final
judgment did not order the clerk to dismiss the case, the magistrate judge
concluded that the case had not been dismissed. The magistrate judge’s order does
not discuss the Stipulation of Dismissal beyond noting that it was filed and that the
parties agreed that the district court would retain jurisdiction to enforce the
Settlement Agreement.
After an evidentiary hearing, the magistrate judge recommended that the
district court deny Shaz and Eco’s Motion to Compel. The district court adopted
the magistrate judge’s findings and denied the motion on the merits, concluding
that Shaz had breached the Settlement Agreement and that this discharged Anago’s
obligation to perform. Shaz and Eco now appeal.
II. JURISDICTION
We have an independent obligation to determine whether jurisdiction exists
in each case before us, so we may consider questions of jurisdiction sua sponte
even when, as here, the parties have not raised jurisdictional challenges. Arbaugh
v. Y&H Corp., 546 U.S. 500, 514, 126 S. Ct. 1235, 1244 (2006).
Our jurisdictional inquiry requires us to determine if the case was dismissed
5
below and whether the district court retained jurisdiction to enforce the Settlement
Agreement after that dismissal. This inquiry requires us to clarify two points of
law: (1) whether a stipulation of dismissal filed under Federal Rule of Civil
Procedure 41(a)(1)(A)(ii) dismisses a case automatically, and (2) whether under
Kokkonen v. Guardian Life Insurance of America, 511 U.S. 375, 114 S. Ct. 1673
(1994), a district court may enter an order retaining jurisdiction over a settlement
agreement after a stipulation of dismissal is effectuated.
The case below could only have been dismissed through the March 2
Stipulation of Dismissal filed by the parties or through the district court’s March
26 entry of Final Judgment. Because voluntary dismissal of a case strips the court
of jurisdiction and leaves it without power to make legal determinations on the
merits, we begin our inquiry by determining the nature of the document filed by
the parties on March 2. See SmallBizPros, Inc. v. MacDonald, 618 F.3d 458, 463
(5th Cir. 2010) (per curiam) (noting that any action by the district court after a
voluntary dismissal is “superfluous”); Smith v. Phillips, 881 F.2d 902, 904 (10th
Cir. 1989) (stating that once a stipulation is filed pursuant to Rule 41(a)(1)(A)(ii),
all action on the merits of the case is terminated).
A. Dismissal under Federal Rule of Civil Procedure 41
After settlement of a case, parties may dismiss the case themselves by
6
utilizing Federal Rule of Civil Procedure 41(a), which allows plaintiffs to
voluntarily dismiss an action. Generally, a plaintiff may ask the court to dismiss an
action at any time. See Fed. R. Civ. P. 41(a)(2). Under Rule 41(a)(2), the court
has discretion to dismiss the case through an order and to specify the terms of that
dismissal. A plaintiff may dismiss an action voluntarily without a court order in
two circumstances: by filing a notice of dismissal before the opposing party serves
an answer or motion for summary judgment, Fed. R. Civ. P. 41(a)(1)(A)(i), or at
any time during the litigation by filing a stipulation of dismissal signed by all
parties who have appeared, Fed. R. Civ. P. 41(a)(1)(A)(ii).
1. Standard of Review
Anago, Shaz, and Eco filed a document with the court entitled “Stipulation
for Dismissal with Prejudice” which stated that it was filed pursuant to “Rule
41(a)(1)[(A)](ii) and (2).” The parties made an obvious drafting mistake by citing
two different modes of dismissal—Rule 41(a)(1), which allows for dismissal
without a court order, and Rule 41(a)(2), which requires the court to order the case
dismissed—so to determine whether the case was dismissed, we must identify
which rule the parties used to dismiss the case.
We have never specifically addressed the standard we use when reviewing a
district court’s construction of a Rule 41(a) filing. We review a district court’s
7
decision to dismiss a case pursuant to a Rule 41(a)(2) motion for abuse of
discretion, Negron v. City of Miami Beach, 113 F.3d 1563, 1571 (11th Cir. 1997),
and a district court’s interpretation of Rule 41(a) de novo, ASX Inv. Corp. v.
Newton, 183 F.3d 1265, 1267 (11th Cir. 1999). The determination of whether a
document was filed under Rule 41(a)(1) or Rule 41(a)(2) is a legal conclusion that
can be made on the face of the filing and does not depend on facts the district court
should find in the first instance. We therefore review the district court’s
determination de novo. See Cunningham v. Whitener, 182 F. App’x 966, 968–69
(11th Cir. 2006) (per curiam) (considering a court order on its face to determine if
it was issued pursuant to 41(a)(1) or (a)(2)); De Leon v. Marcos, 659 F.3d 1276,
1282–83 (10th Cir. 2011) (reviewing de novo the district court’s determination on
whether a stipulation was filed pursuant to Rule 41(a)(1) or 41(a)(2)).
A de novo review requires us to determine the parties’ intent when they filed
the March 2 document, and the best indication of that intent is the document itself.
See generally De Leon, 659 F.3d at 1283–84 (interpreting a filing de novo,
analyzing its contents and comparing them to the requirements found in Rule
41(a)(1)(A)(ii) and Rule 41(a)(2) to determine which controls). The parties styled
the document a “Stipulation,” which is expressly required in Rule 41(a)(1)(A)(ii)
and not mentioned in Rule 41(a)(2). The Stipulation states that all parties “agree to
8
dismissal with prejudice” of the complaint and counterclaim in the case. Rule
41(a)(1)(B) states that dismissals under Rule 41(a)(1) must explicitly state if
prejudice is to attach, else the court will assume that the dismissal will be without
prejudice. Rule 41(a)(2) also presumes dismissal without prejudice but leaves the
final dismissal terms to the discretion of the district court. Fed. R. Civ. P. 41(a)(2)
(“Unless the order states otherwise, a dismissal under this paragraph (2) is without
prejudice.”). Finally, the Stipulation does not contemplate that a court order is
necessary to make it effective. There is no signature line for the district court, and
the statement retaining jurisdiction is not a request made to the district court but a
declaration of retained jurisdiction. We therefore find that the Stipulation was
entered pursuant to Rule 41(a)(1)(A)(ii) and that its reference to Rule 41(a)(2) was
in error.
2. Dismissal Pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii)
Because the Stipulation was filed pursuant to Rule 41(a)(1)(A)(ii), we now
examine when and how a stipulation can dismiss a case under that provision. Rule
41(a)(1)(A)(ii) allows for plaintiffs, subject to certain rules inapplicable here, to
“dismiss an action without a court order by filing . . . a stipulation of dismissal
signed by all parties who have appeared.” “Unless the notice or stipulation states
otherwise, the dismissal is without prejudice.” Fed. R. Civ. P. 41(a)(1)(B).
9
Although we have found that a notice of dismissal under Rule 41(a)(1)(A)(i) “is
effective immediately upon filing,” Matthews v. Gaither, 902 F.2d 877, 880 (11th
Cir. 1990) (per curiam), we have never directly addressed whether a stipulation
filed pursuant to Rule 41(a)(1)(A)(ii) is similarly self-executing. The former Fifth
Circuit indirectly indicated that a Rule 41(a)(1)(A)(ii) stipulation may dismiss the
case automatically. See United States v. City of Miami, 614 F.2d 1322, 1330 (5th
Cir. 1980)3 (“[P]rocedurally it would seem to be impossible for the judge to
become involved in overseeing a settlement[] because the parties are free at any
time to agree to a resolution of the dispute by private contractual agreement[] and
to dismiss the lawsuit by stipulation. . . . [T]he trial court plays no role in
overseeing or approving any settlement proposals.”); Williams v. Ezell, 531 F.2d
1261, 1263–64 (5th Cir. 1976) (stating that a district court has no discretion to
deny a properly filed dismissal by the plaintiff under Rule 41(a)(1)). In a more
recent case, we seemed to expect court approval because of the consent decree
nature of the disposition. See Am. Disability Ass’n v. Chmielarz, 289 F.3d 1315,
1318 (11th Cir. 2002) (discussing the district court’s entry of a Final Order of
Dismissal to effectuate a Rule 41(a)(1)(A)(ii) stipulation of dismissal when the
3
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we
adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior
to October 1, 1981.
10
plaintiff requested the entry of a dismissal order). But see State Treasurer of Mich.
v. Barry, 168 F.3d 8, 14 (11th Cir. 1999) (stating that the district court has
“nothing further to do when a stipulation of dismissal without prejudice is filed”).
Most of our sister circuits have directly or implicitly found, in published and
unpublished opinions, that a stipulation filed under Rule 41(a)(1)(A)(ii) is self-
executing and dismisses the case upon filing. Gambale v. Deutsche Bank AG, 377
F.3d 133, 139 (2d Cir. 2004) (“Generally . . . a plaintiff’s filing in the district court
of a stipulation of dismissal signed by all parties pursuant to Rule 41(a)(1)(ii)
divests the court of its jurisdiction over a case, irrespective of whether the district
court approves the stipulation.”); Kabbaj v. Am. Sch. of Tangier, 445 F. App’x 541,
544 (3d Cir. 2011) (per curiam) (“A dismissal under Rule 41(a)(1)(A)(ii) is
automatic; it does not require judicial approval.” (citing First Nat’l Bank of Toms
River v. Marine City, Inc., 411 F.2d 674, 677 (3d Cir. 1969))); SmallBizPros, 618
F.3d at 463 (“[A] voluntary stipulation of dismissal under Rule 41(a)(1)(A)(ii) is
effective immediately, [so] any action by the district court after the filing of such a
stipulation can have no force or effect because the matter has already been
dismissed . . . .”); Green v. Nevers, 111 F.3d 1295, 1301 (6th Cir. 1997) (noting
that a “properly stipulated dismissal under Rule 41(a)(1)[(A)](ii) is self-executing
and does not require judicial approval . . . .”); Jenkins v. Vill. of Maywood, 506
11
F.3d 622, 624 (7th Cir. 2007) (“[U]nder Rule 41(a)[(1)(A)(ii)], the dismissal was
effective immediately upon the filing of the Stipulation . . . .”); Gardiner v. A.H.
Robins Co., 747 F.2d 1180, 1189 (8th Cir. 1984) (recognizing that the entry of a
stipulation under Rule 41(a)(1)(A)(ii) is effective automatically and does not
require judicial approval); De Leon, 659 F.3d at 1284 (characterizing a Rule
41(a)(1)(A)(ii) dismissal as self-executing); In re Wolf, 842 F.2d 464, 466 (D.C.
Cir. 1988) (per curiam) (“‘[C]aselaw concerning stipulated dismissals under Rule
41(a)(1)[(A)](ii) is clear that the entry of such a stipulation of dismissal is effective
automatically and does not require judicial approval.’” (quoting Gardiner, 747
F.2d at 1189)); see also Marino v. Pioneer Edsel Sales, Inc., 349 F.3d 746, 752 n.1
(4th Cir. 2003) (noting that dismissals by stipulation pursuant to Rule 41(a)(1)(ii)
are not effectuated by court order); Commercial Space Mgmt. Co. v. Boeing Co.,
193 F.3d 1074, 1077 (9th Cir. 1999) (noting, when discussing a Rule
41(a)(1)(A)(i) dismissal, that Rule 41(a)(1) dismissals are generally automatic and
contrasting them with Rule 41(a)(2) dismissals).
The distinctions Rule 41(a)(1) draws between stipulations and notices are
based on the stage of litigation during which they may be filed. The Rules make
no distinction regarding their effect on litigation. See Fed. R. Civ. P. 41(a)(1)(B)
(discussing the effect of a “notice or stipulation”). We have found that notices of
12
dismissal allowed for under Rule 41(a)(1)(A)(i) are effective upon filing, and we
find no reason to require judicial approval of stipulations of dismissal filed under
Rule 41(a)(1)(A)(ii). See In re Wolf, 842 F.2d at 466 (finding instructive cases
interpreting Rule 41(a)(1)(A)(i) to determine the effect of a Rule 41(a)(1)(A)(ii)
filing).
Therefore, we find that the plain language of Rule 41(a)(1)(A)(ii) requires
that a stipulation filed pursuant to that subsection is self-executing and dismisses
the case upon its becoming effective. The stipulation becomes effective upon
filing unless it explicitly conditions its effectiveness on a subsequent occurrence.
District courts need not and may not take action after the stipulation becomes
effective because the stipulation dismisses the case and divests the district court of
jurisdiction. See SmallBizPros, 618 F.3d at 464.
We must now determine if the Stipulation filed below was effective upon
filing and if so, whether the district court properly retained jurisdiction to enforce
the Settlement Agreement.
B. Retaining Jurisdiction under Kokkonen
In Kokkonen, the Supreme Court recognized that the enforcement of a
settlement agreement falls outside of the scope of ancillary jurisdiction of the
federal courts, even when the court had jurisdiction to hear the underlying case.
13
511 U.S. at 379–80, 114 S. Ct. at 1676. The Supreme Court reasoned that a district
court could retain jurisdiction to enforce a settlement agreement with consent of
the parties and of the court, provided the district court issues an order requiring
compliance with the settlement agreement. Id. at 381, 114 S. Ct. at 1677. In that
case, non-compliance would be a violation of a court order and the district court
could use its ancillary jurisdiction to enforce its orders (and by extension enforce
the settlement agreement). Id. The Supreme Court stated that a district court could
require compliance by either making the settlement agreement part of the court
order by a separate provision “retaining jurisdiction” or by incorporating the terms
of the agreement into the order itself. Id. at 381, 114 S. Ct. at 1677.
Underlying Kokkonen is the well-established proposition that jurisdiction
cannot exist by mere consent of the parties. See, e.g., Eagerton v. Valuations, Inc.,
698 F.2d 1115, 1118 (11th Cir. 1983). To retain jurisdiction to enforce a
settlement agreement, the court itself must act; agreement by the parties is not
enough. See SmallBizPros 618 F.3d at 464 n.4 (speculating that a situation might
arise in which a district court may lack jurisdiction to enforce a settlement
agreement because it issued no order retaining jurisdiction even though the parties
expressly provide for ancillary jurisdiction in their stipulation for dismissal). The
Supreme Court stated that when dismissal is pursuant to Rule 41(a)(1)(A)(ii), the
14
district court is “authorized to embody the settlement contract in its dismissal order
. . . if the parties agree.” Kokkonen, 511 U.S. at 381–82, 114 S. Ct. at 1677. In
Chmielarz, this court’s first interpretation of Kokkonen, we did not detail the
methods by which a district court could retain jurisdiction. We did note, however,
that the district court entered an order of dismissal following the filing of a
stipulation of dismissal and that the court’s dismissal order sufficiently adopted the
settlement agreement to retain jurisdiction. 289 F.3d at 1318, 1320–21.
C. Reconciling Rule 41(a)(1)(A)(ii) and Kokkonen
Our Circuit has not yet decided whether a district court order entered after
the filing of a Rule 41(a)(1)(A)(ii) stipulation can have any effect. In Kokkonen,
the Supreme Court stated that in the context of a
Rule 41(a)(1)[(A)](ii) [dismissal] (which does not by its terms
empower a district court to attach conditions to the parties’ stipulation
of dismissal) . . . the court is authorized to embody the settlement
contract in its dismissal order (or, what has the same effect, retain
jurisdiction over the settlement contract) if the parties agree. Absent
such action, however, enforcement of the settlement agreement is for
state courts, unless there is some independent basis for federal
jurisdiction.
511 U.S. 381–82, 114 S. Ct. at 1677. This language creates a tension between the
self-executing nature of a stipulation of dismissal which strips the district court of
jurisdiction to issue orders and the Supreme Court’s allowance of a postdismissal
order to have the effect of retaining jurisdiction. The Seventh Circuit resolved this
15
tension by finding that Kokkonen allows the district court to “take certain
postdismissal action in furtherance of its ancillary jurisdiction” despite the fact that
generally a Rule 41(a)(1)(A)(ii) stipulation divests the court of jurisdiction. Bond
v. Utreras, 585 F.3d 1061, 1078 (7th Cir. 2009). Instead of finding an exception,
the Fifth Circuit has resolved this issue by focusing on the mechanics of Rule 41
and allowing parties to make the effectiveness of their stipulation contingent on
action by the district court. SmallBizPros, 618 F.3d at 463. Specifically, the Fifth
Circuit explains that the district court can retain jurisdiction if “(i) all of the
requirements for retaining jurisdiction [are] met at the time of filing, or (ii) the
filing’s effectiveness [is] contingent upon a future act (such as the district court
issuing an order retaining jurisdiction).” Id.
We agree with the Fifth Circuit that a district court cannot retain jurisdiction
by issuing a postdismissal order to that effect. A district court loses all power over
determinations of the merits of a case when it is voluntarily dismissed. Id. In the
context of a Rule 41(a)(1)(A)(ii) dismissal, we understand the Supreme Court’s
statement that “the [district] court is authorized to embody the settlement contract
in its dismissal order (or, what has the same effect, retain jurisdiction over the
settlement contract) if the parties agree” to mean that the parties must agree to the
district court’s order retaining jurisdiction, not that the district court may enter a
16
dismissal order when it would otherwise lack jurisdiction to do so. Kokkonen, 511
U.S. at 381–82, 114 S. Ct. at 1677.
Similar to the Fifth Circuit, we read Kokkonen in light of the plain language
of Rule 41(a)(1)(A)(ii) and understand that it allows a district court to retain
jurisdiction through an order, even if the parties dismiss the case through use of
Rule 41(a)(1)(A)(ii), so long as the parties agree to the retention of jurisdiction.
Because a court has no power to enter orders after a Rule 41(a)(1)(A)(ii)
stipulation becomes effective, however, the court must enter the order retaining
jurisdiction before the stipulation becomes effective. We therefore find that for a
district court to retain jurisdiction over a settlement agreement where the parties
dismiss the case by filing a stipulation of dismissal pursuant to Rule
41(a)(1)(A)(ii), either (1) the district court must issue the order retaining
jurisdiction under Kokkonen prior to the filing of the stipulation, or (2) the parties
must condition the effectiveness of the stipulation on the district court’s entry of an
order retaining jurisdiction.4
This is not inconsistent with our interpretation of Kokkonen in Chmielarz.
4
As the Fifth Circuit noted, this does not transform a Rule 41(a)(1)(A)(ii) stipulation into
a Rule 41(a)(2) dismissal (requiring a court order) because the parties themselves are agreeing to
the conditional effectiveness of the stipulation, and the court would not be empowered to impose
new conditions on the parties. SmallBizPros, 618 F.3d at 463 n.3. If the district court does not
issue an order retaining jurisdiction, the stipulation would simply not become effective and the
case would not be dismissed.
17
There, the parties filed a stipulation of dismissal and “requested the Court to retain
jurisdiction to enforce the terms of the Stipulation for Settlement.” Chmielarz, 289
F.3d at 1318 (emphasis added) (internal quotation marks omitted). Pursuant to that
request, the district court entered an order of dismissal which specifically
“approved, adopted and ratified the Stipulation of Voluntary Dismissal with
Prejudice, dismissed the case with prejudice, and expressly retained jurisdiction
solely for the purpose of enforcing the Settlement Agreement.” Id. (alteration and
internal quotation marks omitted). Thus, the court issued its order because the
stipulation requested it and by its nature required it.
In this case, the parties purported to retain jurisdiction by stating in their
Stipulation that “[a]ll parties agree that the Supreme Court shall reserve
jurisdiction to enforce the settlement between the parties pursuant to the terms
contained therein.” Unlike the stipulation in Chmielarz, this Stipulation makes no
request of the district court; the parties seek to extend jurisdiction by agreement
only. It is undoubtedly true that all parties must consent to the retention of
jurisdiction over the enforcement of a settlement agreement if the case is dismissed
by stipulation of all parties, but that agreement alone is not sufficient. See
Kokkonen, 511 U.S. at 381, 114 S. Ct. at 1677. The district court must also issue
an order specifically retaining jurisdiction in accordance with Kokkonen because
18
ancillary jurisdiction allows a district court to effectuate its orders, not to enforce
stipulations. See Kokkonen, 511 U.S. at 380–81, 114 S. Ct. at 1676–77. The
district court did not retain jurisdiction to enforce the Settlement Agreement here
because the court issued no such order before the case was dismissed and the
stipulation was not conditioned by the entry of an order retaining jurisdiction.
Our decision does not leave the parties without a remedy—they may seek to
enforce the settlement agreement in state court. Kokkonen, 511 U.S. at 382, 114 S.
Ct. at 1677 (“[E]nforcement of the settlement agreement is for state courts, unless
there is some independent basis for federal jurisdiction.”). Settlement agreements
are contracts and thus may be adjudicated in courts with jurisdiction over the
contract. See id. at 378, 114 S. Ct. at 1675–76 (“Enforcement of [a] settlement
agreement, however, . . . is more than just a continuation or renewal of the
dismissed suit, and hence requires its own basis for jurisdiction.”). When the
settlement agreement is not made part of a court order, it is merely a private
contract arising out of a case in federal court and “ha[s] nothing to do with” the
underlying case. Id. at 380, 114 S. Ct. at 1676. The contract does not require
adjudication by the same court, and is too “remote from what courts require in
order to perform their functions.” Id.
III. CONCLUSION
19
The underlying lawsuit was dismissed on March 2, 2009, when the
Stipulation for Dismissal with Prejudice was filed in the district court pursuant to
Rule 41(a)(1)(A)(ii).5 The Stipulation did not condition its effectiveness on the
issuance of an order by the district court retaining jurisdiction, and the court did
not issue such an order prior to the dismissal of the case. Therefore, the district
court did not retain jurisdiction to enforce the Settlement Agreement.
Rule 41(a)(1)(A) is a useful tool in settling cases because it allows parties to
dismiss an action without a court order. However, it must be used precisely to
reach the desired result; ancillary jurisdiction does not allow a court to enforce a
filed stipulation in the same way it allows a court to enforce its orders. Cf.
Kokkonen, 511 U.S. at 380–81, 114 S. Ct. at 1676–77. Because the case was
dismissed and jurisdiction was not retained, the district court did not have
jurisdiction to consider the July 6 Motion to Compel, and we do not have
jurisdiction to rule on the merits of that decision.
“Jurisdiction is power to declare the law, and when it ceases to exist, the
only function remaining to the court is that of announcing the fact and dismissing
the cause.” Ex Parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1869). We therefore
5
Because we find that the March 2 stipulation dismissed the case, we do not address the
magistrate judge’s conclusion that the entry of a final judgment does not dismiss a case unless it
does so explicitly.
20
vacate the district court’s ruling on the Motion to Compel and remand this case
with instructions to dismiss for lack of jurisdiction.6
VACATED AND REMANDED WITH INSTRUCTIONS TO DISMISS FOR
LACK OF JURISDICTION.
6
We note that all orders issued after the filing of the stipulation of dismissal—including
the consent final judgment—are vacated because the court was without power to issue them.
21