Fafel v. DiPaola

United States Court of Appeals
For the First Circuit

No. 04-1718

LEONARD FAFEL,

Plaintiff, Appellant,

v.

JAMES V. DIPAOLA, individually

and in his capacity as Middlesex Sheriff,

Defendant, Appellee.

APPEAL FROM THE U.S. DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Patti B. Saris, U.S. District Judge]

Before

Torruella, Circuit Judge,
Campbell, Senior Circuit Judge,
and Lipez, Circuit Judge.

Robert S. Mantell, with whom Rodgers, Powers & Schwartz LLP
was on brief, for appellant.
Thomas Drechsler, Special Assistant Attorney General, with
whom Salvatore M. Giorlandino, Assistant Attorney General, and
Finneran, Byrne & Drechsler, L.L.P., were on brief, for appellee.

March 7, 2005
 LIPEZ, Circuit Judge. Plaintiff-Appellant Leonard Fafel

appeals from the denial of his Rule 60(b)(4) motion for relief from

an injunction that prohibits him from pursuing claims in state

court in contravention of a consent judgment entered in federal

court pursuant to Rule 68. See Fed. R. Civ. P. 60 (Relief from

Judgment or Order); Fed. R. Civ. P. 68 (Offer of Judgment). Fafel

argues that the injunction is void for lack of subject-matter

jurisdiction because the district court misunderstood the scope of

its ancillary jurisdiction to enforce the underlying Rule 68

judgment. Given that the district court had more than an arguable

basis for concluding that it had jurisdiction to enforce its

judgment, we reject Fafel's collateral attack and affirm the

district court's decision.

I.

A. Fafel's State and Federal Court Actions

We recount the undisputed facts and procedural history in

some detail to provide an understanding of the unusual nature of

this case. On April 10, 2002, Fafel filed a civil rights action

under 42 U.S.C. § 1983, along with pendent state law claims, in

federal district court against Defendant-Appellee, Middlesex County

Sheriff James V. DiPaola, individually and in his official

capacity, based on Fafel's termination from employment in April

2000. Specifically, Fafel alleged that DiPaola had caused a

deprivation of Fafel's constitutional rights to freedom of

-2-
association and due process in violation of § 1983 and its state

law counterpart, Mass. Gen. L. ch. 12, § 11I, and that he had

engaged in tortious interference with Fafel's employment. Fafel

had already filed another action against DiPaola and the

Commonwealth of Massachusetts arising out of the same incident in

Massachusetts Superior Court alleging that Fafel had been

terminated without the benefit of procedural protections required

under Mass. Gen. L. ch. 35, § 51. On May 30, 2002, less than two

months after the filing of his federal court action, Fafel obtained

a court order in his state court action directing DiPaola and the

Commonwealth of Massachusetts to reinstate Fafel with back pay.

Judgment in Fafel's favor was not entered until approximately six

months later, in January 2003.

B. DiPaola's Offer of Judgment

On April 17, 2003, while DiPaola's appeal from the state

court judgment was pending in the Massachusetts Appeals Court,

Fafel filed a civil contempt action against DiPaola in state court

seeking enforcement of the state court judgment. On April 30,

2003, DiPaola filed a motion for summary judgment in Fafel's

federal court action. Instead of waiting for a ruling on the

motion, DiPaola extended an offer of judgment to Fafel on May 8,

2003, pursuant to Federal Rule of Civil Procedure 68, which permits

"a party defending against a claim [to] serve upon the adverse

party an offer to allow judgment to be taken against the defending

-3-
party for the money or property or to the effect specified in the

offer, with costs then accrued." DiPaola's offer specified an

amount of $150,000, including "attorney['s] fees and costs accrued

to date in the [federal court] case only," which amount, "[i]f

accepted, . . . shall satisfy all claims made and relief sought by

the plaintiff against the defendant arising from or related to the

April 2000 termination of the plaintiff from his employment in the

Middlesex Sheriff's Department." The offer also provided that,

upon Fafel's acceptance, "judgment shall enter in the amount of

$150,000 . . . in the case of Leonard Fafel v. James V. DiPaola,

Individually, and in his capacity as Middlesex Sheriff[,] and . . .

plaintiff's claims for punitive damages and injunctive relief shall

be dismissed with prejudice." The offer of judgment did not

explicitly refer to the disposition of Fafel's state law claims.

Under Rule 68, "[i]f within 10 days after the service of

the offer the adverse party serves written notice that the offer is

accepted, either party may then file the offer and notice of

acceptance together with proof of service thereof and thereupon the

clerk shall enter judgment." Fafel timely accepted the offer, and

DiPaola filed the requisite documents with the court on May 13,

2003. For reasons that remain unclear, judgment was not

immediately entered. Instead, on May 15, 2003, the entire case was

dismissed "[i]n accordance with the Offer of Judgement filed by the

Defendant on May 13, 2003."

-4-
C. DiPaola's Motion to Enforce

When Fafel refused to sign a stipulation of dismissal in

his state court contempt action or to assent to a motion to vacate

the state court judgment of reinstatement and back pay based on

Fafel's April 2000 termination, DiPaola moved in federal district

court on June 11, 2003, to enforce the Rule 68 judgment through an

injunction prohibiting Fafel from pursuing his state court action.

That same day, judgment was entered in the federal court action in

Fafel's favor. Because the order of dismissal entered on May 15,

2003, clearly failed to comply with either the terms of Rule 68 or

the terms of the offer of judgment filed with the court,1 we treat

that order as superseded by the judgment that was properly entered

on June 11, 2003, "[i]n accordance with Plaintiff's acceptance of

the Defendant's Offer of Judgement," which in turn provided that

"judgment shall enter in the amount of $150,000 . . . in the case

of Leonard Fafel v. James V. DiPaola Individually, and in his

capacity as Middlesex Sheriff[,] and . . . plaintiff's claims for

punitive damages and injunctive relief shall be dismissed with

prejudice."

1
Put most simply, an order dismissing a lawsuit does not
result in the entry of the judgment for money damages contemplated
by the Rule 68 offer in this case. The language of the order also
created an ambiguity about whether Fafel's claims for punitive
damages and injunctive relief were dismissed with prejudice. The
Rule 68 offer clearly required dismissal with prejudice.

-5-
 On August 19, 2003, the district court held a hearing on

DiPaola's motion to enforce.2 DiPaola argued that Fafel was

precluded from pursuing reinstatement through his state court

contempt action because, under the terms of the Rule 68 offer of

judgment that Fafel had accepted, his identical prayer for

injunctive relief in the form of reinstatement in the federal court

action had been dismissed with prejudice. Similarly, DiPaola

argued, Fafel was precluded from pursuing back pay in state court

through his contempt action because, again under the terms of the

Rule 68 offer, Fafel's acceptance of payment of $150,000

"satisf[ied] all claims made and relief sought by the plaintiff

against the defendant arising from or related to [his] April 2000

termination."3

Observing that Fafel had "lost" any entitlement to back

pay (the amount of which had never been calculated) in state court

by accepting DiPaola's offer of a $150,000 federal court judgment

in satisfaction of "all claims made and relief sought . . . arising

from or related to [his] April 2000 termination," the district

court enjoined Fafel -- deliberately "parrot[ing]" the terms of the

offer of judgment he had accepted -- "from taking any action to

2
The state court stayed Fafel's contempt action pending the
district court's decision on DiPaola's motion to enforce the Rule
68 judgment.
3
DiPaola tendered a check to Fafel dated August 15, 2003,
which was deposited on August 19, 2003.

-6-
seek relief or make claims against defendant arising from or

related to the April 2000 termination of the plaintiff from his

employment in the Middlesex Sheriff's Department."4 When Fafel

objected on the ground that the court lacked subject-matter

jurisdiction over his action in state court, the district court

responded, "I have jurisdiction over my judgment[,] and I'm

enforcing this judgment with respect to all claims made and relief

sought by the plaintiff against the defendant arising from or

related to the April[] 2000 termination of the plaintiff."

D. Fafel's Motion for Relief

Fafel did not appeal from the issuance of the injunction.

On October 30, 2003, approximately one month after the 30-day time

limit for filing a notice of appeal had passed, Fafel, represented

by new counsel, filed a "Motion to Vacate the Judgment and Reopen

the Case Due to an Unauthorized Acceptance of an Offer of

Judgment." He claimed that his former attorney had acted "contrary

to [Fafel's] specific instruction that [his attorney] not accept an

offer of judgment to the extent that it would dispose of [Fafel's]

claims in Massachusetts Court." In his motion, Fafel estimated

that "he would be owed $457,000" in back pay "as of June 30, 2003,"

under the state court's judgment and stated that "[i]t simply would

4
The district court expressed some reservations about whether
Fafel's contempt action seeking to enforce the state court order of
reinstatement fell within the scope of the terms of the offer.
Without deciding the matter, it simply issued an injunction in
accordance with the terms of the accepted offer.

-7-
not have made sense to accept a $150,000 offer of judgment in

Federal Court, to the extent that it would have [led] to a waiver

of the lucrative judgment in State Court worth $457,000 plus

reinstatement." Fafel then alleged that his former attorney had

been "instructed not to accept the offer to the extent that it

called for a release of the state law claims." In his prayer for

relief, Fafel requested that the court "[w]ithdraw the injunction

that prevents Plaintiff from pursuing remedies in State Court for

the April 2000 termination."

The magistrate judge considering this motion held an

evidentiary hearing on February 24, 2004, and issued a report and

recommendation on April 14, 2004. The magistrate judge construed

the motion as one for relief from judgment under the catch-all

provision of Federal Rule of Civil Procedure 60(b)(6), which

permits a district court to grant relief for "any other reason [not

set forth in Rule 60(b)(1)-(5)] justifying relief from the

operation of the judgment."

The magistrate judge first addressed Fafel's failure to

appeal the issuance of the injunction. Reciting the "bedrock" rule

that "Rule 60(b)(6) cannot, and should not, be used to [circumvent]

time limits available to take an appeal," the magistrate judge

stated: "To the extent that plaintiff was of the view that the

district judge . . . improperly or improvidently granted the

defendant the injunctive relief sought, he could have filed an

-8-
appeal . . . within thirty (30) days after the injunctive relief

was ordered." The magistrate judge concluded, quoting Cotto v.

United States, 993 F.2d 274, 278 (1st Cir. 1993), that

"[P]laintiff's current Motion to Reopen . . . is nothing more than

an attempt to '. . . escape the consequences of failure to take a

timely appeal.'"

Nevertheless, the magistrate judge went on to address

Fafel's motion on the merits. Based on the evidence presented

during the hearing, he determined that Fafel "did give [his

attorney] actual authority to accept the offer of judgment, knowing

full well that . . . there was a downside risk in acceptance of the

offer." Accordingly, the magistrate judge recommended denial of

Fafel's motion to vacate the Rule 68 judgment on the merits.

Then, after noting that "[n]either side . . . ha[d]

addressed [Fafel's] prayer for relief" requesting withdrawal of the

injunction enforcing the Rule 68 judgment (as distinct from Fafel's

request for relief from the Rule 68 judgment itself), the

magistrate judge recommended sua sponte that the district court

vacate the injunction because "this court always must be vigilant"

about subject-matter jurisdiction.5 The magistrate judge explained

that DiPaola's motion to enforce the Rule 68 judgment must be

"[t]reated as a breach of contract suit" between non-diverse

5
The magistrate judge did not identify which provision of Rule
60(b) authorized the granting of such relief and under what
conditions. We address this question below in Part II.

-9-
parties governed solely by state law, over which the district court

lacked jurisdiction once the court had disposed of Fafel's § 1983

suit. The magistrate judge then quoted extensively from the

Supreme Court's opinion in Kokkonen v. Guardian Life Insurance Co.

of America, 511 U.S. 375 (1994). There, the Court held that a

federal district court lacked subject-matter jurisdiction to

enforce a settlement agreement for which part of the consideration

was the filing of a stipulation of voluntary dismissal pursuant to

Fed. R. Civ. P. 41(a)(1)(ii).6 The Court held that the settlement

agreement at issue in Kokkonen, which provided no independent basis

for federal jurisdiction, could only be enforced in federal court

pursuant to the court's ancillary jurisdiction if the dismissal

order either (1) incorporated the terms of the settlement agreement

or (2) contained a provision, with the parties' consent, expressly

reserving jurisdiction to enforce the agreement. Id. at 381-82.

In the instant case, the magistrate judge reasoned, the

district court had employed neither of the measures set forth in

Kokkonen. Instead, "[t]he Order of Dismissal previously entered

[on May 15, 2003], and the formal judgment later entered [on June

11, 2003], did not purport to condition the dismissal on compliance

6
Fed. R. Civ. P. 41(a)(1)(ii) provides for dismissal of a
plaintiff's claims "without order of court" upon the filing of "a
stipulation of dismissal signed by all parties who have appeared in
the action. Unless otherwise stated in the . . . stipulation" (and
with exceptions not relevant here), "the dismissal is without
prejudice . . . ."

-10-
with the terms of the offer of judgment. Nor did [they] purport to

retain jurisdiction over the case to enforce the settlement."7 As

a result, the magistrate judge concluded, the district court lacked

subject-matter jurisdiction to enforce the terms of the Rule 68

offer purporting to "satisfy all claims made and relief sought by

the plaintiff against the defendant arising from or related to

[his] April 2000 termination."

DiPaola filed a limited objection to the magistrate

judge's report and recommendation relating to subject-matter

jurisdiction. The district court then issued the following margin

order on April 30, 2004:

I adopt the Report and Recommendation except
with respect to the recommendation that I lack
subject matter jurisdiction to enforce the
offer of judgment by an injunction. I believe
I have jurisdiction to issue the injunction.
See Utility Automation 2000 Inc. v.
Choctawhatchee Electric Cooperative, 298 F.3d
1238, 1248-49 (11th Cir. 2002).

The district court denied Fafel's motion for reconsideration of its

jurisdictional ruling on May 24, 2004. Fafel now appeals only from

that portion of the court's decision rejecting the magistrate

7
As we noted above, the May 15, 2003, order of dismissal,
which on its face failed to comport with the terms of the offer of
judgment or with Rule 68, was incorrectly entered. As we discuss
in Part III. C, a Rule 68 judgment differs from an order dismissing
a lawsuit. The magistrate judge did not recognize that the
judgment entered on June 11, 2003, superseded the order of
dismissal. This misunderstanding contributed significantly to the
misapplication of the Kokkonen case.

-11-
judge's recommendation to vacate the injunction for lack of

subject-matter jurisdiction.

II.

A. Standard of Review

We treat Fafel's appeal, which continues a collateral

attack on the validity of an injunction allegedly issued in the

absence of subject-matter jurisdiction, as an appeal from a denial

of a motion for relief from a judgment pursuant to Federal Rule of

Civil Procedure 60(b)(4), which permits a court to grant such

relief where "the judgment is void." See Lubben v. Selective Serv.

Sys. Local Bd. No. 27, 453 F.2d 645, 649-50 (1st Cir. 1972)

(analyzing claim that judgment was entered without subject-matter

jurisdiction under Rule 60(b)(4)).8 Ordinarily, a district court's

decision to grant or deny relief from judgment pursuant to Rule

60(b) is reviewable on appeal "only for an abuse of discretion."

Honneus v. Donovan, 691 F.2d 1, 2 (1st Cir. 1982) (per curiam)

(citation omitted). We have said, however, that a court deciding

a motion brought under Rule 60(b)(4) "ha[s] no discretion because

a judgment is either void or it is not." Id. (citations omitted).

Thus, we review de novo the district court's legal conclusion that

8
We thus have no need to analyze Fafel's claim under the
"catch-all" provision of Rule 60(b)(6), which the magistrate judge
used to analyze Fafel's entirely different claim that his attorney
lacked authority to accept the Rule 68 offer.

-12-
it had subject-matter jurisdiction to enforce its judgment with the

issuance of the injunction.

B. Void Judgments

As the magistrate judge noted, courts must always be

"vigilant" about the existence of subject-matter jurisdiction. Yet

determining when a judgment rendered in the absence of subject-

matter jurisdiction is "void" for purposes of collateral attack is

an issue of some complexity.

"Federal courts are courts of limited jurisdiction,"

Kokkonen, 511 U.S. at 377, and the requirement of subject-matter

jurisdiction "functions as a restriction on federal power,"

Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456

U.S. 694, 702 (1982). The existence of subject-matter jurisdiction

"is never presumed." Viqueira v. First Bank, 140 F.3d 12, 16 (1st

Cir. 1998). Rather, federal courts, including appellate courts,

must satisfy themselves that subject-matter jurisdiction has been

established. Ins. Corp. of Ir., 456 U.S. at 702. To that end,

federal courts have jurisdiction for at least the limited purpose

of determining whether they have jurisdiction. Chicot Cty.

Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 377 (1940).

A court without subject-matter jurisdiction may not

acquire it by consent of the parties; "principles of estoppel do

not apply, and a party does not waive the requirement by failing to

challenge jurisdiction early in the proceedings." Ins. Corp. of

-13-
Ir., 456 U.S. at 702 (citations omitted). Weighing against this

seemingly "inflexible" jurisdictional requirement, id. (internal

quotation marks and citation omitted), however, is a strong

interest in the finality of judgments. "The court has the

authority to pass upon its own jurisdiction and its decree

sustaining jurisdiction against attack, while open to direct

review, is res judicata in a collateral action." Chicot Cty.

Drainage Dist., 308 U.S. at 377.

Where a judgment is collaterally attacked as void for

lack of subject-matter jurisdiction, then, "[c]ompeting policies

are at stake," namely, "observation of limits on federal

jurisdiction and need for judgments that are final." Kan. City S.

Ry. v. Great Lakes Carbon Corp., 624 F.2d 822, 826 (8th Cir. 1980)

(en banc); see also Hodge v. Hodge, 621 F.2d 590, 592 (3d Cir.

1980) ("[U]nless more than the private interests of the litigants

is at stake, even the issue of subject matter jurisdiction must at

some point be laid to rest."); Lubben, 453 F.2d at 650 (noting a

need for "the certainty which allows controversies to be deemed

judicially concluded"). Accordingly, this court has established a

high bar for collaterally vacating a judgment for lack of subject-

matter jurisdiction:

A void judgment is to be distinguished from an
erroneous one, in that the latter is subject
only to direct attack. A void judgment is one
which, from its inception, was a complete
nullity and without legal effect. In the
interest of finality, the concept of void

-14-
 judgments is narrowly construed. While
absence of subject matter jurisdiction may
make a judgment void, such total want of
jurisdiction must be distinguished from an
error in the exercise of jurisdiction. A
court has the power to determine its own
jurisdiction, and an error in that
determination will not render the judgment
void. Only in the rare instance of a clear
usurpation of power will a judgment be
rendered void.

Lubben, 453 F.2d at 649 (footnotes omitted). If a court has an

"arguable basis" for concluding that it has subject-matter

jurisdiction, the judgment it enters may not be collaterally

attacked as "void." Nemaizer v. Baker, 793 F.2d 58, 65 (2d Cir.

1986).

Fafel's collateral attack on the district court's

judgment alleging a lack of subject-matter jurisdiction must be

evaluated pursuant to these principles. In this case, neither the

magistrate judge nor the district court discussed the difference

between a challenge to a court's subject-matter jurisdiction on

direct appeal and a collateral attack on that jurisdiction. The

magistrate judge observed that Fafel's argument that his attorney

lacked authority to accept DiPaola's offer of judgment was "nothing

more than an attempt" to cure his failure to appeal the injunction

within the time limits set forth in Fed. R. App. P. 4(a). That

observation is equally applicable to Fafel's claim that the

injunction is void for lack of subject-matter jurisdiction, a claim

which Fafel raises for the first time on appeal from the district

-15-
court's rejection of the magistrate judge's sua sponte

recommendation on subject-matter jurisdiction. See Lubben, 453

F.2d at 651 (Rule 60(b)(6), "like Rule 60(b) generally, is not a

substitute for an appeal"). Nevertheless, a motion for relief

from an unappealed judgment alleged to be void for lack of subject-

matter jurisdiction may succeed if the rigorous standard for such

relief is met. Kocher v. Dow Chem. Co., 132 F.3d 1225, 1230 (8th

Cir. 1997) (reviewing Rule 60(b)(4) motion "employ[ed] . . . as a

substitute for the timely appeal [plaintiff] never filed"). We

turn, then, to the question of whether the district court, by

enjoining Fafel from pursuing claims in state court in order to

enforce a federal court judgment, engaged in "a clear usurpation of

power" such that the injunction, "from its inception, was a

complete nullity and without legal effect," Lubben, 453 F.2d at

649.

III.

A. Ancillary Enforcement Jurisdiction

"The doctrine of enforcement jurisdiction is a judicial

creation, born of the necessity that courts have the power to

enforce their judgments." U.S.I. Props. Corp. v. M.D. Constr. Co.,

230 F.3d 489, 496 (1st Cir. 2000). Without this "residual federal

jurisdiction . . . flowing from [a court's] original jurisdiction

over the action," id. at 496, "the judicial power would be

incomplete and entirely inadequate to the purposes for which it was

-16-
conferred by the Constitution," Riggs v. Johnson Cty., 73 U.S. (6

Wall.) 166, 187 (1867). However, because enforcement jurisdiction

is a "creature of necessity," it extends only as far as required to

effectuate a judgment. Peacock v. Thomas, 516 U.S. 349, 359

(1996).

Fafel contends that the district court impermissibly

extended its ancillary jurisdiction to enforce a judgment by

interpreting and enforcing the terms of the underlying Rule 68

offer and acceptance of judgment, which, he argues, constituted

nothing more than a private settlement agreement between non-

diverse parties governed solely by state contract law. Under

Kokkonen, Fafel maintains, the court's failure to incorporate the

terms of the offer of judgment into the formal judgment or to

include an express provision retaining jurisdiction deprived it of

authority to enforce the provision in the Rule 68 offer purporting

to "satisfy all claims made and relief sought by the plaintiff

against the defendant arising from or related to [Fafel's] April

2000 termination."

B. The Kokkonen Decision

In Kokkonen, the Supreme Court unanimously held that a

district court lacked jurisdiction to enforce the terms of a

settlement agreement after the underlying federal court action had

been dismissed with prejudice by stipulation of the parties under

Rule 41(a)(1)(ii). 511 U.S. at 382. Although the substance of the

-17-
oral settlement agreement was "recited, on the record, before the

District Judge in chambers," id. at 376, the terms later sought to

be enforced, which provided for the return of files to one party,

"ha[d] nothing to do with" the subject-matter of the claim that had

originally initiated the litigation in federal court, id. at 380.9

Rather, the stipulation of voluntary "dismissal of an earlier

federal suit" was but "part of the consideration for" the

settlement agreement. Id. at 381. The subsequent action to

enforce the unrelated terms of the settlement agreement thus

constituted a standard breach of contract suit "requir[ing] its own

basis for jurisdiction." Id. at 378.

Under certain circumstances, the Court recognized that an

independent basis for federal jurisdiction may be supplied by

ancillary jurisdiction. The doctrine of ancillary jurisdiction,

the Court explained, serves

two separate, though sometimes related,
purposes: (1) to permit disposition by a
single court of claims that are, in varying
respects a nd degrees, factuall y
interdependent; and (2) to enable a court to
function successfully, that is, to manage its
proceedings, vindicate its authority, and
effectuate its decrees.

Kokkonen, 511 U.S. at 379-80 (citations omitted).10

9
The underlying action involved breach of an agency contract
and had been removed to federal court based on diversity
jurisdiction. Kokkonen, 511 U.S. at 376.
10
The first type of ancillary jurisdiction has been described
as "supplemental" jurisdiction, and is generally codified at 28

-18-
 The facts in Kokkonen supported neither rationale.

Rather, the Court stressed that "[t]he facts to be determined with

regard to" the claim of breach of the settlement agreement

providing for the return of files were "quite separate from the

facts to be determined in the principal suit," which involved an

alleged breach of an entirely different agreement. Id. at 381. In

the context of that case, "it would neither be necessary nor even

particularly efficient that [the two claims] be adjudicated

together." Id. at 380. Moreover, "the only order [in Kokkonen]

was that the suit be dismissed, a disposition that is in no way

flouted or imperiled by the alleged breach of the settlement

agreement" providing for the return of files. Id. The Court also

emphasized that the action to enforce the terms of the settlement

U.S.C. § 1367. See 28 U.S.C. § 1367(a) ("[I]n any civil action of
which the district courts have original jurisdiction, the district
courts shall have supplemental jurisdiction over all other claims
that are so related to claims in the action within such original
jurisdiction that they form part of the same case or controversy
under Article III of the United States Constitution."); Vera-Lozano
v. Int'l Broad., 50 F.3d 67, 70 (1st Cir. 1995) (§ 1367(a) codifies
"common nucleus of operative fact" test adopted in United Mine
Workers v. Gibbs, 383 U.S. 715 (1966)).
The second type of ancillary jurisdiction has been
characterized as "enforcement jurisdiction" and recognizes the
"inherent power of federal courts to exercise jurisdiction in order
to enforce their judgments in certain situations where jurisdiction
would otherwise be lacking." Futura Dev. of P.R. v. Estadio Libre
Asociado de P.R., 144 F.3d 7, 9 n.1 (1st Cir. 1998) (distinguishing
between "supplemental" jurisdiction and "enforcement"
jurisdiction); see also Susan M. Glenn, Note, Federal Supplemental
Enforcement Jurisdiction, 42 S.C. L. Rev. 469 (1991).

-19-
agreement involved "more than just a continuation or renewal of the

dismissed suit." Id. at 378. Finally, the Court stated:

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.

Id. at 381.11 In the absence of an independent basis for federal

jurisdiction or one of the additional measures required to retain

ancillary jurisdiction, the Court concluded, "enforcement of the

settlement agreement is for state courts." Id. at 382.

11
If the May 15, 2003, order of dismissal had remained the
operative document in this case (rather than the judgment that we
have explained superseded the order of dismissal), an argument
could be made that the order, which was entered "[i]n accordance
with the Offer of Judgement filed by the Defendant," complied with
the requirement that it "incorporat[e] the terms of the settlement
agreement." Kokkonen, 511 U.S. at 381. There is some disagreement
among the circuits about what language is required to effectively
incorporate such terms for purposes of retaining jurisdiction.
See, e.g., In re Phar-Mor, Inc. Sec. Litig., 172 F.3d 270, 274-75
(3d Cir. 1999) (citing cases finding similar language in orders of
dismissal insufficient to incorporate terms of settlement
agreements); but see Lucille v. City of Chicago, 31 F.3d 546, 549
(7th Cir. 1994) (Cudahy, J., concurring) ("It is not much of a
stretch to construe 'entered in accordance with' as language of
incorporation" where "Kokkonen is silent as to what words a
district court must use"). We need not resolve the matter because
the Rule 68 offer of judgment in this case properly resulted in the
entry of a judgment rather than an order of dismissal.

-20-
C. Applying Kokkonen

Fafel argues that the Rule 68 judgment in this case was

obtained merely as an incident to a purely private settlement

agreement between non-diverse parties: "In this case, the parties

settled the case via an offer of judgment." As a result, he

argues, like the order of dismissal entered in Kokkonen, entry of

the Rule 68 judgment was simply part of the consideration for a

private contract comprising the terms of the offer.

To be sure, "[t]he plain purpose of Rule 68 is to

encourage settlement and avoid litigation." Marek v. Chesny, 473

U.S. 1, 5 (1985). To that end, Rule 68 creates a significant

disincentive for a party to reject an offer of judgment in favor of

proceeding to trial by imposing the risk of being charged with

"costs incurred after the making of the offer" if "the judgment

finally obtained by the offeree is not more favorable than the

offer." Fed. R. Civ. P. 68. However, entry of judgment pursuant

to Rule 68 operates as more than mere consideration for the

underlying offer and acceptance of judgment. The unique features

of Rule 68 render "[a] Rule 68 judgment . . . a consent judgment of

a particular kind." Mallory v. Eyrich, 922 F.2d 1273, 1280 (6th

Cir. 1991).

In order to trigger entry of judgment under Rule 68, one

party must first "file the offer and notice of acceptance together

with proof of service thereof." Fed. R. Civ. P. 68. Upon filing,

-21-
the clerk of court "shall enter judgment." Id.; see Ramming v.

Natural Gas Pipeline Co., 390 F.3d 366, 370 (5th Cir. 2004) ("A

Rule 68 Offer of Judgment is usually considered self-executing.").

In the event that an offeree rejects an offer of judgment made in

compliance with Rule 68, the court may be called upon to enforce

the rule's cost-shifting provision, thus imbuing the decision to

reject a fair offer of judgment with meaningful consequences. See,

e.g., Webb v. James, 147 F.3d 617, 621 (7th Cir. 1998) ("Unlike an

ordinary contract offer, 'a Rule 68 offer imposes certain

consequences that can be costly for the plaintiff who declines the

offer.'") (citation omitted). In order to enforce the cost-

shifting provision, moreover, a court necessarily must evaluate the

terms of the rejected offer in order to compare it against the

value of any "judgment finally obtained by the offeree" and thereby

determine whether the offeree is liable for "costs incurred after

making of the offer." Fed. R. Civ. P. 68.12 See, e.g., Tai Van Le

v. Univ. of Pa., 321 F.3d 403, 407-09 (3d Cir. 2003) (district

court properly compared final judgment obtained by plaintiff

against offer tendered by defendants).

If an offer of judgment is accepted and judgment entered,

a court may still be called upon (as was the district court in this

case) to decide a motion brought under Fed. R. Civ. P. 60(b) to

12
A rejected offer is "deemed withdrawn and evidence thereof
is not admissible except in a proceeding to determine costs." Fed.
R. Civ. P. 68.

-22-
vacate the Rule 68 judgment. See, e.g., Webb, 147 F.3d at 622

("[T]he proper procedural device for relief from a Rule 68 judgment

is the same as for any other judgment: Rule 60.") (citing

Richardson v. Nat'l R.R. Passenger Corp., 49 F.3d 760, 765 (D.C.

Cir. 1995)). Again, in doing so, a court may have to interpret the

terms of the underlying offer of judgment in order to determine

whether relief from judgment is warranted.

Finally, when a district court is called upon to enforce

a Rule 68 judgment, it may examine the parties' intent regarding

the effect of that judgment, as manifested by the offer and

acceptance of judgment filed with the court. In the absence of

terms specifying the "money or property" or other "effect" to which

"judgment [is] to be taken against the defending party," Fed. R.

Civ. P. 68, a Rule 68 judgment has no meaningful content; the terms

of an accepted offer of judgment are thus part and parcel of a Rule

68 judgment. As a result, a Rule 68 judgment necessarily

incorporates the terms of the underlying offer, with or without the

additional measures prescribed in Kokkonen for a settlement

agreement providing for dismissal of claims under Rule 41.13

13
In its margin order rejecting the magistrate judge's
recommendation that it vacate the injunction for lack of subject-
matter jurisdiction pursuant to Kokkonen, the district court cited
the Eleventh Circuit's opinion in Utility Automation, 298 F.3d at
1248-49. That portion of Utility Automation describes the effect
of a Rule 68 judgment for purposes of determining an offeree's
entitlement to attorney's fees as a "prevailing party." Id. We do
not view Utility Automation as bearing on the entirely different
question of whether the district court had subject-matter

-23-
 Here, in evaluating DiPaola's motion to enforce the Rule

68 judgment by enjoining Fafel's pursuit of his claims in state

court, the district court examined the terms of the Rule 68 offer

of judgment to determine the scope and effect of a judgment it

already had jurisdiction to enforce. Moreover, in protecting its

Rule 68 judgment, the district court prudently confined its

exercise of ancillary jurisdiction to the scope of the offer of

judgment. It thus enjoined Fafel, in precisely the same terms as

the offer of judgment Fafel accepted, "from taking any action to

seek relief or make claims against defendant arising from or

related to the April 2000 termination of the plaintiff from his

employment in the Middlesex Sheriff's Department."14 Far from

engaging in a "clear usurpation of power," Lubben, 453 F.2d at 649,

the district court justifiably concluded that it had ancillary

jurisdiction to enforce its Rule 68 judgment. Accordingly, the

injunction it issued was not void for lack of subject-matter

jurisdiction to enforce its judgment.
14
To the extent that Fafel argues on appeal that the terms of
the offer of judgment purporting to settle claims in state court
fell outside the proper scope of Rule 68, he raises a claim of
legal error on the merits of entry of the Rule 68 judgment.
Similarly, to the extent Fafel argues that the district court
lacked authority to enforce its judgment by issuing an injunction
as opposed to some other method of enforcement, he raises a claim
of legal error regarding the propriety of issuing an injunction to
enforce the underlying Rule 68 judgment. These claims are not
before us on appeal from the denial of Fafel's Rule 60(b)(4) motion
seeking to vacate the injunction entered by the district court to
enforce the Rule 68 judgment as void for lack of subject-matter
jurisdiction.

-24-
jurisdiction, and it properly rejected the magistrate judge's

recommendation to the contrary.

Affirmed.

-25-