February 13, 2020

A Binding Settlement Agreement Generally Moots the Action Even if it Requires Future Performance

In Serta Simmons Bedding LLC v. Casper Sleep Inc., [2019-1098, 2019-1159] (February 13, 2020), the Federal Circuit vacated the district court’s summary judgment of non-infringement and remanded with instructions to enforce the settlement agreement that the parties made prior to the grant of summary judgment.

Casper filed three motions for summary judgment on the issue of non-infringement. While these motions were pending, the parties executed a settlement agreement and filed a Joint Notice of Settlement and Motion to Stay, informing the district court that they “entered into a Settlement Agreement” and were requesting that all deadlines be stayed. Two days later, the district court granted summary judgment for Serta.

The district court then denied Serta’s motions to enforce the settlement agreement, reasoning that the case was not moot when it issued the summary judgment order because the parties did not intend to immediately dismiss the claims, instead keeping the action alive until the parties fulfilled their obligations under the Settlement Agreement.

On appeal, Casper argued that the Settlement Agreement did not moot the case, because it still had future obligations to perform. The Federal Circuit disagreed, noting that in Exigent Technology, Inc. v. Atrana Solutions, Inc., 442 F.3d 1301 (Fed. Cir. 2006), it held that an enforceable settlement generally renders a case moot even though the parties have not yet performed the terms. The Federal Circuit also noted that other circuits have similarly held that a settlement involving all parties and all claims moots an action even if they contain executory terms. The Federal Circuit held that a binding settlement agreement generally moots the action even if the agreement requires future performance.

The Federal Circuit further found that, under Federal Circuit law, a district court has jurisdiction to enforce a settlement agreement that resolves patent infringement claims if the motion to enforce is filed before the case is dismissed and the proceedings are ongoing.

The Federal Circuit vacated the district court’s judgment, summary judgment order, and order denying the motion to enforce the Settlement Agreement, and remanded with instructions to enforce the Settlement Agreement. The Court also affirmed the district court’s denial of fees and costs pertaining to proceedings incurred before the Settlement Agreement because, as a result of the settlement, Casper was not a prevailing party and, in any event, the settlement agreement provided that each party bear its own fees.