New York Law Journal "District Court Refuses to Vacate Sanctions Awards Following Settlement" by Thomas E.L. Dewey

January 25, 2019

When parties agree to settle an action, they usually try to wrap up all aspects of the litigation. Pending motions are withdrawn, ancillary actions in other fora are voluntarily dismissed, and binding promises are made not to relitigate the dispute. But a recent decision from the Southern District of New York reminds us that the parties are not the only ones who have a say in what can be resolved in a settlement agreement. Courts have an interest in preserving their authority to enforce orders and procedural rules, and parties cannot avoid the consequences of noncompliance through private settlement.

 

In Rogue Wave Software v. BTI Systems, No. 16-cv-7772 (VM), 2018 WL 6920770 (S.D.N.Y. Dec. 14, 2018), the parties reached a settlement agreement following a contentious discovery process, during which the defendants were sanctioned twice for failing to produce requested documents and information. As a part of the settlement, the plaintiff agreed to use its best efforts to cooperate with the defendants in seeking to vacate the sanctions orders. The parties jointly moved to vacate, but Magistrate Judge Kevin Fox denied the motions and Judge Victor Marrero affirmed, holding that the public interest in deterring noncompliance with procedural rules and court orders in this case outweighed the public interest in encouraging settlements.

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