United States Court of Appeals, Third Circuit
United States Court of Appeals, Third Circuit
2d 250
5 Fed.R.Serv.3d 1196
This unfortunate appeal is again before us for resolution due to the parties'
On February 11, 1986, this court heard oral argument on this appeal and was of
the opinion that the parties should attempt to reach a prompt and equitable
settlement of their claims. Decision in this matter was accordingly held in
abeyance pending settlement negotiations mediated by Judge Rosenn.1
Unfortunately, after months of negotiations the bitter rift between the parties
could not be closed and we are again faced with the resolution of their dispute.
Prior to trial, plaintiffs and Nissan Motor Corporation in USA and Nissan
Motor Corporation Limited (Japan) agreed to a compromise settlement.
Following three days of jury trial Continental Products Corporation and
Continental Gummi-Werke Aktiengesellschaft also entered into a compromise
settlement with the plaintiffs. Pursuant to these settlement agreements plaintiffs
were to receive a handsome lump sum settlement, the amount of which was to
remain confidential.2
Subsequently, the plaintiffs reported to the district court that although they had
agreed that payment of the lump sum amount would settle their claims against
the defendants, they had been unable to agree upon an equitable allocation of
the funds among themselves. On December 6, 1984, the district court
dismissed the action against Continental with prejudice pursuant to Local Rule
23(b).3 Shortly thereafter, on or about January 16, 1985, Mrs. Lasky filed a
divorce action in the Chester County Common Pleas Court seeking, inter alia,
distribution of all marital property. Some two months later a consent order in
the products liability action was submitted to and signed by the district judge.
That order of March 18, 1985 approved the payment of counsel fees and
expenses out of the settlement proceeds. Since no agreement had been reached
among father, wife and son on the division of the funds, however, the court
directed that the balance of the settlement fund be deposited in an interest
bearing account in the court registry. Three separate deposits were duly made to
the account for the benefit of the plaintiffs. To date, those funds remain in the
registry of the court.
6
II.
7
III.
A question concerning the jurisdiction of the district court is also raised by this
appeal. Following futile attempts to negotiate an equitable division of the
settlement fund, appellant, Jamie Lasky, moved for an order allocating the
settlement proceeds among the plaintiffs pursuant to Rule 60(b)(6).4 The
district court, in ruling on appellant's motion, held that it lacked jurisdiction "to
adjudicate the allocation of proceeds dispute among [the] plaintiffs...." App. at
194. In addition, Harvey Lasky, on behalf of his brother, Jesse, independently
alleges a jurisdictional defect at the district court level, contending that the
dismissal of the underlying products liability action divested the court of
jurisdiction over the subsequent motion to allocate. Specifically, appellee
maintains that, because the Rule 60(b) motion involves competing claims of
non-diverse parties, there is no basis for federal court subject-matter
jurisdiction.5 See Brief of Appellee, Jesse I. Lasky at 10-11.
We briefly address the issue whether the district court could properly entertain
the Rule 60(b) motion to allocate. Appellee suggests that the dismissal of the
products liability action with prejudice on December 5, 1984 terminated the
district court's jurisdiction over the allocation dispute because diversity
jurisdiction no longer existed. Appellee also contends that the 90-day time limit
for seeking relief from a final dismissal pursuant to Rule 23(b) had elapsed,
thereby extinguishing any right of appellant to object to the consent order. Both
arguments are without merit. First, appellant's motion seeks relief from the
March 18, 1985 consent order of district court approving the settlement amount
and directing, inter alia, that deposits in satisfaction of the settlement be made
to the registry of the court. Appellee does not challenge, nor could he, the
court's jurisdiction over the consent decree. The power of a court to enter a
consent decree emanates from its authority to adjudicate the rights of the parties
in the first instance. The authority thereafter to modify the consent decree
similarly derives directly from the court's initial exercise of jurisdiction over the
dispute. Put otherwise, a court has inherent power to modify a consent decree
that it initially had the power to approve. See Sansom Committee By Cook v.
Lynn, 735 F.2d 1535, 1538 (3d Cir.1984). Thus, jurisdiction over appellant's
motion to allocate is not contingent upon the diversity of the parties seeking
modification of the consent decree. Rather, the district court's power to
consider the motion at all is based on the consent decree itself which was
properly entered pursuant to the court's diversity jurisdiction. See Smith v.
Widman Trucking & Excavating, 627 F.2d 792 (7th Cir.1980) ("It is clear that
a Rule 60(b) motion is considered ancillary to or a continuation of the original
suit; the motion thus requires no independent jurisdictional ground") (citing
Kelly v. Greer, 334 F.2d 434 (3d Cir.1964)).6 See also 7 J. Moore & J. Lucas,
supra, at p 60.28, p. 60-308 ("No independent jurisdictional ground is needed to
support the motion proceeding, which is ancillary to or in effect a continuation
of the action that resulted in the [order] from which relief is sought."). Thus,
that the current dispute with regard to the consent order does not involve the
original adversaries in the products liability action does not defeat the district
court's jurisdiction over its order.7
10
Nor does the 90-day limitation period of Local Rule 23(b) preclude district
court consideration of a Rule 60(b) motion. The primacy of the Federal Rules of
Civil Procedure with regard to the procedural aspects of litigation in federal
courts is well-settled. See Hanna v. Plumer, 380 U.S. 460, 465, 85 S.Ct. 1136,
1140, 14 L.Ed.2d 8 (1965). Thus, the "reasonable time" provision of Federal
Rule 60(b), as opposed to the 90-day limitation of Local Rule 23(b), controls
the determination whether appellant's motion was timely filed.8
11
A district court properly exercises power over a Rule 60(b) motion where the
motion is made within a reasonable time, subject to a maximum time limit of
one year after the judgment if made pursuant to clauses (1) through (3), or
solely "within a reasonable time," if made pursuant to clauses (4) through (6).
In either instance, "what is a reasonable time must depend to a large extent upon
the particular circumstances alleged." 7 J. Moore & J. Lucas, supra, at p 60.27,
p. 60-301. See also Delzona Corporation v. Sacks, 265 F.2d 157, 159 (3d
Cir.1959) (same). Here, appellant's motion pursuant to Rule 60(b)(6) to allocate
the settlement fund was filed within six months of the Rule 23 dismissal, three
months of the court approved settlement agreement and several weeks prior to
the final deposit of settlement proceeds into the court registry. Moreover, there
is nothing in the record to suggest that appellant did not act as soon as it
became clear that a settlement was not imminent. We think these facts satisfy
the reasonable time requirement. Accordingly, we find that appellant's motion
is neither jurisdictionally defective nor time-barred by virtue of Local Rule
23(b).
IV.
12
13
If the district court has the power to grant relief under Rule 60(b), the
determination to grant or deny relief is within the sound discretion of the court.
See 7 J. Moore & J. Lucas, supra, at paragraphs 60.19, 60.27, pp. 60-149, 60-
272. We have long held in this circuit that "[r]ule 60(b)(6) is available only in
cases evidencing extraordinary circumstances." Stradley v. Cortez, 518 F.2d
488, 493 (3d Cir.1975). See also Mayberry v. Maroney, 558 F.2d 1159, 1163
(3d Cir.1977) (relief justified "only upon a showing of 'exceptional
circumstances,' " and where "absent such relief an 'extreme' and 'unexpected'
hardship will result"). In exercising its discretion the district court is guided by
a number of relevant factors, inter alia, " the general desirability that a final
judgment should not be lightly disturbed; the procedure provided by Rule 60(b)
is not a substitute for an appeal; the Rule should be liberally construed for the
purpose of doing substantial justice; whether, although the motion is made
within the maximum time, if any, provided by the Rule, the motion is made
within a reasonable time; ... whether there are any intervening equities which
make it inequitable to grant relief; any other factor that is relevant to the justice
of the [order] under attack...." See id. at p 60.19, pp. 60-164--60-165.10
14
15 case settled on the third day of trial, December 5, 1984, at which time I made it
This
abundantly clear to counsel then representing all plaintiffs 'that regardless of any
problems that conceivably could lie ahead theoretically as among the parties inter se,
each one of the parties is specifically agreeing that this case is, has been, shall be
and is finally settled, and that they will negotiate and work out any division as
among themselves.' (Tr. at 3.4).... As stated in the March 18th order, those funds
will be released by court order after negotiations or other resolution between the
plaintiffs result in an apportionment of the funds now with the registry.
16
App. at 193-94 (emphasis added). The effect of the court's order is essentially
to hold the settlement funds hostage until the parties "kiss and make up." The
Perhaps there is more to this case than meets the eye. But closing one's eyes
will not make the problem go away. Apparently prompted by its view that it
lacked jurisdiction, the district court failed appropriately to consider appellant's
motion. There is no evidence in the record by way of findings by the district
court or appellee opposition to indicate that the suggested allocation is
inequitable or otherwise inappropriate. Moreover, the court, without discussion,
granted appellee's cross-motion only to the extent that it argued lack of subject
matter-jurisdiction. Thus, the record is also devoid of any assessment of the
propriety of transferring the funds to the Common Pleas Court in Chester
County. Consequently, we are left without a basis finally to dispose of this
matter. It is clear, however, that the general purpose of Rule 60(b) and the more
specific factors that inform a district court's discretion compel that some relief
be granted in this case. Accordingly, we will reverse the order of the district
court and remand for a determination of what relief is just.12
Honorable Hubert I. Teitelbaum, United States District Court for the Western
District of Pennsylvania, sitting by designation
In a few cases each year after having read the briefs and heard oral argument, a
panel becomes persuaded that to further prolong of the litigation would be
disastrous to all of the parties and that the case has a record that suggests that
rational parties acting in good faith should be able to adjust their differences.
Under such circumstances we inquire of counsel whether they are in unanimous
agreement that the submission of the matter to an experienced judge and
mediator for a limited period of time would be desirable. In this case after all
the parties agreed that such mediation would be helpful, we assigned the matter
to Judge Max Rosenn, a distinguished Senior Court of Appeals Judge and
extremely effective mediator. The matter was assigned with the explicit
agreement that none of the facts would be discussed with the panel; that the
only information we would receive would be whether the matter had or had not
been settled. After several months of persistent effort, Judge Rosenn advised us
that despite his recommendations, the parties had not been able to reach an
amicable resolution of their dispute. We note our appreciation to Judge Rosenn
for his efforts in this matter and in several other matters where he has had
10
Other "relevant factors and propositions," that the district court may consider in
exercising its discretion on a Rule 60(b) motion include: "if relief is sought
from a default judgment or a judgment of dismissal where there has been no
consideration of the merits, whether in the particular case the interest of
deciding cases on the merits outweighs the interest in orderly procedure and in
the finality of judgments, and whether there is merit in the defense or claim, as
the case may be; if relief is sought from a judgment rendered after a trial on the
merits, whether the movant had a fair opportunity to present his claim or
defense...." 7 J. Moore & J. Lucas, supra note 2, at p 60.19, p. 60-164. None of
these factors are applicable here
11
12
We recognize that there are some cases where the wisest of trial judges or