The opinion of the court was delivered by: Judge Caputo
Before the Court is plaintiffs' motion for disbursement of funds. (Doc. No. 48.) Because the Court has no subject matter jurisdiction over the action, the motion will be denied and the Court's orders following the April 22, 2010 dismissal (Docs. No. 35, 44, 49, 50) will be vacated.
On April 22, 2010 this Court issued an order that read in pertinent part as follows:
[C]counsel having reported to the Court that the above case has been settled,
IT IS HEREBY ORDERED that this case is dismissed without costs and without prejudice to the right of any party, upon good cause shown, to reinstate the action within sixty (60) days of the date of this Order if settlement is not consummated. (Doc. No. 33.) The settlement appears to have been consummated; the plaintiffs represent that the United States tendered full payment pursuant to the agreement. (Doc. No. 41.)
In Shaffer v. GTE North, the Third Circuit Court of Appeals confronted a dismissal order similar to the one issued in this case. 284 F.3d 500 (2002). The underlying litigation in Shaffer involved a wrongful discharge claim brought by Ms. Shaffer against GTE North, Inc., her employer. Id at 501. All counts of the complaint were dismissed on summary judgment except Ms. Shaffer's gender-based disparate treatment claim. Id.
On the date jury trial was to commence, both parties' counsel informed the court they had agreed to a settlement. Id. GTE counsel described the terms of the settlement on the record and Ms. Shaffer confirmed that she understood. Id. at 501--02. The district court judge entered this dismissal order:
Counsel having reported to the court that this action has been settled,
IT IS HEREBY ORDERED THAT this action is dismissed without costs and without prejudice to the right, upon good cause shown, to reinstate the action within sixty (60) days if the settlement is not consummated.
Ms. Shaffer later declined to sign the written settlement agreement, and GTE moved to enforce the agreement within the sixty day period of the dismissal order. Id. The district court granted GTE's motion, and Shaffer appealed, arguing that her attorney had not been authorized to enter into the settlement. Id.
On appeal, the Third Circuit sua sponte raised the issue of subject matter jurisdiction. The court began by discussing Kokkonen v. Guardian Life Insurance Co. Of America, 511 U.S. 375 (1994), a unanimous Supreme Court decision. In Kokkonen, the Court held that a district court has the power to enforce a settlement agreement after dismissal under only two circumstances: first, when a separate provision in the dismissal order "retains jurisdiction" over the settlement agreement or second, when the terms of the settlement agreement are incorporated in the order so that breach of the agreement constitutes a violation of the court's order-giving the district court ancillary jurisdiction to enforce the agreement. Id. at 381. If neither of these exceptions is present, then the court is without jurisdiction absent an independent ...