Lexington Ins. Co. v. Ambassador Grp. LLC
| Citation | 581 F.Supp.3d 863 |
| Decision Date | 09 December 2021 |
| Docket Number | 3:20-cv-330-BJB |
| Parties | LEXINGTON INSURANCE COMPANY, Plaintiff, v. The AMBASSADOR GROUP LLC, et al., Defendants. State National Insurance Company, Inc., et al., Plaintiff–Intervenors, v. The Ambassador Group LLC, et al., Defendants–Intervenors. |
| Court | U.S. District Court — Western District of Kentucky |
Adam J. Kaiser, Joanna H. Schorr, Alston & Bird LLP, New York, NY, Carolyn P. Michener, Joel T. Beres, Stites & Harbison, PLLC, Louisville, KY, Kelsey L. Kingsbery, Alston & Bird, LLP, Raleigh, NC, Michael R. Hoernlein, Alston & Bird, Charlotte, NC, for Plaintiff.
Adam J. Kaiser, Alston & Bird LLP, New York, NY, Joel T. Beres, Stites & Harbison, PLLC, Louisville, KY, Kelsey L. Kingsbery, Alston & Bird, LLP, Raleigh, NC, Michael R. Hoernlein, Alston & Bird, Charlotte, NC, for Plaintiff–Intervenors American International Group, Inc., National Union Fire Insurance Company of Pittsburgh, PA.
Jack Allen Wheat, Peter J. Rosene, McBrayer PLLC, Louisville, KY, Julie L. Young, Steven T. Whitmer, Locke Lord LLP, Chicago, IL, for Plaintiff–Intervenors State National Insurance Company, Inc., National Specialty Insurance Company.
Christopher E. Schaefer, Culver V. Halliday, Douglas C. Ballantine, Kevin A. Imhof, Stoll Keenon Ogden PLLC, Louisville, KY, for Defendants/Defendants–Intervenors The Ambassador Group LLC, Brandon White.
Chad Owens Propst, W. Kennedy Simpson, Thompson Miller & Simpson PLC, Louisville, KY, Ira Matthew Mains, Megan Fulcher Bosak, Flaherty Sensabaugh Bonasso, PLLC, Charleston, WV, for Defendant/Defendants–Intervenors HeritageRM, LLC.
Gagliardi Insurance Service, Inc., Pro Se.
Goldenstar Specialty Insurance, LLC, Pro Se.
Performance Insurance Company SPC, Pro Se.
"A consent decree is a strange hybrid in the law." Brown v. Neeb , 644 F.2d 551, 557 (6th Cir. 1981). Indeed it is! Both "a voluntary settlement agreement which could be fully effective without judicial intervention" and "a final judicial order ... plac[ing] the power and prestige of the court behind the compromise struck by the parties." Williams v. Vukovich , 720 F.2d 909, 920 (6th Cir. 1983). In effect, a "settlement agreement subject to continued judicial policing." Id. But many types of judicial "intervention" and "policing" might be desirable, yet beyond the limited role the Constitution assigns to federal courts. See, e.g., Marbury v. Madison 5 U.S. (1 Cranch) 137, 2 L.Ed. 60 (1803) ().
Even so, this strange hybrid enjoys a privileged—if perhaps untested—position among the ranks of permissible judicial remedies. Certainly the law of this circuit tolerates, and even favors, their use in order to speed the resolution of the cases and controversies on federal dockets. "[P]ublic policy," the court of appeals has noted, "generally supports a presumption in favor of voluntary settlement of litigation" through "a consent decree." United States v. Lexington-Fayette Urban County Gov't , 591 F.3d 484, 490–91 (6th Cir. 2010) (quotation omitted). But once the parties reach agreement, would the underlying disputes even qualify as "Cases" and "Controversies" as used by the framers of Article III? And could justice proceed just as swiftly based on private settlement agreements alone? These are important constitutional questions whose answers are not obvious. As a matter of precedent, however, caselaw demands that the Court enter the consent decree proposed in this case because it satisfies the prudential factors long set forth in Sixth Circuit decisions.
* * *
State National Insurance intervened in this trademark dispute to allege that the defendants, including ePremium, secretly forged State National's name and trademark on hundreds of counterfeit insurance policies and thousands of insurance certificates. See First Amended Intervenor Complaint (DN 47). State National sought an injunction under the Lanham Act and relief under a variety of state and federal laws. Id. ¶¶ 112, 128, 154, 165. Shortly thereafter, State National and ePremium jointly moved for a consent order (DN 54) to maintain the status quo during this litigation. The Court entered that order (DN 62) in October 2020. Now those two parties have reached a settlement contingent on the Court dismissing ePremium and permanently enjoining it from future infringement of State National's trademarks. See DN 130.
That strongly suggests State National and ePremium now agree on the appropriate resolution of their dispute—or at least they will if the Court enters the consent decree on which their settlement is conditioned. See Williams , 720 F.2d at 920.
In response to the parties’ request, the Court asked why its public imprimatur and supervision are necessary in light of their private agreement. In other words, "[i]f the parties have already agreed they'll stop doing whatever causes the harm, why would they need the Court to order [the] ‘extraordinary remedy’ " of an injunction "merely to further solemnize an already enforceable contract?" J.P. Morgan Secs. v. Kittell , 554 F.Supp.3d 895 (W.D. Ky. 2021). The affected parties responded with a supplemental brief establishing that courts regularly enter such orders in trademark cases, DN 138, and with an oral representation that State National would have "additional comfort" resolving its claims if it knew the Court stood behind the agreement, DN 135 (telephonic hearing).
Stand behind what, exactly? The nature of the parties’ request—no doubt welcome for its efficiency and amicability—puts a court in a somewhat uncomfortable position: the facts and law undergirding the agreement haven't been litigated, and the nature of the resolution hasn't been disclosed. A pig in a poke, to be sure, but one that clears the docket. Why wouldn't a busy judge just sign off? Two reasons come to mind—one jurisdictional and one remedial.
1. Jurisdiction . What is the ongoing adversity between ePremium and State National amounting to a live case or controversy within the meaning of the Constitution? "[J]urisdiction is always first."
Shrimpers & Fishermen of RGV v. Tex. Comm'n on Env'tl Quality , 968 F.3d 419, 426 (5th Cir. 2020) (Oldham, J., concurring). And in federal court, jurisdiction is always limited: the Constitution authorizes courts to hear only "Cases" or "Controversies," U.S. Const. Art. III § 2, which the Supreme Court has interpreted to require adversity that persists "at all stages of review," "not merely at the time the complaint is filed," Arizonans for Official English v. Arizona , 520 U.S. 43, 67, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997). Even an earlier era—characterized by a laxer approach to Article III's limits—understood that the "requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness)." Henry P. Monaghan, Constitutional Adjudication: The Who and When , 82 YALE L.J. 1363, 1384 (1973). And parties of course may not waive or concede federal jurisdiction. Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).
Based on the representations set forth in the proposed order, ePremium is not currently violating State National's trademarks. Proposed Order (DN 130-1) at 3. Ordinarily, "[s]ettlement of a plaintiff's claims moots an action." Brunet v. City of Columbus , 1 F.3d 390, 399 (6th Cir. 1993) (quotation omitted). A court's jurisdiction to enter an order dismissing a case in light of a settlement is clear enough: that "matte[r] of judicial administration" merely conforms the public docket to the private reality that a preexisting dispute no longer exists. U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership , 513 U.S. 18, 21–22, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994). And, as here, the parties typically compromise despite an ongoing disagreement regarding whether and to what extent their past conduct was lawful. See, e.g. , Proposed Order at 4 ().
But a consent decree, unlike a dismissal, shifts the court's focus from past actions to future obligations. The basis for extending jurisdiction to that context is far less clear. By anticipating hypothetical future violations, consent decrees invite courts to exercise ongoing public supervision over a dispute that a private agreement has ended. Why doesn't this violate the general rule that courts lack authority to act after a case becomes moot? See, e.g., Friends of the Earth, Inc. v. Laidlaw Env'tl Services , 528 U.S. 167, 192, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (); Moore v. Charlotte-Mecklenburg Bd. of Education , 402 U.S. 47, 48, 91 S.Ct. 1292, 28 L.Ed.2d 590 (1971) (). To be sure, the custom of entering consent decrees is longstanding and familiar—repeatedly discussed, without apparent objection, by appellate courts. See, e.g., Benalcazar v. Genoa Township , 1 F.4th 421, 425 (6th Cir. 2021) (citing Local No. 93 Int'l Ass'n of Firefighters v. City of Cleveland , 478 U.S. 501, 525, 106 S.Ct. 3063, 92 L.Ed.2d 405 (1986) (citing Swift & Co. v. United States , 276 U.S. 311, 326, 48 S.Ct. 311, 72 L.Ed. 587 (1928) )); James E. Pfander & Daniel D. Birk, Article III Judicial Power, The Adverse-Party Requirement, and Non-Contentious Jurisdiction , 124 YALE L.J. 1346, 1387 (2015) ().1 But examples are not necessarily endorsements, and it's not easy to find caselaw reconciling consent-decree practice with case-or-controversy precedent.2 Professor Morley...
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