Nestle Co., Inc. v. Chester's Market, Inc., Civ. No. H-82-445.

Citation596 F. Supp. 1445
Decision Date05 November 1984
Docket NumberCiv. No. H-82-445.
PartiesThe NESTLE COMPANY, INC. v. CHESTER'S MARKET, INC. and Saccone's Toll House, Inc.
CourtUnited States District Courts. 2nd Circuit. United States District Court (Connecticut)

Thomas J. Ward, Michael A. Grow, and Niles V. Montan, Washington, D.C., John Murphy, Stephen E. Goldman, and Susan P. McHugh, Robinson & Cole, Hartford, Conn., Allen F. Maulsby, Cravath, Swaine & More, New York City, for plaintiff.

Richard Reynolds, Day, Berry & Howard, Hartford, Conn., Barry Garfinkel, Skadden, Arps, Slate, Meagher & Flom, New York City, Dominic J. Ferraina, Windsor, Conn., for defendants.

RULING ON JOINT MOTION FOR ENTRY OF A FINAL JUDGMENT ON CONSENT

BLUMENFELD, District Judge.

I. INTRODUCTION

This case comes before me in a somewhat unusual posture. On August 23, 1983, I granted partial summary judgment to defendants on their claim that the trademark Toll House owned by plaintiff is invalid, because Toll House is a generic name when used in connection with cookies. The Nestle Co. v. Chester's Market, Inc., 571 F.Supp. 763 (D.Conn.1983). Pursuant to Fed.R.Civ.P. 54(b), the entry of final judgment was directed on that claim, and plaintiff thereafter filed a notice of appeal.

During pre-argument conferences before Staff Counsel for the Second Circuit, the parties reached a settlement agreement which would resolve not only the pending appeal, but also the other claims still pending before this court. These include plaintiff's state law dilution and unfair competition claims, and a variety of counterclaims by defendant Saccone. The settlement provides for a trademark license agreement, a service mark and trade name license agreement, and an options and first refusal agreement. Affidavit of Barry Garfinkel, Attorney for Defendant Saccone's Toll House, ¶¶ 5 and 6.

The settlement agreement has not, however, yet become effective. It is conditioned on this court's willingness to vacate the partial summary judgment granted against plaintiff on defendant's claim that the term "Toll House" is generic, and therefore invalid as a trademark. The parties have stated the reason for this condition in blunt fashion:

The controversy in its present posture can be resolved, and plaintiff will forego its appeal, only if plaintiff, as a condition of the settlement, can obtain the protection that it believes it needs against any subsequent use by defendants and by third parties, for collateral estoppel and other preclusive purposes, of the ruling and order of this court dated August 23, 1983, together with the findings and conclusions embodied therein, and the partial judgment of this court dated September 6, 1983, which was based upon such earlier ruling and order.

Affidavit of Barry Garfinkel, Attorney for Defendant Saccone's Toll House, ¶ 7. The Affidavit of Allen F. Maulsby, Attorney for Plaintiff, affirms the above in paragraph 3, referring to protection from preclusive effect of the 1983 judgment as "an essential condition of the settlement."1 Therefore the parties have moved jointly for the entry of a final judgment on consent in which, inter alia, the 1983 judgment and "the findings and conclusions embodied therein ... are withdrawn, vacated, and set aside."2

The proposed consent judgment was first brought to my attention in June of this year, when the parties came before me for a status conference which I had initiated in order to establish a schedule for resolution of the remaining issues in the case. At that point, this motion had not been filed, and, as I indicated in a Status Conference Memorandum dated June 22, 1984, I would have had no jurisdiction to consider such a motion while the appeal was pending.

The parties also asked that I consent to their application for entry of the proposed consent judgment by the Court of Appeals. I stated:

As this case is pending before the Court of Appeals, the parties need not seek or obtain my permission to report to that court that the case has been settled. If the parties find comfort in knowing my position on this question, I am not averse to their seeking, from the Court of Appeals, whatever relief they consider appropriate to effectuate the settlement of this dispute.

Status Conference Memorandum at 2.

The parties thereupon jointly moved in the Court of Appeals for entry of the consent judgment, but in August they stipulated to withdraw the motion without prejudice because, as stated in the stipulation and order approved by that court on August 15, 1984, "the Court of Appeals has suggested that in the first instance the entry of such a judgment on consent should be considered by the district court ...." The stipulation and order also remands the matter to this court for consideration of this motion, and preserves the parties' rights to appeal both the 1983 judgment and my decision on this motion.

The appellate tribunal having placed the proverbial ball squarely in this court, a search has been made for authority concerning the standards which should be employed in deciding a motion such as this one. Regrettably, there seems to be very little authority on point, and the parties, naturally enough, have provided none. As I see it, the court is faced with two questions. First, is there some doctrine or rule which requires that this motion be granted, or is there discretion to grant or deny the motion? Second, if the decision is discretionary, what interests, other than the obvious interests of the movants, should be considered in exercising that discretion, and how do those interests weigh in the balance? I turn first to the question whether I have discretion at all.

II. DISCRETION
A. Mootness

It might be argued that, under time-honored authority concerning moot cases, the court is legally bound to grant this motion. The argument has surface plausibility. The parties have come to an agreement; there is no longer a dispute between them. It is hornbook law that in the absence of a definite and concrete controversy between parties having adverse legal interests, a court is without power to act. E.g., Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617 (1937). Where events render a case moot while an appeal from a lower court judgment is pending, the federal appellate courts will generally vacate the judgment and remand to the district court with instructions to dismiss. United States v. Munsingwear, 340 U.S. 36, 71 S.Ct. 104, 95 L.Ed. 36 (1950); see 1B Moore's Federal Practice ¶ 0.4161 (1984).3

An analogy can be drawn to this case, even though dismissal is not precisely what the parties seek here. The argument would be that "events"i.e., the parties' negotiations — have dissolved the controversy between these parties. Only the 1983 partial summary judgment stands in the way of a comprehensive settlement, and no apparent grounds exist for disapproving that settlement. It could therefore be contended that in essence, the case is moot, and the judgment should be vacated so that the action can be dismissed on appropriate terms.4

I am not persuaded, however, that the proposed settlement renders the case moot. So long as the partial summary judgment remains in effect, there is a live controversy between these parties. Only if that judgment is vacated will they agree to compromise their dispute. Both parties have carefully preserved their rights to appeal and to continue to press their other claims if the judgment is not vacated. This is not a case where events outside the parties' control, such as the passage of time, see Hall v. Beals, 396 U.S. 45, 90 S.Ct. 200, 24 L.Ed.2d 214 (1969), have mooted the case while an appeal was pending. Instead, the parties here have attempted to moot their own dispute, but have made their settlement expressly conditional on the court's vacation of its prior judgment. The dispute therefore survives at least until this motion is decided.

Moreover, there are strong reasons of policy for refusing to hold the case moot at this stage. If losing parties could moot cases simply by offering their adversaries financial rewards sufficient to induce cooperation in joint motions to vacate judgments, mootness doctrine would become little more than a tool with which litigants could avoid the preclusive effect of adverse decisions. Wealthy litigants could shop for favorable decisions by settling unfavorable ones after judgment. But mootness doctrine is intended to prevent courts from issuing advisory opinions, not to circumvent res judicata and collateral estoppel rules. See California v. San Pablo & T.R.R., 149 U.S. 308, 313, 13 S.Ct. 876, 878, 37 L.Ed. 747 (1893); Wirtz v. Local Unions 410, 410A, 410B & 410C, International Union of Operating Engineers, 366 F.2d 438, 442 (2d Cir.1966). The decision granting partial summary judgment to defendants on the claim that Toll House is a generic term was not advisory; there was a live and concrete controversy before the court when that decision was made, and that controversy will clearly remain live unless the judgment is vacated. I therefore find that this case is not moot.

B. Rule 60(b)

Rule 60 of the Federal Rules of Civil Procedure governs federal courts in granting relief from judgments or orders. The rule was intended to be complete; that is, it was designed "to define the practice with respect to any existing rights or remedies to obtain relief from final judgments." Notes of Advisory Committee on Rules, Note to Subdivision (b) of 1946 Amendment to Rule 60.

Subdivision (b) of Rule 60 governs this motion. It permits the court to grant relief from a judgment for a variety of reasons including mistake, neglect, newly discovered evidence, and fraud, none of which is applicable here. But Rule 60(b) goes on to state:

On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment ... for the following reasons: ... (5) the judgment has been satisfied, released, or discharged, ... or it is no longer equitable that the
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