Plasmacam, Inc. v. Cncelectronics, LLC
| Decision Date | 03 February 2022 |
| Docket Number | 2021-1689 |
| Parties | PLASMACAM, INC., Plaintiff-Appellee v. CNCELECTRONICS, LLC, Fourhills Designs, LLC, Thomas Lee Caudle, Martha Jane Caudle, Defendants-Appellants |
| Court | U.S. Court of Appeals — Federal Circuit |
Maria Crimi Speth, Jaburg & Wilk, P.C., Phoenix, AZ, argued for plaintiff-appellee. Also represented by Aaron Keith Haar.
Charles John Rogers, Conley Rose, P.C., Houston, TX, argued for defendants-appellants. Also represented by Thomas Warden.
Before Newman, Dyk, and Reyna, Circuit Judges.
PlasmaCAM, Inc. ("Plasmacam") sued CNCElectronics, LLC, Fourhills Designs, LLC, and Thomas and Martha Caudle (collectively "CNC") in the Eastern District of Texas for infringing U.S. Patent No. 7,071,441 ("the '441 patent") for which Plasmacam has an exclusive license. In December 2019, the parties notified the district court that they had settled the case. However, when the parties met to draft a formal agreement, it became evident that they interpreted the settlement differently, and further negotiations resulted. The parties eventually advised the district court that they had reached a complete agreement. The district court granted the motion to enforce Plasmacam's version of that agreement and ordered CNC to execute it.
CNC appeals. We hold that this court has jurisdiction over CNC's appeal. We also reverse the district court's judgment ordering CNC to execute Plasmacam's version of the settlement agreement and conclude that CNC's version of the agreement accurately reflects the parties' understanding. We remand for further proceedings not inconsistent with this opinion.
This appeal arises out of a disputed settlement agreement. Plasmacam sued CNC in January 2019 for infringing the '441 patent, which claims a plasma cutting system and as to which Plasmacam has an exclusive license. The parties eventually agreed to settle the case. This agreement was reflected in an exchange of emails.
The parties then notified the district court that they had settled the case, and the court ordered them to submit final, closing paperwork by January 23, 2020. During that window, Plasmacam and CNC discussed the specific terms of the settlement agreement, but they disagreed as to the terms of the mutual release and as to the products that would be covered by the covenant not to sue ("Covered Products"). With respect to the release, the parties primarily disagreed on its scope. Plasmacam advocated for separate release obligations for it and CNC, requiring CNC to release Plasmacam from any causes of action that arose out of or related to the lawsuit, whereas Plasmacam would release CNC only for past and future claims for infringement of the '441 patent arising from the Covered Products. Conversely, CNC proposed a broad release, applying equally to each party, which released all past claims of any nature and appeared to cover claims not related to the '441 patent.
With respect to the definition of Covered Products in paragraph 2 of the draft agreement, Plasmacam proposed Covered Products be defined as "the components currently manufactured, sold or offered for sale by CNC which incorporate digital height control." J.A. 737. On January 7, 2020, CNC responded with a draft that defined Covered Products as "all past, present, and future components manufactured, sold, or offered for sale by CNC which incorporate digital torch height control." J.A. 745. Plasmacam replied on January 15, and proposed to limit Covered Products to "components previously or currently manufactured, sold or offered for sale by CNC which incorporate digital torch height control." J.A. 754.
On January 17, CNC objected on the basis that its "products are very frequently revised or updated" so the limited definition "would be practically meaningless." J.A. 779. Plasmacam then agreed to "one additional compromise to address [CNC's] concern about routine updates and bug fixes," J.A. 760–61, and apparently proposed that Covered Products be defined as "(1) all components previously or currently manufactured, sold or offered for sale by CNC which incorporate digital torch height control; and (2) updates and bug fixes to the currently manufactured products," J.A. 1061. CNC rejected this "compromise" and proposed that Covered Products be "all components manufactured, sold or offered for sale by CNC which incorporate digital torch height control." J.A. 771. On January 21, Plasmacam stated that it "agreed to [CNC's] change in paragraph 2 ()." J.A. 777.
However, the parties continued to disagree as to the terms of the mutual release and advised the district court that they "ha[d] a dispute regarding the scope of the mutual release." J.A. 522. As a result, the district court authorized each side to brief separate motions to enforce their respective interpretations of the settlement agreement. In the course of briefing, the parties came to an agreement regarding the mutual release. This agreement was reflected in Plasmacam's reply brief, which stated that the parties no longer disagreed, and that the mutual release should apply to claims that "were brought or should have been brought, arising out of or relating to the Litigation." J.A. 1061. CNC's brief referenced the January 21 agreement with respect to Covered Products, stating "[Plasmacam] accepted [CNC's] correction to paragraph 2... that [Covered Products] should not be limited to current products." J.A. 568. However, Plasmacam's reply brief departed from the parties' January agreement in defining Covered Products as "(1) all components previously or currently manufactured, sold or offered for sale by CNC which incorporate digital torch height control; and (2) updates and bug fixes to the currently manufactured products." J.A. 1061. CNC did not raise this issue at a June 5 status conference set by the district court.
Thereafter, the district court granted Plasmacam's motion to enforce the settlement agreement and adopted Plasmacam's version of the agreement without addressing the January 21 agreement as to the definition of Covered Products.
CNC filed a motion for reconsideration urging the district court that Plasmacam's reply brief definition was not what the parties agreed to on January 21. Plasmacam filed a competing motion to enforce the court's order, contending that the parties never reached an agreement on January 21 because "that compromise was in exchange for the request that [CNC] compromise on the release paragraph." J.A. 1077. The district court denied CNC's motion for reconsideration and upheld its interpretation of Covered Products, explaining that the January 21 exchange showed that Plasmacam "did not agree to [CNC's] proposed Covered Products language in a vacuum." J.A. 10. Instead, Plasmacam made its compromise contingent on "other proposed changes" to the release. J.A. 10. The district court ordered CNC to execute the settlement agreement and promissory note and pay any unpaid settlement funds. CNC appeals.
We first address our jurisdiction to hear the case. The parties agree that the court has jurisdiction, but disagree as to whether it arises from 28 U.S.C. §§ 1292(a)(1), (c)(1) (as an injunction), or 28 U.S.C. § 1295(a)(1) (). Notwithstanding the parties' agreement, we are independently obligated to determine our jurisdiction. See Bender v. Williamsport Area Sch. Dist. , 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986). We conclude that the district court order to execute the settlement agreement constitutes either an appealable injunction or a final judgment.
Section 1292(a)(1) confers appellate jurisdiction over interlocutory district court orders "granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions." Whether an order constitutes an injunction does not turn on whether the district court labeled it as such, but instead on "the substantial effect of the order made." Hewlett-Packard Co. v. Quanta Storage, Inc. , 961 F.3d 731, 742 n.7 (5th Cir. 2020) (quoting McCoy v. La. State Bd. of Educ. , 345 F.2d 720, 721 (5th Cir. 1965) ); see also Union Oil Co. of Cal. v. Leavell , 220 F.3d 562, 566 (7th Cir. 2000) ().
Section 1292(a)(1) thus "applies to ‘orders that are directed to a party, enforceable by contempt, and designed to accord ... some or all of the substantive relief sought in the complaint in more than a temporary fashion.’ " Police Ass'n of New Orleans v. City of New Orleans , 100 F.3d 1159, 1166 n.5 (5th Cir. 1996) (quoting 16 Charles A. Wright et al., Federal Practice & Procedure § 3922, at 29 (1977) ). To be sure, an order to pay money pursuant to an agreement, including a settlement agreement, alone does not constitute an appealable injunctive order. See Saber v. FinanceAmerica Credit Corp. , 843 F.2d 697, 702–03 (3d Cir. 1988). But an order granting specific performance on nonmonetary terms is appealable as an injunction. Resolution Tr. Corp. v. Ruggiero , 994 F.2d 1221, 1225 (7th Cir. 1993) ; see...
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