A Settlement While Appeal is Pending Deprives Appellate Court Of Jurisdiction (Badaiki v. Calmeron)

By Donald L. Swanson

An appellate court is deprived of continuing jurisdiction over an appeal once the disputing parties reach a settlement.

There’s nothing remarkable about that proposition.

But what’s interesting is:

• the technical, legal and constitutional foundation behind that proposition;
• which is provided by the U.S. Court of Appeals in its Badaiki v. Cameron International Corporation opinion (Case No. 21-20628, decided December 8, 2023).

What follows is a summary of that opinion.

Facts

For nearly a decade, Badaiki works for Defendant, an oil and gas company, as a senior designer. 

Then, Defendant fires Badaiki, who responds with a pro se lawsuit against Defendant alleging violations of, (i) Title VII of the Civil Rights Act, and (ii) Americans with Disabilities Act. 

In the lawsuit, Badaiki and Defendant file cross motions for summary judgment.  The U.S. District Court grants Defendant’s motion, and Badaiki appeals to the Fifth Circuit.

While the appeal is pending, Badaiki files a second suit, also pro se, which Defendant moves to dismiss.  The U.S. District Court grants Defendant’s dismissal motion with prejudice.  In response, Badaiki:

• moves to amend the dismissed complaint; and
• appeals the dismissal order to the Fifth Circuit.

Then, as the amendment motion and the two appeals are pending, Badaiki and Defendant settle their disputes. Their settlement is memorialized in writing like this:

• Defendant’s counsel sends Badaiki an email with the subject line, “Settlement Offer,” that says—“I have talked with my clients, and in exchange for a complete release on all claims in all cases you have filed, my clients will agree to forego pursuing their award of attorneys’ fees . . . which are in excess of $200,000. Should you not accept this offer, we will move forward with executing on all judgments. . . . This offer will expire if not accepted by December 25, 2021”;
• On December 25, 2021, Badaiki responds with an email saying, “Accepted. We could discourse later”;
• Then, each party files a notice of settlement with the Court; and
• Badaiki’s notice says, “Defendant and Plaintiff Badaiki reach a settle by email,” which notice attaches the December 21, 2021 email from Defendant’s counsel, and concludes with, “On December 25, 2021 email, Badaiki ACCEPTED the above Settlement Offer.”

In response, the U.S. District Court stays all deadlines until the parties file their dismissals.

But trouble ensues:

• Badaiki wants to add severance pay to the settlement agreement;
• Defendant says, “No,” because severance pay was “never part of the settlement”; and
• Badaiki files a motion arguing that the U.S. District Court lacked jurisdiction to stay deadlines in the case.

So, Defendant notifies the Court that Badaiki “has agreed to resolve all litigation but has refused to sign a more detailed settlement agreement.”

In response, the Court sets a deadline for the parties to file their settlement paperwork.  And when the parties fail to comply, the Court orders them to appear for a hearing.

At the hearing, the trial court:

• rules that it has jurisdiction to determine if a valid settlement exists;
• determines that Defendant’s December 21, 2021 email was a valid settlement offer and that Badaiki accepted the offer by email response; and
• concludes that the settlement terms obligate Defendant to forgo any claims to attorney fees in exchange for Badaiki’s release of all claims against Defendant.

Then, the U.S. District Court issues a written order and final judgment dismissing Badaiki’s lawsuits with prejudice and denying all motions that Badaiki files.  Badaiki appeals to the Fifth Circuit.

Fifth Circuit Rejects Badaiki’s Arguments

The U.S. Fifth Circuit Court of Appeals rejects Badaiki’s various arguments as groundless.  For example, the Fifth Circuit declares: 

• Fed.R.Ev. 408 did not prevent the U.S. District Court from evaluating the purported settlement; and
• the U.S. District Court properly exercised its discretion in finding that the parties entered into a binding settlement agreement.

Settlement Deprives Appellate Court of Jurisdiction

Additionally, the Fifth Circuit Court of Appeals declares that the parties’ settlement deprives the Fifth Circuit of appellate jurisdiction on issues beyond the existence and validity of the settlement.

Here are the technical, legal and constitutional reasons why.

• Federal court jurisdiction, under Article III of the U.S. Constitution, is limited to “cases” and “controversies”:
  • an actual controversy must exist at all stages of review, not merely at the time the complaint is filed.
• The mootness doctrine effectuates the “cases” and “controversies” requirement—by ensuring that a litigant’s interest in the outcome continues throughout the life of the lawsuit, including the pendency of an appeal:
  • a case is rendered moot when the issues presented are no longer “live” or when the parties no longer have a legally cognizable interest in the outcome; and
  • once a case becomes moot, the federal court has no constitutional authority to resolve any issue.
• Settlement of a dispute between parties renders moot any issues between them growing out of that dispute:
  • once parties have completely settled their differences, there is no relief left for the court to award.

Fifth Circuit’s Ruling

The Fifth Circuit concludes its opinion with the following ruling.

In this case, the parties entered into a valid settlement agreement.  Such settlement mooted the appeals no matter how vehemently Badaiki continues to dispute the lawfulness of the conduct that precipitated the lawsuit.

Because the parties have completely settled their differences, there is no relief left for the Fifth Circuit to award, and the Fifth Circuit lacks jurisdiction to consider Badaiki’s arguments on appeal.

Conclusion

A settlement between litigating parties ends the lawsuit between them.  There’s nothing remarkable about that proposition.

What the Badaiki v. Cameron opinion adds, however, is the technical, legal and constitutional analysis behind that proposition—which analysis is worth noting.

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