Reported / Citable
Background
This Fair Labor Standards Act (FLSA) case was dismissed on March 28, 2025, after the parties informed the court they had reached a settlement. The dismissal order specified it was without prejudice to the parties’ right to reinstate the case within 30 days upon proof that the settlement could not be consummated. Crucially, the court did not expressly retain jurisdiction to enforce the settlement agreement, nor were the terms of the settlement incorporated into any judgment.
Over a year after the dismissal, Plaintiff Angelic Setchell filed a Motion to Reinstate Case to Active Docket, alleging that Defendant Marvelous Counseling & Therapy, PLLC had breached the settlement agreement and had no intent to comply. The payment under the settlement agreement was reportedly due on December 1, 2025, five months before the plaintiff filed the motion to reinstate.
The Court’s Holding
The U.S. Magistrate Judge recommended denying the Plaintiff’s Motion to Reinstate Case. The court determined that the dismissal order became a final judgment on September 24, 2025, 180 days after its entry, pursuant to Federal Rule of Civil Procedure 58(c)(2)(B) and Federal Rule of Appellate Procedure 4(a)(1)(A). Because the court had not expressly retained jurisdiction to enforce the settlement agreement or incorporated its terms into the judgment, it lacked ancillary jurisdiction over the matter.
Treating the motion to reinstate as a motion for relief from judgment under Federal Rule of Civil Procedure 60(b), the court found that the Plaintiff failed to meet the necessary criteria. Specifically, the motion was not filed within a “reasonable time” given it was filed over a year after dismissal and five months after the alleged breach. Furthermore, the Plaintiff did not demonstrate “extraordinary circumstances” justifying relief under Rule 60(b)(6), as the initial judgment was not “manifestly unjust” and was entered at the parties’ request. The court concluded that the Plaintiff’s appropriate remedy for an alleged breach of the settlement agreement is to file a new breach of contract action in a court with jurisdiction.
Key Takeaways
- Federal courts generally lack ancillary jurisdiction to enforce settlement agreements after a case’s dismissal unless jurisdiction is expressly retained in the dismissal order or the settlement terms are incorporated into the judgment.
- A dismissal order, even without a separate judgment document, can become a final judgment, triggering strict deadlines for appeals and motions for relief.
- Motions for relief from judgment under Fed. R. Civ. P. 60(b)(6) are rarely granted, requiring both timely filing and “extraordinary circumstances” that demonstrate the initial judgment was “manifestly unjust.”
- If a settlement agreement is breached after a case is dismissed without retained jurisdiction, the aggrieved party’s recourse is typically a new breach of contract lawsuit, not reinstatement of the original action.
Why It Matters
This ruling serves as a crucial reminder for litigants and their counsel about the procedural nuances of settlement agreements in federal court. If parties intend for a federal court to retain authority to enforce a settlement, they must ensure the dismissal order explicitly states that jurisdiction is retained or that the settlement terms are formally incorporated into a judgment. Failure to do so means the court generally loses its power to oversee the agreement, forcing parties to initiate new litigation to address breaches.
The case also underscores the high bar for seeking relief from a final judgment under Rule 60(b). Parties cannot indefinitely seek to reopen cases based on post-dismissal events like settlement breaches without satisfying stringent requirements regarding timeliness and extraordinary circumstances. This ensures finality in litigation, but also places the onus on parties to structure their settlement and dismissal carefully to anticipate potential enforcement issues.