The Definitive Case on Vacatur by Consent in the Federal Circuit
There has been a lot of debate about the viability of Vacatur by Consent in connection with any potential settlement. Below is the definitive ruling in the Federal Circuit on Vacatur by Consent.
The takeaways from the Opinion written by 92 year-old Judge "Goddess Uber Super Genius" Newman, who is still on the Federal Circuit and could end up on Amarin's Panel, are as follows:
1) Vacatur is the general rule in the Federal Circuit.
2) Even though it is the general rule, it does not always have to be granted.
3) Where the settlement involves all of the parties, and all of the claims are rendered entirely moot, "the parties are entitled to rely on precedent", and "vacatur of the judgments on appeal is appropriate."
4) If Judge Du's Opinion is vacated by the Federal Circuit in connection with a settlement, her Opinion no longer has any precedential value. If a future generic wants to rely upon it, Amarin (or hopefully BP by then) counters with the Willy Wonka defense, "It bumped into the Federal Circuit, and has now been vacated and sterilized, so you get nothing! You lose! Good day, sir!"
5) While the issue of whether the parties can reach mutually agreeable terms, including agreement to vacatur, is certainly subject to extensive debate, the viability of vacatur itself is no longer subject to debate, in terms of the Federal Circuit's willingness to vacate Judge Du's decision. If the parties settle, the odds favor vacatur being granted by the Federal Circuit.
U.S. Philips Corp. v. Windmere Corp., 971 F.2d 728, 731–32 (Fed. Cir. 1992) states as follows:
Vacatur
It is nonetheless appropriate that this court review the propriety of vacatur, for we do not view vacatur as automatic under all circumstances.
This court has held that vacatur of the judgment at trial is appropriate when settlement moots the action on appeal. Federal Data Corp. v. SMS Data Products Group, Inc., 819 F.2d 277, 280 (Fed.Cir.1987); Smith Int'l, Inc. v. Hughes Tool Co., 839 F.2d 663, 664, 5 USPQ2d 1686, 1687 (Fed.Cir.1988). Authority is found in United States v. Munsingwear, Inc., 340 U.S. 36, 39–40, 71 S.Ct. 104, 106–107, 95 L.Ed. 36 (1950) and Duke Power Co. v. Greenwood County, 299 U.S. 259, 267, 57 S.Ct. 202, 205, 81 L.Ed. 178 (1936), which provide that judgments should in general be vacated when the case becomes moot. In City Gas Co. of Florida v. Consolidated Gas Co. of Florida, 499 U.S. 915, 111 S.Ct. 1300, 113 L.Ed.2d 235 (1991) the Court summarily vacated a decision of the Eleventh Circuit and ordered the appellate court to dismiss the case under Munsingwear, apparently because the parties had settled. Consolidated Gas Co. of Florida v. City Gas Co. of Florida, 931 F.2d 710 (11th Cir.1991) (on remand from Supreme Court).
We take note that some circuits have declined to vacate judgments merely because the parties settled their dispute. E.g., Clarendon Ltd. v. Nu–West Indus., Inc., 936 F.2d 127 (3rd Cir.1991); In re United States, 927 F.2d 626 (D.C.Cir.1991); National Union Fire Ins. Co. v. Seafirst Corp., 891 F.2d 762 (9th Cir.1989); In re Memorial Hosp. of Iowa County, Inc., 862 F.2d 1299 (7th Cir.1988). These courts distinguish the “mootness” occasioned by settlement pending appeal from that which was the concern in Munsingwear. Munsingwear addresses the situation where the parties are foreclosed from seeking appellate review by circumstances beyond their control, whereas these courts characterize settlement of claims pending appeal as a voluntary decision to forego appeal, and not as a “happenstance” which divests the parties of their right to appellate review. Clarendon, 936 F.2d at 130; In re United States, 927 F.2d at 627–28; National Union, 891 F.2d at 766; In re Memorial Hosp., 862 F.2d at 1301. See generally 13A Charles A. Wright et al., Federal Practice and Procedure § 3533.10 (1984 & Supp.1992) (discussing the concerns faced by courts in deciding whether to vacate a judgment in light of settlement pending appeal).
Although in the Federal Circuit vacatur is the general rule, we do not hold that vacatur must always be granted, whatever the circumstances. In this case, however, as in Federal Data Corp. and Smith International, the settlement between Philips and Windmere includes all the parties to the appeal. All of the claims of the judgments were appealed, and have now become entirely moot. See Munsingwear, supra. The parties to this appeal are entitled to rely on our precedent. Vacatur of the judgments on appeal is appropriate.
ACCORDINGLY, IT IS ORDERED THAT:
1. Izumi's opposition to the parties' joint motion to dismiss and vacate is DENIED.
2. The parties' joint motion is GRANTED. The judgments of April 6, 1990 and May 4, 1990 are VACATED. We remand *732 with instructions that the case be DISMISSED WITH PREJUDICE.
3. Thereupon, Appeal No. 92–1020 is DISMISSED.
