A Settlement Requiring Future Performance Generally Moots an Action

SERTA SIMMONS BEDDING, LLC V. CASPER SLEEP INC

Before Dyk, Plager, and Stoll. Appeal from the Southern District of New York.

Summary: A binding settlement agreement generally moots an action, even if the agreement requires future performance by the parties.

Serta Simmons Bedding LLC (“Serta”) sued Casper Sleep Inc. (“Casper”) for patent infringement. In response, Casper filed motions for summary judgment of noninfringement. While those motions were pending, the parties executed a settlement agreement, advised the district court of the settlement, and asked the district court to stay all deadlines. The settlement agreement provided that Casper would make a payment to Serta and the parties would dismiss the case within 5 days of that payment. Two days after the parties notified the district court of the settlement, but before Casper made its payment to Serta, the district court granted Casper’s pending motions for summary judgment of noninfringement.

Serta filed motions to enforce the settlement agreement and to vacate the district court’s summary judgment order, arguing that the judgment was void because the case became moot by virtue of the settlement agreement. The district court denied Serta’s motions, stating the case was not moot because the parties did not intend to immediately dismiss the case, instead keeping the action alive until the parties fulfilled their obligations under the agreement. The district court entered judgment and Serta appealed.

The Federal Circuit reversed. It held that a binding settlement moots an action even when the settlement agreement requires future performance. The Federal Circuit concluded that the settlement agreement between Serta and Casper mooted the district-court action. Accordingly, the Federal Circuit vacated the district court’s entry of judgment and summary judgement order and remanded the case back to district court with instructions to enforce the settlement agreement.

Editor: Paul Stewart