Court holds up settlement

July 30, 2008
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Even though the parties involved in litigation of a wrongful imprisonment suit want to settle after a jury already announced its award, the 7th Circuit Court of Appeals denied a request to throw out the jury award to clear the way for the settlement.

Larry Mayes was convicted and sent to prison in 1980 for a rape that he was later cleared from committing based on DNA evidence. Mayes filed a suit in 2006 against the Hammond Police Department, which allegedly fudged the evidence in order to send Mayes to prison. Mayes won the suit, and a jury awarded him $9 million.

The City of Hammond and Mayes’ attorneys have since agreed to settle the case out of court for half that amount. The catch? The parties can’t settle unless there is an order vacating the jury verdict and the judgment from the 7th Circuit.

The 7th Circuit denied a joint motion July 15 to vacate the jury verdict and judgment and remanded to the U.S. District Court to determine and inform the federal appellate court if the District Court is inclined to vacate the judgment and jury verdict. The 7th Circuit has taken a firm position of denying motions to vacate opinion and judgment of a District Court decision on a condition of settlement on appeal.

In an opinion and order issued July 29, Magistrate Judge Paul Cherry from the Northern District of Indiana, Hammond Division, denied making a decision on whether the District Court would throw out the jury award.

The joint motion only cited one 2006 unpublished 7th Circuit decision that vacated an underlying judgment because the appeal had become moot – not because a settlement was reached.

Magistrate Judge Cherry ordered the parties to file a joint brief on or before Aug. 8 setting forth the laws and facts necessary for the District Court to tell the 7th Circuit whether or not it is inclined to vacate the jury verdict and judgment in the case as a condition of settlement. He encouraged the parties to fully brief the issue of vacatur and not to limit themselves to the issues raised by the District Court in the order.

What do you think? Should settlement be a valid reason for tossing out a jury award and verdict or should parties have to meet “extraordinary circumstances” standards for vacatur as a condition of settlement on appeal, as defined in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 29 (1994).
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