Bryan v. Erie County Office of Children & Youth ( 2014 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 12-4623
PAUL BRYAN; BONNIE BRYAN, Husband and Wife,
individually and as Parents and Natural Guardians on behalf
of their minor child, KB, and KB, KENNETH BRYAN
v.
ERIE COUNTY OFFICE OF CHILDREN AND YOUTH;
PAUL CANCILLA, individually and as an employee of Erie
County Office of Children and Youth; CARMEN E.
MERRITT, individually and as an employee of Erie County
Office of Children and Youth; RENIE SKALKO,
individually and as an employee of Erie County Office of
Children and Youth; CINDY BAXTER, individually and as
an employee of Erie County Office of Children and Youth;
CINDY LEWIS, individually and as an employee of Erie
County Office of Children and Youth; BRIGETTE
SULLIVAN, individually and as an employee of Erie County
Office of Children and Youth; JOHN PETULLA,
individually and as an employee of Erie County Office of
Children and Youth DPW Bureau of County Children and
Youth Programs
Cindy Baxter and Renie Skalko,
Appellants.
_____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(Case No. 1-03-cv-00259)
District Judge: Honorable Sean J. McLaughlin
_____________
Argued: January 22, 2014
Before: FUENTES and FISHER, Circuit Judges, and
STARK, District Judge
(Opinion Filed: May 20, 2014)
Pamela V. Collins
Walsh, Barnes Collins & Zumpella
707 Grant Street
Gulf Tower
Suite 1400
Pittsburgh, PA 15219
Barbara S. Magen
Sheila A. Haren [Argued]
Post & Schell, P.C.
Four Penn Center, 14th Floor
1600 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attorneys for Appellants
Jay Paul Deratany [Argued]
221 North LaSalle, Suite 2200
Chicago, IL 60601
Jeffrey G. Mashni

The Honorable Leonard P. Stark, U.S. District Judge for the
District of Delaware, sitting by designation.
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9245 Maple Court
Morton Grove, IL 60053
Timothy D. McNair
821 State Street
Erie, PA 16501
Attorneys for Appellees
OPINION
FUENTES, Circuit Judge
In the midst of trial in the District Court, the parties
agreed to a high-low settlement. Regardless of the verdict, the
Bryan family was to receive at least $900,000. And regardless
of the verdict, defendants Cindy Baxter and Renie Skalko
were to pay no more than $2.7 million. So when the jury
returned an $8.6 million verdict for the Bryans, Baxter and
Skalko tendered $2.7 million and asked the Bryans to end the
action. The Bryans refused. They asserted that Baxter and
Skalko had breached the settlement agreement’s
confidentiality clause and thereby rendered the deal
unenforceable. The parties brought their dispute to the
District Court. But the District Court refused to resolve it,
reasoning that the Court lacked the subject matter jurisdiction
to decide whether to enforce the parties’ terms or the jury’s
verdict.
The District Court erred. The parties presented their
dispute to the District Court in order to bring the action to a
close. The case had not been dismissed, nor had the jury’s
verdict been marked satisfied. Indeed, the action remained
active and ongoing: the parties continued to litigate the effect
of the jury’s verdict up to and after taking this appeal. The
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case should have remained with the District Court. Ancillary
jurisdiction exists, for example, for post-judgment
proceedings related to the enforcement of the judgment.
Similarly, the District Court had jurisdiction to decide
whether or not to enforce the parties’ settlement agreement. A
district court’s jurisdiction does not terminate at the moment
the jury’s deliberations do.
The parties raise two other matters that we do not decide:
(1) the merits of the Bryan family’s allegation that Baxter and
Skalko breached the settlement agreement and (2) Baxter and
Skalko’s argument that the District Court ought to have
granted summary judgment in their favor. The District Court
has not had an opportunity to consider the first issue and
Baxter and Skalko have not addressed the second issue in
light of the trial record. Accordingly, we remand for further
proceedings before the District Court.
I. Background of the Case
A. After the Bryans adopted J.O., he assaulted one of
their children.
During the summer of 2001, violence seized the Bryan
family household. Their adopted son, J.O., repeatedly raped
and molested his younger foster brother, K.B., in the room the
boys shared together. After suffering through weeks of abuse,
K.B. eventually told his parents, Paul and Bonnie Bryan. The
Bryans then contacted the Erie County Office of Children and
Youth (“ECOCY”)—the agency that facilitated J.O.’s
adoption—and had J.O. removed from their home.
The Bryans blamed ECOCY for K.B.’s ordeal. Among
others employed at ECOCY, the Bryans focused on Renie
Skalko and Cindy Baxter. Skalko served as one of J.O.’s
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caseworkers. Baxter helped coordinate the Supportive Host
Program, which aimed to transition institutionalized children,
such as J.O., into foster homes. Through that program, Skalko
and Baxter introduced J.O. to the Bryans and, eventually,
helped facilitate the adoption. According to the Bryans,
however, ECOCY and its employees concealed J.O.’s history
during this process. ECOCY staff had reports of J.O.’s history
of violent behavior and sexual misconduct, but did not
disclose them to the Bryans.
B. Proceedings in the District Court
The Bryans sued ECOCY and seven of its employees
pursuant to 42 U.S.C. § 1983 for a violation of their
Fourteenth Amendment right to substantive due process.
After an appeal to this Court for permission to amend the
complaint, see Bryan v. Erie Cnty. Office of Children & Youth
Servs., 293 F. App’x 143 (3d Cir. 2008), the case proceeded
on a state-created danger theory. That theory of liability
permits a plaintiff to recover from state actors when “the
state’s own actions create the very danger that causes the
plaintiff’s injury.” See Morrow v. Balaski, 719 F.3d 160, 167
(3d Cir. 2013). The Bryans alleged that ECOCY employees
had placed KB into harm’s way.
The District Court granted summary judgment in favor of
many defendants. But the Court did not grant summary
judgment for Baxter and Skalko on the merits of the Bryans’
state-created danger claim or on Baxter and Skalko’s
qualified immunity defense. The Court identified contested
questions of fact that deserved the jury’s attention. In
particular, the Court described the conflicting evidence about
how much of J.O.’s history Skalko and Baxter knew, how
much they told the Bryans, and whether, in light of that
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knowledge, it was prudent to place J.O. into a foster home at
all. (App’x 39-54, 69.)
C. During trial, the parties agreed to a high-low
settlement.
The parties tried their case to a jury. During the trial, the
parties reached a “Stipulated to High/Low Agreement.” This
agreement constrained the parties’ financial risks by
stipulating a recovery range between the low of $900,000 and
the high of $2.7 million. If the jury returned a verdict of
$900,000 or less, the Bryans would receive $900,000. If the
jury returned a verdict of $2.7 million or more, Skalko and
Baxter would pay $2.7 million. If the jury returned a verdict
between the high and the low, the parties had to accept that
result. The agreement contemplated that payment would
terminate the action: “Upon payment of any of the
aforementioned amount by the Defendants, the verdict is
deemed satisfied and any and all of Plaintiffs [sic] claims
which are the subject of this lawsuit are dismissed forever and
any and all appellate rights are hereby waived by all the
Plaintiffs; and defendants.” (App’x 188.)
In addition to the high-low terms, the agreement also
contained confidentiality provisions. Paragraph 11 required
the Bryans to “limit their public comments about ECOCY and
the individual ECOCY Defendants” and to “say that the
ECOCY and Defendants did the right thing by [the Bryans’
son] and the parties are satisfied with the outcome.” (App’x
188.) Paragraph 15 forbade the agreement from being
disclosed to the jury. Paragraph 16 stipulated that “[t]his
Agreement shall be CONFIDENTIAL subject to the duties, if
any, of the ECOCY and/or its employees under the
Pennsylvania Right to Know Act.” (App’x 189.) And
Paragraph 18 required the parties to “put [the] Agreement on
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the record with the court to memorialize the same following
entry of the verdict or court order disposing of the case.”
(App’x 189.)
The jury returned a verdict of $8,654,769 in favor of the
Bryan family. After the jury announced its verdict, the Court
and the parties conferenced about what to do next. Skalko and
Baxter stated their intention “to make an oral motion to mold
the verdict consistent with our agreement to $2.7 million.”
(App’x 742.) After discussing the matter, however, the
parties’ attorneys and the Court agreed to enter a stipulation
of dismissal instead:
[ECOCY’s Attorney]: Why don’t
we do this. We have an agreement
for a high/low that we previously
signed, we’re going to issue
checks for $2.7 million to you. If
you accept that, once we’ve
issued the checks, we will file a
stipulation of dismissal.
[Bryans’ Attorney]: That’s fine.
The Court: All right, we’re done.
(App’x 743-44.) Shortly after the post-verdict conference, the
District Court entered judgment in favor of the Bryans in the
amount of $8,654,769.00.
Defendants’ counsel then tendered $2.7 million to satisfy
the agreement. The Bryans accepted the money “as only
partial payment on the judgment.” (App’x 190.) In a letter to
Skalko and Baxter, the Bryans questioned whether Baxter and
Skalko had “violated the terms of the high/low agreement
which would render the agreement void or voidable.” (App’x
190.) In particular, the Bryans alleged that Skalko and Baxter,
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or their agents, had disclosed the terms of the agreement to
county councilmen.
In response, Skalko and Baxter filed a “Motion to Satisfy
Pursuant to F.R.C.P. 60” and a “Motion for Leave to File
Rule 59 Motions Under Seal.” (Doc. Nos. 361-62.) The Court
directed the parties to brief the settlement dispute, and it
denied Baxter and Skalko’s motion to file the briefs under
seal. The Court remarked: “I can’t imagine for the life of me
why it’s appropriate to file anything under seal.” (App’x 750.)
While briefing the Rule 60 motion, Skalko and Baxter also
filed a “Motion to Alter or Amend Judgment Under Rule
59(e), or in the Alternative, Motion for New Trial Under Rule
59(a)(1)(A).” (Doc. No. 363.) This motion identified
numerous trial errors. It also purported to renew Skalko and
Baxter’s argument that they were immune from liability.
D. The District Court denied Skalko and Baxter’s
motion to enforce the high-low agreement.
The District Court denied Skalko and Baxter’s post-trial
motions. The Court concluded that it lacked “jurisdiction to
resolve the dispute relative to the enforceability of the
agreement.” (App’x 7.) The District Court observed that the
high-low agreement “was solely the product of counsels’
efforts with no involvement of the court,” that “[i]t was not
made part of the record prior to the case being closed,” and
that the Court “did not retain jurisdiction to resolve any
dispute arising under it.” (App’x 12.) The District Court noted
that it denied the motions “without prejudice to reassert them,
as may be appropriate, after a ruling by the state court on the
issues germane to the alleged breach of the Agreement.”
(App’x 12.)
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Skalko and Baxter filed a notice of appeal identifying two
specific issues: the District Court’s decision regarding
jurisdiction and its denial of summary judgment. They did not
appeal from the judgment in favor of the Bryans, or brief the
merits of their Rule 59 motion to amend the judgment or to
receive a new trial.
II. Jurisdiction
Defendants Skalko and Baxter’s “Motion to Satisfy
Pursuant to F.R.C.P. 60” seeks relief on the grounds that the
judgment has been “satisfied, released or discharged.” See
Fed. R. Civ. P. 60(b)(5). The denial of a Rule 60(b) motion
may or may not constitute a final order. See Penn W. Assocs.,
Inc. v. Cohen, 371 F.3d 118, 123 (3d Cir. 2004). The one in
this case does: The District Court’s decision, which followed
the entry of judgment, ended the litigation on the merits. The
District Court had nothing left to do but to execute the
judgment it had entered on the record. See Catlin v. United
States, 324 U.S. 229, 233 (1945). We therefore take
jurisdiction under 28 U.S.C. § 1291.
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III. Analysis
A. The District Court’s jurisdiction over the high-low
agreement1
The District Court properly exercised jurisdiction over the
Bryans’ lawsuit because it presented a federal question. See
28 U.S.C. § 1331. The presence of a federal question confers
jurisdiction to a district court for an entire “civil action.” Id.
As part of its original jurisdiction over an action, a district
court must consider the parties’ post-trial motions concerning
the trial, the verdict, and the judgment. See Fed. R. Civ. P. 50,
54, 59, 62. A district court’s jurisdiction does not terminate at
the moment the jury’s deliberations do.
In certain circumstances, a federal court has jurisdiction to
consider claims or to conduct proceedings beyond those
raised by the original action itself. For example, when the
parties present “other claims that are so related to claims in
the action . . . that they form part of the same case or
controversy,” a federal court may exercise supplemental
jurisdiction over them. 28 U.S.C. § 1367. Additionally, when
matters “incident to the disposition of the primary matter”
arise before a court, the doctrine of ancillary jurisdiction
permits district courts to decide them. United States v.
Dunegan, 251 F.3d 477, 478 (3d Cir. 2001). Thus, the limits
1
This Court usually reviews denials of Rule 60 motions for
abuse of discretion. See Budget Blinds, Inc. v. White, 536
F.3d 244, 251 (3d Cir. 2008). But we review de novo whether
the District Court possessed subject matter jurisdiction. See
Emerald Investors Trust v. Gaunt Parsippany Partners, 492
F.3d 192, 197 (3d Cir. 2007).
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of a court’s original jurisdiction do not define the limits of the
court’s subject matter jurisdiction. When a federal court has
original jurisdiction over an entire action, it has limited
authority to decide certain related claims or conduct
incidental proceedings. See generally 13 Charles Alan Wright
& Arthur R. Miller, Federal Practice & Procedure § 3523
(3d ed. 2013) (discussing supplemental, ancillary, and
pendent jurisdiction, as well as their limits).
A federal court has jurisdiction to decide a Rule 60(b)(5)
motion made by a party to a pending action. A Rule 60
motion does not “affect the judgment’s finality or suspend its
operation,” see Rule 60(c)(2), so it does not form part of the
original action. Indeed, Rule 60(b)(5) motions are used by a
judgment-debtor to relieve itself of an already-final judgment
that has been satisfied, released, or discharged. See, e.g.,
Sunderland v. City of Philadelphia, 575 F.2d 1089, 1090 (3d
Cir. 1978); see also Zamani v. Carnes, 491 F.3d 990, 995-96
(9th Cir. 2007); Newhouse v. McCormick & Co., Inc., 157
F.3d 582, 584 (8th Cir. 1998). But that does not mean that a
federal court lacks the jurisdiction to decide a Rule 60(b)(5)
motion. To the contrary, a federal court may entertain
garnishment, attachment, or other proceedings that “assist in
the protection and enforcement of federal judgments.”
Peacock v. Thomas, 516 U.S. 349, 356 (1996); see also Fed.
R. Civ. P. 64, 69, 70 (providing various post-judgment
enforcement and execution procedures). We conclude that the
same ancillary jurisdiction that supports post-judgment
enforcement proceedings supports proceedings to seek relief
from the judgment. The jurisdiction to enforce a judgment
necessarily includes the jurisdiction to declare the judgment
satisfied.
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Accordingly, when Skalko and Baxter moved pursuant to
Rule 60(b) to relieve themselves from the judgment, the
District Court had jurisdiction to decide the motion. The
nature of the defendants’ argument did not counsel otherwise.
To show why the Court should grant Rule 60(b) relief, Skalko
and Baxter pointed to a high-low settlement agreement. And
to show why the Court should deny Rule 60(b) relief, the
Bryans argued that the agreement had been materially
breached. True, these arguments formed a contract dispute
distinct from the federal action. But this contract dispute
stood between the Court and the resolution of the Rule 60
motion, and, by extension, the enforcement of the jury’s
verdict on the underlying claim. The Court, therefore, had
ancillary jurisdiction to decide the dispute. See Dunegan, 251
F.3d at 478-79.
The District Court’s contrary conclusion—that it lacked
the subject matter jurisdiction to consider the enforceability
of the high-low agreement—rested on Kokkonen v. Guardian
Life Insurance Co. of America, 511 U.S. 375 (1994). There,
the U.S. Supreme Court held that a district court does not
inherently have subject matter jurisdiction over disputes
concerning “the breach of an agreement that produced the
dismissal of an earlier federal suit.” Id. at 379. In so doing,
“Kokkonen rejected any . . . resort to notions of ‘inherent
power’ as surviving a dismissal order.” Shaffer v. GTE North,
Inc., 284 F.3d 500, 504 (3d Cir. 2002) (citation omitted).
Kokkonen did, however, chart a procedure by which the
parties could maintain a federal court’s jurisdiction after
dismissal. To do so, the parties had to incorporate the terms of
the settlement into the court’s dismissal order. Thus, “a
breach of the agreement would be a violation of the order,
and ancillary jurisdiction to enforce the agreement would
therefore exist.” Kokkonen, 511 U.S. at 381; see In re Phar-
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Mor, Inc. Secs. Litig., 172 F.3d 270, 274 (3d Cir. 1999)
(applying Kokkonen to conclude that district court lacked
subject matter jurisdiction over motion to enforce settlement
agreement because it did not incorporate the terms of the
settlement into its dismissal order or otherwise indicate that it
retained jurisdiction).
Kokkonen does not yet have any bearing on this dispute.
In Kokkonen, the parties had dismissed their suit; in this case,
the parties had not. As the U.S. Court of Appeals for the
District of Columbia Circuit observed, “this distinction is
critical.” T Street Dev., LLC v. Dereje & Dereje, 586 F.3d 6,
10 (D.C. Cir. 2009). The absence of an ongoing matter within
the district court’s original jurisdiction left the district court in
Kokkonen without any basis on which to predicate ancillary
jurisdiction. But here, of course, the Bryans never dismissed
the case, notwithstanding the high-low agreement. Having
frustrated dismissal, and thus maintained the action, the
Bryans cannot contend that the District Court lacked
jurisdiction to decide whether to enforce the parties’
agreement or the jury’s verdict.
Finally, the procedural consequences of the District
Court’s decision underscore its error. By holding that it
lacked jurisdiction over the parties’ settlement agreement, the
District Court made the outcome of a federal case contingent
on a state proceeding. Were we to accept the Bryans’
argument on appeal, the enforceable worth of the federal
judgment would be determined in a state proceeding. That
outcome poses an obstacle to efficiency as well as to
federalism, and we think it must be undone.
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B. The District Court must decide the other issues in the
first instance.
We do not reach the additional issues the parties call to
our attention. Those two issues—whether Skalko and Baxter
breached the settlement agreement and whether Skalko and
Baxter are entitled to qualified immunity—ought to be
addressed first by the District Court.
As to the breach of contract issue, the District Court has
yet to evaluate the merits of the dispute. This Court
“ordinarily decline[s] to consider issues not decided by a
district court, choosing instead to allow that court to consider
them in the first instance.” Forestal Guarani S.A. v. Daros
Int’l, Inc., 613 F.3d 395, 401 (3d Cir. 2010). That policy suits
this circumstance. The parties argue about whether Skalko
and Baxter breached the agreement by disclosing its terms to
third parties. Our record of those issues is incomplete and we
are, therefore, unable to decide them.
As to qualified immunity, Skalko and Baxter purport to
raise that issue before us by taking appeal from the District
Court’s denial of their summary judgment motion. But Skalko
and Baxter concede that they raised the same immunity
argument, in light of the trial record, in their Rule 59 motion
for a new trial. As a general matter, “[o]nce the case proceeds
to trial, the full record developed in court supersedes the
record existing at the time of the summary judgment motion.”
Ortiz v. Jordan, 131 S. Ct. 884, 889 (2011). Skalko and
Baxter have not briefed or argued the merits of the Rule 59
motion, however, so we need not decide it. Moreover, Skalko
and Baxter only seek to challenge the District Court’s
qualified immunity ruling if the high-low agreement cannot
be enforced. Otherwise, according to the agreement, “any and
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all appellate rights [have been] waived by all the Plaintiffs;
and defendants.” (App’x 188.)
Because Baxter and Skalko have not briefed and argued
the Rule 59 dispute, and because Skalko and Baxter may have
waived any appeal of the issue at all, we will not review the
qualified immunity defense now. Rather, we remand with
instructions to consider the Rule 59 issues, if appropriate,
following the Rule 60 decision.
IV. Conclusion
When the parties presented the District Court with a
dispute about whether or not the judgment had been satisfied,
the District Court had the subject matter jurisdiction to decide
it. The District Court’s decision to the contrary rested,
incorrectly, on the theory that no settlement agreement fell
within a district court’s supplemental jurisdiction unless the
court incorporated the terms of the agreement into an order.
In ongoing litigation, district courts have the jurisdiction to
decide whether the parties have settled the action or have
satisfied the judgment.
Accordingly, we reverse the District Court’s ruling with
respect to its jurisdiction to consider the high-low agreement
in the context of the Rule 60 motion. Because the District
Court’s evaluation of that motion and the other post-trial
motions rested on its erroneous conclusion that it lacked
jurisdiction to consider the existence and meaning of the
high-low agreement, we vacate its order of dismissal. Finally,
we remand to the District Court to consider the remaining
post-trial motions in light of this opinion.
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