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Li v. ReCellular

April 16, 2010


The opinion of the court was delivered by: Honorable Stephen J. Murphy, III


On December 4, 2009, pro se Plaintiff Fengmei Li ("Li") and Defendant ReCellular, Inc. ("ReCellular") filed a stipulation of dismissal with prejudice. Docket no. 50. On December 8, 2009, though not required to do so*fn1 but simply by request of the parties, the Court entered an order of dismissal with prejudice. Docket no. 52. Then, on December 11, 2009, unhappy with her settlement, Li filed a motion to set aside the dismissal and settlement and reopen her case. Docket no. 53. For the reasons stated below, the Court will deny Li's motion.


In April 2009 Li filed this action for employment discrimination and retaliation against ReCellular, her former employer. On November 25, 2009, after nearly seven months of contentious discovery, counsel for ReCellular offered to settle the action. Li promptly rejected the offer. In the mean time, the Court appointed Kurt Koehler to represent Li on a pro bono basis. Koehler promptly contacted ReCellular and requested that Li's then-impending deposition be rescheduled while the parties further negotiated settling the case. ReCellular agreed.

ReCellular sent Koehler a proposed settlement agreement, along with a proposed stipulated order of dismissal with prejudice and information regarding prior settlement negotiations, and asked him to discuss the offer with Li. Li submitted a counter offer. After numerous offers and counteroffers, the parties agreed to meet in person on the morning of December 4, 2009 -- the day of Li's scheduled deposition -- to discuss a possible settlement. That morning at 8:24 a.m., Li fired Koehler and began negotiating with ReCellular without the assistance of counsel.

After the parties agreed to settle the case, they discussed possible changes to the language of the settlement agreement. Li requested changes to the agreement including:

1) removal of language indicating Li was receiving valuable and good consideration to which she was otherwise not entitled; 2) removal of language that the agreement could be used as the basis of a future injunction; 3) making mutual certain portions of the agreement, including the non-disparagement covenant; and 4) including an agreement to destroy confidential documents relating to the settlement. ReCellular agreed to these changes and incorporated them into the settlement documents.

Li agreed to change certain language in the settlement agreement to reflect that Li had voluntarily entered into the agreement without consulting legal counsel and that Li was fully advised as to the meaning and finality of the waiver and intended to be bound by it. After more negotiations, the parties agreed to the final terms and executed the settlement documents, which included a settlement agreement and a stipulated order of dismissal with prejudice. Li agreed to place the terms of the settlement "on the record" using the court reporter originally hired to record Li's deposition. Li stated under oath that she understood an agreed to all of the settlement terms.

In the days following the settlement, Li sent numerous e-mails to ReCellular representatives complaining about the terms of the settlement. She mainly complained about the settlement amount and her own failure to have an attorney advise her about the agreement before signing it. Li complained that the settlement amount was not sufficient to release her from her financial troubles. ReCellular responded that it would not increase the settlement amount, but offered to subsidize a portion of any future credit counseling.

Li then filed the instant motion to set aside the dismissal and settlement. Li asserts four grounds for setting the settlement aside: 1) she did not consult with an attorney before signing the agreement; 2) she did not have a clear head during settlement negotiations due to the prescription drugs she was taking; 3) the settlement does not provide her with enough money to avoid foreclosure on her home; and 4) the non-disparagement clause was moved into a separate agreement. ReCellular seeks costs and fees incurred in having to respond to the motion.


Li's motion and ReCellular's response present two primary issues. The first is whether Li is entitled to have the settlement and dismissal set aside. The second is whether ReCellular, if successful in opposing Li's motion, is entitled to reimbursement from Li for the fees and costs it incurred in having to respond to her motion. The Court's conclusion with respect to both issues is no.

I. Is Li Entitled to Have the Settlement and Dismissal Set Aside?

The Court first addresses whether Li may set aside the settlement and dismissal. The Court begins with Li's request to set aside the settlement agreement and finds that it lacks jurisdiction to set aside the settlement agreement itself.

Neither the Federal Rules of Civil Procedure nor the doctrine of ancillary jurisdiction provide a district court with jurisdiction to enforce a settlement agreement simply because the agreement arises out of a matter over which a court once had subject matter jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994). Rather, a party must assert an independent basis of jurisdiction to permit a federal ...

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