Does the Claim Not to Be Tried Support Immediate Appeal of an Order That Sets Aside a Settlement Agreement?


Linda S Mullenix

5 Preview of United States Supreme Court Cases 153


It is spring, and as the early crocuses annually blossom forth, so yet another collateral order doctrine case flowers on the Supreme Court's docket. In one of the longest-running riffs on doctrinal law, the Supreme Court in Digital Equipment is hearing its eighth case in seven years involving the collateral order doctrine of interlocutory appeal. As Casey Stengel might have said, you could look it up.

In this year's collateral order outing, the Supreme Court will grapple with concepts of what court orders are important, and when and if a party has a right not to go to trial. The primary issue the Court will address is whether the Tenth Circuit Court of Appeals was correct in determining that Digital Equipment Corporation had no right to immediately appeal a lower federal court's order that set aside settlement agreement on grounds of fraud after Desktop Direct, Inc. had dismissed its lawsuit against Digital Equipment Corporation as part of the agreement?

The struggle between DEC and Desktop concerning whether DEC is entitled to an immediate review of the district court's decision to vacate the dismissal is significant for its potential impact on settlement negotiations. DEC would have the Supreme Court believe that, unless the Court validates a right to an appeal in this situation, litigants will always be bargaining in the shadow of the possibility that a party may be forced to go to trial when it expects that its settlement has foreclosed trial. Thus, the strong public policy concerning enforceability of settlement agreements, including standard provisions not to litigate, would be subverted if enforcement had "to await the end of the very litigation sought to be avoided."

Desktop counters that, under applicable collateral order standards, DEC's rights "would be perfectly vindicable" through ordinary appellate review after trial, especially where the settlement itself was the product of fraudulent misrepresentation. Digital Equipment is significant in a broader sense in that the Supreme Court will have to clarify three aspects of the collateral order doctrine: (1) what it means when an issue involves a right not to go to trial, (2) whether the importance of the issue is a legitimate judicial concern, and, if so, (3) the methodology for assessing the importance of an issue under the collateral order standards.

Full Citation

Linda S. Mullenix, Does the Claim Not to Be Tried Support Immediate Appeal of an Order That Sets Aside a Settlement Agreement?, 1993-94 Preview of U.S. Supreme Court Cases 153.