Goss Graphics Systems, Inc., formerly known as Rockwell Graphic Systems, Inc. v. DEV Industries, Inc.

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-1370
Goss Graphics Systems, Inc., formerly
known as Rockwell Graphic Systems, Inc.,
Plaintiff-Petitioner-Appellant,
v.
DEV Industries, Inc., et al.,
Defendants-Appellees,
and
Tensor Group, Inc.,
Respondent-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 84 C 6746--Charles R. Norgle, Sr., Judge.
Argued September 10, 2001--Decided September 27, 2001
Before Posner, Kanne, and Evans, Circuit
Judges.
Posner, Circuit Judge. A predecessor of
the plaintiff brought this suit against
DEV Industries and others in 1984,
charging theft of trade secrets related
to the design of printing presses. A
permanent injunction was entered in the
plaintiff’s favor after 10 years of
litigation. DEV went out of business and
promptly reappeared, the plaintiff
argues, as Tensor Group. The plaintiff
asked the district court to hold Tensor
in contempt of the injunction and provide
appropriate relief. After various
proceedings unnecessary to recount here
(see Rockwell Graphic Systems, Inc. v.
DEV Industries, Inc., 925 F.2d 174 (7th
Cir. 1991), and 91 F.3d 914, 915 (7th
Cir. 1996)), the district court, on July
13, 1999, advised by the parties that a
settlement was likely, dismissed the case
with leave to reinstate it within six
months. The case did not settle, and on
January 11, 2000, shortly before the
expiration of the six-month deadline for
reinstatement, the plaintiff filed a

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motion in the district court to reinstate
it. The district court’s rules require
that such a motion be accompanied by a
notice of presentment to the judge who is
to handle the motion, so that he is made
aware of it. N.D. Ill. R. 5.3(b); see
Lorentzen v. Anderson Pest Control, 64
F.3d 327, 331 (7th Cir. 1995); Wilson v.
Chicago Housing Authority, No. 99 C 2380,
1999 WL 988812 (N.D. Ill. Oct. 22, 1999).
However, the judge who had been handling
the case (and had dismissed it) was no
longer a district court judge and, as of
January 11, no other judge had yet been
assigned to the case. Not until January
21 did the plaintiff learn the identity
of the judge who had been assigned to the
case and it forthwith noticed the motion
for a hearing before the new judge on
January 28, the earliest available date.
At that hearing, rather than ruling on
the motion the judge directed the parties
to continue to try to settle the case. On
August 11, settlement efforts having
again failed, the judge on his own
initiative denied the plaintiff’s motion
to reinstate. He deemed it untimely
because the notice of presentment had
been filed after the expiration of the
six-month deadline. He expressed dismay
at the parties’ having strung along the
litigation for 16 years.
The first district judge should not have
dismissed the case merely because she
thought it likely to settle. The right
time to dismiss a case is when the
dispute between the parties has been
definitively and finally resolved, not
when it seems likely to be resolved.
There was a chance the case would not
settle, and indeed it did not, thus
requiring the plaintiff to come back to
court and precipitating the dispute that
brings the case back before us for the
third time. We have repeatedly criticized
the practice of dismissing suits before
they have been concluded, with leave to
reinstate the suit. Otis v. City of
Chicago, 29 F.3d 1159, 1163 (7th Cir.
1994) (en banc); King v. Walters, 190
F.3d 784, 786 (7th Cir. 1999) ("we have
frowned on this practice, unless it is
clear that nothing else will accomplish
the desired goal, because it can be
confusing, or worse, prejudicial to the
rights of the parties. . . . In this
case, it appears to have been driven by
the pressure to improve docket
statistics, which is not the kind of

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valid reason that Otis contemplated");
Ford v. Neese, 119 F.3d 560, 562 (7th
Cir. 1997) ("it would be helpful to all
concerned if when judges retained
jurisdiction of a case they said so
rather than using the Aesopian ’dismissed
with leave to reinstate’ formula, which
they do presumably so that the case will
not be carried on their docket where it
might mar the judge’s statistical showing
of prompt disposition of the cases
assigned to him"); see also JTC Petroleum
Co. v. Piasa Motor Fuels, Inc., 190 F.3d
775, 776 (7th Cir. 1999). The confusion
to which the practice gives rise is
illustrated not only by this case but
also by Baltimore & Ohio Chicago Terminal
R.R. v. Wisconsin Central Ltd., 154 F.3d
404, 407-08 (7th Cir. 1998) ("once again
we urge district judges to eschew
dismissals with leave to reinstate," id.
at 408); Adams v. Lever Bros. Co., 874
F.2d 393, 395-96 (7th Cir. 1989), and In
re Ohio River Co., 754 F.2d 236 (7th Cir.
1985) (per curiam).
The second judge’s action in denying the
motion to reinstate Goss’s contempt case,
an action for which the judge was "set
up" by the first judge’s action in
dismissing the case with leave to
reinstate, was an abuse of discretion on
three grounds. First, there was no
violation of local rules. Second, even if
there had been, the sanction of refusing
to reinstate, amounting to a dismissal of
a probably meritorious case, was
disproportionate to the wrong. Third, a
refusal to settle a case is not a valid
ground for dismissing it--there is no
legal duty to settle litigation.
The district court’s presentment rule
requires that motions in a case be
presented to the judge presiding over the
case so that he’ll know the motion has
been filed and can dispose of it
expeditiously. When there is no judge as
signed to the case, however, there is no
one to present a motion to, and in that
situation presentment would serve no
earthly purpose. Tensor makes the absurd
argument that in such a case the motion
has to be presented to the emergency
judge of the district court, that is, the
district judge designated to hear
emergency motions. There was no emergency
here, however. The plaintiff was not
seeking immediate action on its motion to
reinstate the case; all the parties were

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content to wait a few days until a judge
was appointed to preside over it. As
there was no judge to whom the motion
should have been presented, there could
have been no violation of the rule.
Cessante ratione legis, cessat et ipsa
lex.
But had there, contrary to our belief,
been a violation, refusal to reinstate
this multimillion dollar suit would have
been a disproportionate sanction.
Sanctions, as we and other courts have
repeatedly emphasized, are to be
proportioned to the severity of the wrong
being punished. E.g., Long v. Steepro,
213 F.3d 983, 986 (7th Cir. 2000); United
States v. Stefonek, 179 F.3d 1030, 1035
(7th Cir. 1999); Blankenship &
Associates, Inc. v. NLRB, 54 F.3d 447,
449-50 (7th Cir. 1995); Philips Medical
Systems International B.V. v. Bruetman, 8
F.3d 600, 602-03 (7th Cir. 1994);
Lorenzen v. Employees Retirement Plan of
the Sperry & Hutchinson Co., 896 F.2d
228, 232-33 (7th Cir. 1990); Zambrano v.
City of Tustin, 885 F.2d 1473, 1480 (9th
Cir. 1989); Johnson v. Boyd-Richardson
Co., 650 F.2d 147, 150 (8th Cir. 1981).
In fact, "proportionality is the
cornerstone of a rational system of
sanctions." Rush-Presbyterian-St. Luke’s
Medical Center v. Hellenic Republic, 980
F.2d 449, 455 (7th Cir. 1992). (There is
an irrelevant exception for cases in
which the wrong is concealable--that is
the rationale for treble damages. Perez
v. Z Frank Oldsmobile, Inc., 223 F.3d
617, 621 (7th Cir. 2000). It is
inapplicable here.) If there was a
violation of the local rule in this case
(but there wasn’t), it was technical and
completely harmless--so technical, so
harmless, that the appropriate sanction
would have been no sanction at all, and
certainly not the extinction of a
meritorious-seeming suit. See Central
States, Southeast & Southwest Areas
Pension Fund v. Slotky, 956 F.2d 1369,
1376 (7th Cir. 1992); cf. Tuf Racing
Products, Inc. v. American Suzuki Motor
Corp., 223 F.3d 585, 590 (7th Cir. 2000).
No one was hurt by Goss’s failure to
present its motion to a judge when no
judge had been appointed to rule on the
motion. Promptly upon receiving notice
that a new judge had been appointed, Goss
notified him of the motion.
And last, the district judge’s annoyance

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at the parties’ failure to settle was not
a valid ground for killing the
plaintiff’s suit. Federal courts do have
authority to require parties to engage in
settlement negotiations, Fed. R. Civ. P.
16(c); Fed. R. App. P. 33; G. Heileman
Brewing Co., Inc. v. Joseph Oat Corp.,
871 F.2d 648, 652-53 (7th Cir. 1989) (en
banc); In re LaMarre, 494 F.2d 753, 755-
56 (6th Cir. 1974), but they have no
authority to force a settlement. E.g., G.
Heileman Brewing Co., Inc. v. Joseph Oat
Corp., supra, 871 F.2d at 653; United
States v. LaCroix, 166 F.3d 921, 922-23
(7th Cir. 1999); In re LaMarre, supra,
494 F.2d at 756 (6th Cir. 1974); Newton
v. A.C. & S., Inc., 918 F.2d 1121, 1128
(3d Cir. 1990); Kothe v. Smith, 771 F.2d
667, 669 (2d Cir. 1985). "The law does
not countenance attempts by courts to
coerce settlements." In re Ashcroft, 888
F.2d 546, 547 (8th Cir. 1989) (per
curiam). If parties want to duke it out,
that’s their privilege. Maybe the
plaintiff was less forthcoming in
settlement negotiations than it should in
some abstract sense have been, but that
was its right. It did not disobey any
order of the district court relating to
the settlement process.
The judgment denying the motion to
reinstate is reversed with instructions
to grant it. We direct that the case be
reassigned to another judge. 7th Cir. R.
36.
Reversed.

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