Samuel Nemaizer, General Manager of the New York Coat, Suit, Dress, Rainwear and Allied Workers' Union I.L.G.W.U. v. Jack Baker, an Individual

MESKILL, Circuit Judge,

dissenting:

I respectfully dissent.

After correctly stating that our scope of review of the grant or denial of relief under Rule 60(b) is limited to determining whether the district court abused its discretion, the majority then proceeds to ignore the facts that Judge Broderick considered in interpreting his own order. The majority effectively reads back into the stipulation the very language that the parties themselves agreed to delete. A review of the complete factual background convinces me that Judge Broderick did not abuse his discretion in this case.

Appellee Samuel Nemaizer filed an action in New York Supreme Court in January 1984 alleging that appellant Jack Baker was liable for employee benefit fund contributions under New York Labor Law § 198-c. On February 16, 1984, the New York Court of Appeals in the case of Stoganovic v. DiNolfo, 61 N.Y.2d 812 , 473 N.Y.S.2d 972 , 462 N.E.2d 149 (Ct.App.1984), affg Stoganovic v. DiNolfo, 92 A.D.2d 729 , 461 N.Y.S.2d 121 (4th Dep’t 1983), squarely held that a civil cause of action against corporate officials like Baker could not be implied under section 198-c. Thus, before Nemaizer’s state law claim ever reached the federal court, its legal basis had been repudiated by the state’s highest court.

Nemaizer's attorney says he learned of the Stoganovic decision on February 21, 1984, following its publication in the New York Law Journal. On February 23, 1984, Baker removed Nemaizer’s suit to federal court, alleging as the ground for removal that the 198-c claim was preempted by ERISA. The following day Baker moved to dismiss Nemaizer’s suit pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. His accompanying memorandum of law argued that the claim failed under ERISA. 1

Rather than investing his client’s time and money in an effort to win a remand of what was now a meritless 198-c claim, Nemaizer contacted Baker and suggested a voluntary termination of the claim. Baker responded by proposing a stipulation of dismissal which contained the following language: “[Tjhis action, including all claims which were or could have been asserted herein, is dismissed with prejudice ____” App. of Appellant at 44 (emphasis added). Nemaizer refused to sign this stipulation which clearly would have barred a future ERISA claim. After negotiation, the italicized language was deleted. The resulting stipulation, signed by both parties and ordered by Judge Broderick, stated instead only that “this action is dismissed with prejudice.” App. of Appellant at 25. With the 198-c complaint now out of the picture, Baker’s motion to dismiss the complaint pursuant to Rule 12(b)(6) was dismissed by Judge Broderick as moot on March 16, 1984.

On September 13, 1984, Nemaizer and another benefit fund trustee brought an action against Baker in federal court alleging that Baker was liable for employee benefit funds under ERISA. The suit was originally assigned to Judge Brieant. At a conference with the judge, Baker’s attorney asserted that the new suit was barred by the stipulated dismissal with prejudice of the earlier suit. According to Nemaizer, Judge Brieant said that if the dismissal order were his own, he would be inclined to modify it in order to allow the ERISA claim to proceed. According to both parties, however, Judge Brieant stated that if the *67 order were not modified, he would probably be required to dismiss the ERISA claim on res judicata grounds. Nemaizer says it was Judge Brieant’s suggestion that the parties return to Judge Broderick to determine the order’s scope.

Nemaizer then filed with Judge Broder-ick the instant request for Rule 60(b) relief from the dismissal order. After receiving affidavits and briefs from the parties and hearing argument, Judge Broderick found that Nemaizer had intended the stipulation only to discontinue his state law claim, that there had been a true misunderstanding between counsel for the parties over the intended effect of the stipulation and that, in light of all of the facts and circumstances of the case, it would be inequitable to deny Nemaizer an opportunity to litigate his ERISA claim. In support of his finding, Judge Broderick particularly noted the deletion of the broad language from the original stipulation and the rapid confluence of events preceding it — the critical New York Court of Appeals decision, the removal of the 198-c action and the motion to dismiss. He also noted that an effort to remand the 198-c claim to state court would probably have succeeded, but would have been futile in light of the New York Court of Appeals decision.

Rather than actually modifying the dismissal order, Judge Broderick issued an order on May 8, 1985, in which he “construe[d] the stipulation as having been intended to discontinue the claim under state law but ... not ... as barring a subsequent claim under ERISA.” 2 App. of Appellant at 4. This order deemed the Rule 60(b) motion as having been made in the ERISA suit. A subsequent order dated June 4, 1985, amended the May 8 order, construing the Rule 60(b) motion as having been made in both the original 198-c suit and the later ERISA action.

DISCUSSION

The majority begs the key question in this case when it states that “[a] dismissal with prejudice arising out of an agreement of the parties is an adjudication of all matters contemplated in the agreement,” Majority Op. at section II (emphasis added), while refusing to examine what was actually contemplated by the parties here or, indeed, whether there ever was a meeting of the minds. The district judge, on the other hand, actually made this inquiry. He found that instead of an agreement there was a genuine misunderstanding between the parties as to the stipulation’s scope. The majority notes this finding, see id. at section I, and nowhere indicates that it was wrong, much less clearly erroneous. Then, instead of according the finding the deference it deserves, the majority disregards it.

Because the instant stipulated judgment of dismissal, like a consent judgment, is “ ‘an agreement of the parties entered upon the record with the sanction and approval of the [c]ourt,’ ” see Schurr v. Austin Galleries of Illinois, Inc., 719 F.2d 571, 574 (2d Cir.1983) (quoting Town of Oyster Bay v. Forte, 34 Misc.2d 5 , 219 N.Y.S.2d 456, 459 (Sup.Ct.1961), it is reasonable to apply here the principles long applied to consent judgment cases. The stipulation, like a consent judgment, should be construed and interpreted as a contract and

“ ‘reliance upon certain aids to construction is proper, as with any contract. Such aids include the circumstances surrounding the formation of the [stipulation, and] any technical meaning words used may have had to the parties’____ [A] court may interpret the terms ... by examining extrinsic documents ... [and may also examine] ‘the circumstances surrounding the order and the context in which the parties were operating,’ ”

Schurr, 719 F.2d at 574 (quoting United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 243 , 95 S.Ct. 926, 935, 938 , 43 L.Ed.2d 148 (1975)). See New York State Association For Retarded Children v. Carey, 596 F.2d 27, 37 (2d Cir.), cert. denied, 444 U.S. 836 , 100 S.Ct. 70 , 62 L.Ed.2d *68 46 (1979); see also Alliance to End Repression v. City of Chicago, 742 F.2d 1007, 1013 (7th Cir.1984) (en banc) (“context ... is the key to understanding language [in a consent decree]”).

Based on his knowledge of the confusing substantive and procedural context in which the parties here were operating, Judge Broderick correctly found that the term “this action” in the parties’ stipulation was ambiguous. He then properly proceeded to determine the intended meaning of the term. See Dunlop v. Pan American World Airways, 672 F.2d 1044 , 1050 (2d Cir.1982) (stipulation stating that it was “deemed to constitute a bar, merger, and estoppel to the institution or prosecution of any further litigation” by certain named parties was “sufficiently ambiguous ... to require clarification”); cf Schurr, 719 F.2d at 575 (district court erred in looking to extrinsic evidence after having found that language of consent judgment was “clear and unambiguous”). But see Alliance to End Repression, 742 F.2d at 1013 (courts seeking to effectuate parties’ intent may disregard even unambiguous language where literal meaning is clearly contrary to that intent). Employing the aids to construction described above, particularly including a comparison of the draft and final stipulations, the district judge concluded that the. intended meaning of “this action” was limited to Nemaizer’s 198-c complaint and did not extend to a potential future claim under ERISA. Cf United States v. O’Neil, 709 F.2d 361 , 366-68 (5th Cir.1983) (appellate court looked to context and wording of related judgments to determine district court’s intended meaning of “severed” in judgments at issue).

Two subsections of Rule 60(b) afforded the district court the power to grant relief from an unintended effect of the stipulation. The first of the applicable subsections, 60(b)(1), allows relief from a judgment resulting from a “mistake.” What occurred here was not the kind of negligent omission that courts have refused to recognize as a ground for relief under Rule 60(b). See, e.g., Hoffman v. Celebrezze, 405 F.2d 833, 835 (8th Cir.1969). Rather, it was as the district court described it — with an apparent reference to the classic mistake case, Raffles v. Wichelhaus, 159 Eng. Rep. 375 (Ex.1864) — a “true case of a misunderstanding where two ships were passing in the night.” App. of Appellant at 7. The stipulation did not clearly express the intent of the parties and relief from it was properly available under Rule 60(b)(1). Cf. Elder v. Metropolitan Freight Carriers, Inc., 543 F.2d 513, 517-18 (3d Cir.1976).

Viewed another way, the stipulated dismissal entered here was also contrary to the intentions of the court. The court, therefore, had the power to grant relief from it pursuant to Rule 60(b)(6), providing that the circumstances here were sufficiently “extraordinary” to satisfy the judicial gloss on this subsection. See Matter of Emergency Beacon Corp., 666 F.2d 754, 759 (2d Cir.1981). The district court did not abuse its discretion when it determined that the circumstances here were extraordinary.

Beyond the facts and events described above, the following factors could also have led to that determination. First, the plaintiff here had the “unfettered power” to obtain a voluntary dismissal of his claim under Fed.R.Civ.P. 41(a)(l)(i) merely by filing a notice of dismissal. Santiago v. Victim Services Agency of the Metropolitan Assistance Corp., 753 F.2d 219, 221 (2d Cir.1985). The defendant’s motion to dismiss did not take the case out of the Rule, id. at 222 , whose policy of encouraging “voluntary dismissals of actions that have become untenable in the very early stages of the litigation,” id. at 223 , was certainly applicable here. Thus, Nemaizer could have withdrawn his 198-c claim without bothering to reach a mutual understanding about the terms of the withdrawal.

Second, a broad reading of the parties’ stipulation here would deny the plaintiff his day in court by re-inserting the very language the parties themselves intentionally deleted. That result is contrary to the policy of Rule 60(b), “a remedial provision intended to prevent injustice by allowing parties their day in court even though some technical error has occurred which would otherwise be grounds for default or dismissal.” Greater Baton Rouge Golf Associa *69 tion v. Recreation and Park Commission, 507 F.2d 227, 228 (5th Cir.1975) (per curiam). Third, the claim precluded here was an ERISA claim, one protected by the strong legislative policy of preventing an employer “from ‘pulling the rug out from under’ promised retirement benefits upon which his employees had relied during their long years of service.” Amato v. Western Union International, Inc., 773 F.2d 1402, 1409 (2d Cir.1985), pet. for cert. dismissed, — U.S. -, 106 S.Ct. 1167 , 89 L.Ed.2d 288 (1986); cf. Gilbert v. Burlington Industries, Inc., 765 F.2d 320, 326 (2d Cir.) (financial loss to employees by employer’s default on severance pay obligations a primary concern of ERISA), aff'd, — U.S. —, 106 S.Ct. 3267 , 91 L.Ed.2d 558 (1986).

Considering all of these factors, the experienced district judge here used sound discretion in construing his own order in such a way as to do substantial justice. Klapprott v. United States, 335 U.S. 601, 614-15 , 69 S.Ct. 384, 390 , 93 L.Ed. 1099 (1949) (opinion of Black, J.). I would affirm.

. The record indicates, therefore, that the Stoga-novic decision did not come during the penden-cy of this dismissal motion as indicated by the majority. Instead, the dismissal motion was filed eight days after the Stoganovic decision had rendered the 198-c claim meritless.

. Despite the district court’s references to clarification and construction rather than modification, we should review its action as a grant of relief under Rule 60(b). Cf. In re Frigitemp Corp., 781 F.2d 324, 328 (2d Cir.1986).