to the enforceability of settlement agreements under the Lanham Act. As the discussion immediately below makes clear, the case law cited by defendant fails to adequately support the position that federal law supplies the rule of decision with respect to the settlement of a Lanham Act claim.
Defendant cites to numerous cases in support of the argument that the court should apply a federal rule of decision. Def.'s Mem. of Law, Doc. 98, at 3-10 (citing, inter alia, Taylor v. Gordon Flesch Co., Inc., 793 F.2d 858 (7th Cir. 1986); Glass v. Rock Island Refining Corp., 788 F.2d 450 (7th Cir. 1986); Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386 (5th Cir. 1984); Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207, 1209 (5th Cir. 1981); Allen v. Alabama Bd. of Educ., 612 F. Supp. 1046 (M.D. Ala. 1985); Bergstrom v. Sears Roebuck & Co., 532 F. Supp. 923 (D. Minn. 1982); Gamewell Mfg., Inc. v. HVAC Supply, Inc., 715 F.2d 112 (4th Cir. 1983); Bd. of Trustees of the Sheet Metal Workers Local Union No. 137 Ins. Annuity and Apprenticeship Training Funds v. Vic Construction Corp., 825 F. Supp. 463 (E.D.N.Y. 1993)). While these cases provide some guidance with regard to the issue presently before the court, they are not dispositive. For example, Taylor, Glass and Fulgence each hold that oral settlements of Title VII claims are enforceable under federal law. Taylor, 793 F.2d at 862; Glass, 788 F.2d at 454-55; Fulgence, 662 F.2d at 1209. Taylor and Glass cite to Lyles v. Commercial Lovelace Motor Freight, Inc., 684 F.2d 501 (7th Cir. 1982), which in turn cites to the Fifth Circuit's decision in Fulgence to support the claim that oral settlement agreements of Title VII claims are enforceable. In Fulgence, the Court specifically held that "federal law determines the validity of oral settlement agreements in employment discrimination actions brought pursuant to Title VII." Fulgence, 662 F.2d at 1209. The Court reasoned that the application of state law would interfere with a significant federal interest. In particular, the Fulgence Court observed that "Congress has mandated a policy of encouraging voluntary settlement of Title VII claims." Fulgence, 662 F.2d at 1209 (citing 42 U.S.C. § 2000e-5(b)). Secondly, the Fulgence Court declined to apply state law because "the Supreme Court has already established prerequisites to the validity of settlement agreements in Title VII suits." Fulgence, 662 F.2d at 1209 (citations omitted). Neither of these considerations are present in the case at bar. As far as this court is able to discern Congress has not expressed a particular interest in encouraging settlement agreements of Lanham Act claims. Nor has the Supreme Court articulated prerequisites to the validity of settlement agreements in Lanham Act claims, as it did with settlement agreements in Title VII suits. See Alexander v. Gardner-Denver Co., 415 U.S. 36, 52 n.15, 94 S. Ct. 1011, 1021 n.15, 39 L. Ed. 2d 147 (1974) (employee must knowingly and voluntarily consent to settlement agreement).
In Allen v. Alabama Bd. of Educ., 612 F. Supp. 1046 (M.D. Ala. 1985), another case cited by defendant, the Court relied heavily upon Fulgence for the claim that the validity of settlement agreements are determined by federal rather than state law. Allen, 612 F. Supp. at 1053. Allen is not helpful because it relies primarily on the Fifth Circuit's decision in Fulgence, a case that this court already distinguished. Furthermore, Allen involved a class action civil rights lawsuit against state officials alleging discrimination. As discussed below, while federal common law has been applied to disputes in which the United States is a party, the Supreme Court has declined to adopt federal common law for private disputes. Morgan v. S. Bend Comm. School Corp., 797 F.2d 471, 475 (7th Cir. 1986).
In asserting that the court is bound to apply federal common law, defendant makes the claim that the Lanham Act, not state law, is the source of "the parties [sic] rights and liabilities under the settlement." Def.'s Mem. of Law, Doc. 98, at 7. Plaintiff counters that the settlement agreement itself is the source of the right. Addressing defendant's argument, the court notes that while federal law is one source of the parties' rights and liabilities as well as the source of this court's jurisdiction, it is not the sole source. Plaintiff brought the instant suit under state law as well as federal law. Furthermore, defendant places too much emphasis on the court's jurisdictional bases over the instant claims. Def.'s Mem. of Law, Doc. 98, at 5. Although Congress granted federal courts original jurisdiction over all actions arising under the Lanham Act pursuant to 28 U.S.C. § 1338(a), that statute is merely jurisdictional and does not create any substantive legal rights. Texas Indus., Inc. v. Radcliff Materials, 451 U.S. 630, 640, 101 S. Ct. 2061, 2067, 68 L. Ed. 2d 500 (1981) ("The vesting of jurisdiction in the federal courts does not in and of itself give rise to authority to formulate federal common law.") (citing United States v. Little Lake Misere Land Co., 412 U.S. 580, 591, 93 S. Ct. 2389, 2396, 37 L. Ed. 2d 187 (1973)); J. Thos. McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION, 3d ed. (1995), § 32.02 (citing Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660 (Fed. Cir. 1988) ("Section 1338(b) is a jurisdictional statute, giving the district court jurisdiction to hear certain state or federal unfair competition claims. That statute does not create the substantive right underlying the claim.")). Furthermore, as discussed more fully below, the mere presence of federal law as a source of the parties' rights and liabilities does not, in itself, mandate the application of federal law. Based on the foregoing, the court concludes that there is no federal common law rule that determines the validity of oral settlement agreements under the Lanham Act.
In the absence of a federal rule of decision, the issue is whether the court should create a federal common law rule. Congress expressed a preference for federal courts to apply state rules in the Rules of Decision Act. That statute provides that "the laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply." 28 U.S.C. § 1652. The Supreme Court has repeatedly reaffirmed its alleigance to the principal that there is "no federal general common law." See e.g., O'Melveny & Myers v. Federal Deposit Insurance Corp., 512 U.S. 79, 129 L. Ed. 2d 67, 114 S. Ct. 2048, 2053 (1994), citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 822, 82 L. Ed. 1188 (1938); cf. Water Technologies, 850 F.2d at 670 ("there is no federal common law of unfair competition"). There are, however, several instances in which federal courts have fashioned federal common law.
First, courts have done so in matters in which a federal rule of decision is necessary to protect uniquely federal interests. Texas Indus., Inc., 451 U.S. at 640, 101 S. Ct. at 2067 (citations omitted) (adopting state law as rule of decision in determining effect of settlement in antitrust action). However, the Supreme Court emphasized that such instances are "few" in number and "limited to situations where there is a 'significant conflict between some federal policy or interest and the use of state law.'" O'Melveny & Myers, 114 S. Ct. at 2055 (1994). Writing for a majority of the Court in O'Melveny, Justice Scalia noted that the very existence of a significant conflict is a "precondition for recognition of a federal rule of decision." O'Melveny, 114 S. Ct. at 2055. In the case at bar, defendants have not pointed to any conflict, significant or otherwise, between a federal policy and the application of state law. Nor is the court able to identify any conflict that would arise from the application of state law and the Lanham Act that would frustrate the purposes of the federal statutory scheme.
Some courts have fashioned a federal rule when there is a perceived need for "uniformity" amongst the states. Kimbell Foods, Inc., 440 U.S. at 728, 99 S. Ct. at 1458; Kamen v. Kemper Financial Services, Inc., 500 U.S. 90, 98, 114 L. Ed. 2d 152, 111 S. Ct. 1711 (1991). The Supreme Court has repeatedly recognized that "federal programs that 'by their nature are and must be uniform in character throughout the Nation' necessitate formulation of controlling federal rules." Kimbell Foods, Inc., 440 U.S. at 728 (citations omitted). The need for uniform rules exists, for example, if Congress provides federal courts with exclusive jurisdiction. One such instance is the provision for exclusive federal court jurisdiction over ERISA claims. See Sheet Metal Workers Local 137 v. Vic Construction, 825 F. Supp. 463, 465-66 (E.D.N.Y. 1993) ("Federal common law should govern the validity of settlement agreements resolving ERISA disputes" because, inter alia, Congress provided for exclusive federal court jurisdiction over such disputes, "thereby encouraging the uniform development of federal common law principles."). Likewise, Congress provided exclusive jurisdiction with regard to patent and copyright claims. 28 U.S.C. § 1338(a). In contrast, Congress did not provide exclusive jurisdiction to federal courts to hear claims brought under the Lanham Act; state courts have concurrent jurisdiction to hear Lanham Act claims. See, e.g., Berlitz Schools of Languages of America, Inc. v. Everest House, 619 F.2d 211 (2d Cir. 1980); see also, 4 J. Thos. McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION, § 32.01 (3d ed. 1994) ("[A] plaintiff wishing to file suit for violation of a provision of the Lanham Act has a choice to sue on the claim in either federal or state court."). See e.g., Lanham Act § 34, codified at 15 U.S.C. § 1116 ("The several courts vested with jurisdiction of civil actions arising under this chapter shall have power to grant injunctions . . . to prevent the violation of any right of the registrant of a mark registered in the Patent and Trademark Office.").
Courts have also found the need for a uniform national rule when federal law preempts a state law in a particular area through a comprehensive statutory scheme. For example, Congress expressly reserved the regulation of employee benefit plans to federal authority under ERISA, which expressly preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. section 1144(a); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S. Ct. 478, 482, 112 L. Ed. 2d 474 (1990) (preemption clause is "conspicuous for its breadth" and its "deliberately expansive language was designed to establish pension plan regulation as exclusively a federal concern." (internal citations omitted)). Furthermore, the Supreme Court and the Second Circuit have acknowledged that federal courts are competent to fashion common law in claims brought under ERISA. Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d 12, 16 (2d Cir.), (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S. Ct. 948, 954, 103 L. Ed. 2d 80 (1989)).
Congress has not preempted the area of common law trademark. See Mead Data Central v. Toyota Motor Sales, U.S.A., 702 F. Supp. 1031, 1040-41 (S.D.N.Y. 1988) ("To the extent that the New York [antidilution statute, N.Y. Gen. Bus. Law § 368-d,] protects rights not provided for by the federal statute, it does not conflict with the Lanham Act but rather, it complements and supplements it."), rev'd on other grounds, 875 F.2d 1026 (2d Cir. 1989); see also Nikon, Inc. v. Ikon Corp., 803 F. Supp. 910, 925-26 (S.D.N.Y. 1992) (citing Mead Data Central, 702 F. Supp. 1031 (S.D.N.Y. 1988)); La Chemise Lacoste v. Alligator Co., 506 F.2d 339, (3d Cir. 1974), cert. denied, 421 U.S. 937, 95 S. Ct. 1666, 44 L. Ed. 2d 94, reh. denied, 421 U.S. 1006, 95 S. Ct. 2408, 44 L. Ed. 2d 674 (1975). Although the Lanham Act would preempt conflicting state trademark law, it does not do so when state trademark law expands the rights provided under the federal statute. Lesportsac, Inc. v. K Mart Corp., 617 F. Supp. 316, 318 (E.D.N.Y. 1985).
Another reason for developing a uniform national rule is the federal interest in remedying unequal bargaining power, such as in claims under Title VII, the Truth in Lending Act, The Age Discrimination In Employment Act, The Federal Employer's Liability Act, and the Jones Act. Gamewell, 715 F.2d at 114-15, and cases cited therein. In the case at bar, there is no need to develop a uniform rule inasmuch as the parties are of relatively equal bargaining power.
The Supreme Court also has declined to adopt federal common law for purely private disputes, even ones that potentially affect federal interests. Morgan, 797 F.2d at 475. On the other hand, federal common law has been fashioned when the United States is a party. See Morgan, 797 F.2d at 475 (citing Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S. Ct. 573, 87 L. Ed. 838 (1943); United States v. Little Lake Misere Land Co., 412 U.S. 580, 93 S. Ct. 2389, 37 L. Ed. 2d 187 (1973)). Because the United States is not a party to the instant lawsuit, there is no basis under this rationale for applying federal common law. Furthermore, even in instances in which the United States is a party, or in which the operation of a federal program is affected, a court usually should apply state law. Morgan, 797 F.2d at 475 (citing Kimbell Foods, Inc., 440 U.S. at 728-29, 99 S. Ct. at 1458-59).
Yet another basis upon which courts have justified fashioning a federal rule is pursuant to express Congressional approval. "Federal common law also may come into play when Congress has vested jurisdiction in the federal courts and empowered them to create governing rules of law." Texas Indus., Inc., 451 U.S. at 643, 101 S. Ct. at 2068 (citing United States v. Little Lake Misere Land Co., 412 U.S. 580, 591, 93 S. Ct. 2389, 2396, 37 L. Ed. 2d 187 (1973) (holding that Congress did not confer power on federal courts to formulate the right to contribution in antitrust claims). However, with regard to the instant case, the court is unable to find, and defendant has not pointed to any express Congressional authorization under the Lanham Act to justify creating a rule to determine the validity of a settlement agreement.
The court concludes that state law must be applied to determine the validity of a settlement agreement under the Lanham Act because there is no federal statute or common law rule on point that provides a rule of decision, and because the circumstances do not justify the creation of a federal common law rule.
2. Application of State Law
a) Which Rule to Apply
Having concluded that state law must be applied to determine whether the parties reached an enforceable settlement agreement, the court must now decide which state rule of decision to apply. In arguing for the application of "federal common law," defendant cites to cases in which courts faced with a similar issue applied state common law. Def.'s Mem. of Law, Doc. 98, at 10-17; Def.'s Mem. of Law, Doc. 84, at 17. In contrast, plaintiff advocates the application of New York Civil Practice Law and Rules § 2104, which provides that a settlement agreement made outside the presence of the court, and which purports to dispose of a lawsuit, must be evidenced by a signed writing. Specifically, § 2104 provides that
An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in writing subscribed by him or his attorney or reduced to the form of an order and entered.
N.Y. Civ. Prac. L. & R. § 2104 (McKinney 1976). Plaintiff also asks the court to deny the instant motion to enforce a settlement agreement because such an agreement would violate what is commonly referred to as the New York State statute of frauds. That statute states in relevant part, that
every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking . . . by its terms is not to be performed within one year from the making thereof.