United States District Court, E.D. New York
March 31, 2004.
PLAYBOY ENTERPRISES INTERNATIONAL, INC., PLAYBOY ENTERTAINMENT GROUP, INC. and PLAYBOY.COM, INC., Plaintiffs against ON LINE ENTERTAINMENT, INC. and MARIO CAVALLUZZO, Defendants
The opinion of the court was delivered by: DAVID TRAGER, District Judge
The plaintiffs in this action are Playboy Enterprises International,
Inc. ("PEII"), Playboy Entertainment Group, Inc. ("PEGI") and Playboy.com
(collectively "plaintiffs"). PEII is a Delaware corporation with its
principal place of business located in Chicago, Illinois. PEII is an
international multimedia entertainment company that publishes
Playboy magazine. PEGI is a Delaware corporation and is a wholly
owned subsidiary of PEII. Playboy.com is a Delaware corporation and is a
wholly owned subsidiary of PEII. The defendants are On Line
Entertainment, Inc. ("OLE") and Mario Cavalluzzo ("Cavalluzzo")
(collectively "defendants"). OLE is a New York corporation with its
principal place of business located in Elmont, New York. Cavalluzzo is a
citizen of the State of New York residing within the Eastern District of
New York who directs and controls the business activities of OLE.
PEII through its wholly owned subsidiary, PEGI, is the producer of a
cable television series entitled "Sex Court," which airs on the
subscription television services "Playboy TV," which is broadcast in the
United States, and "Playboy TV Networks," which is broadcast
internationally. PEGI is also the producer of a video cassette
compilation bearing the Sex Court mark, which is distributed for sale
throughout the United States and internationally via the
<playboy.com> web site, which is owned and operated by
In their complaint, plaintiffs alleged that defendants have sought
improperly to profit from Playboy's investment in marketing the Sex Court
trademark. Plaintiffs claimed that OLE registered the Internet domain
name <sexcourt.com> after the Sex Court series became popular and
the name and mark Sex Court became associated in the public mind with
plaintiffs' television series. Plaintiffs further alleged that defendants
began using and continued to use the <sexcourt.com> domain name in
connection with an Internet Web site that is, in fact, unrelated to
Playboy or the Sex Court series, but attempted to convey to Internet
users that it is connected to the television series. Plaintiffs suggested
that defendants attempted to lure Internet users seeking information
about the Sex Court television show and to then entice users to link to
sexually explicit commercial Internet sites that charge subscription fees
for access to their contents. Thus, plaintiffs alleged that "defendants
seek simultaneously to trade off of the goodwill the SEX COURT mark has
come to enjoy among consumers, and to reduce the value of that goodwill
by improperly associating that name with services from unrelated
sources." Complaint, ¶ 8. The action resulted in the commencement of
a jury trial in this district on April 7, 2003.
On April 9, 2003, prior to the conclusion of the jury trial, defendants
entered into a Settlement Agreement ("April 9 settlement agreement") with
plaintiffs. That same day, both parties' counsel presented and affirmed
an accompanying Permanent Injunction Upon Consent Against Defendants to
the court. The injunction was signed by counsel for both parties, and was
entered by the court on April 10. On April 16, defendants served upon
plaintiffs a Notice of Motion requesting "an Order (1) setting aside the
April 9, 2003 settlement agreement; (2) vacating the April 10 consent
injunction and judgment; and (3) setting a date for a new trial, in the
interest of justice, on the basis of mistake, duress, misrepresentation
and fraud." On April 21, plaintiffs submitted a cross-motion by letter
requesting that the docket entries be sealed. On April 23, plaintiffs
submitted a cross-motion for an order to show cause requesting that the
court enforce the Permanent Injunction and Settlement Agreement by: (1)
ordering Mr. Cavalluzzo to immediately deliver all rights, passwords and
title to the <www.sexcourt.com> and
<www. pamelaandersonlee.net> domain names to Playboy; and (2) to
pay Playboy's costs and attorneys' fees associated with the preparation
of the papers related to the cross motion. Memorandum of Law in Support
of Playboy's Motion for an Order to Show Cause ("Pl. Mem. of Law for
Motion to Set Aside Settlement, Vacate
Consent Judgment and Order a New Trial
Defendants' Memorandum of Law is limited to conclusory statements,
general statements of law, and appeals to the "interests of justice," yet
fails to advance clearly delineated legal arguments. Defendants' brief
states that "[a] settlement agreement should be set aside if it is
induced by fraud, collusion, mistake, accident, intimidation, coercion or
duress." Memorandum of Law in Support of Counterclaimants' Motion to Set
Aside April 9 Settlement ("Def. Mem. of Law") 1. The cases cited by
defendants in support of this assertion state that settlement agreements
must be construed under general principles of contract law. See, e.g.
Dowries v. O'Connell, 103 F. Supp.2d 579, 582 (E.D.N.Y. 2000)
("Settlement agreements are contracts and must therefore be construed
according to general principles of contract law."); see also
Willgerodt v, Hohri, 953 F. Supp. 557, 561 (S.D.N.Y. 1997); Hest
v. New Amsterdam Casualty, 268 F. Supp. 623 (D.S.C. 1967).
Accordingly, defendants request "that the settlement agreement be set
aside due to mistake, misrepresentation, duress and Playboy's fraudulent
use of the [March] consent injunction . . . to induce settlement."
Def. Mem. of Law 4.
Defendants are correct that a settlement agreement should be construed
as a contract. See Goldman v. Commissioner, 39 F.3d 402, 405 (2d
Cir. 1994) (holding that a "settlement agreement constituted a contract"
and that "general principles of contract law must govern its
interpretation."); Torres v. Walker, 356 F.3d 238, 245 (2d Cir.
2004) ("Settlement agreements are contracts and must therefore be
construed according to general principles of contract law.") (quoting
Red Ball Interior Demolition Corp. v. Palmadessa, 173 F.3d 481,
484 (2d Cir. 1999)).
The April settlement agreement contains a choice of law provision
stating that the "Agreement shall be governed by, and construed and
interpreted in accordance with, the substantive laws of the State of New
York, without regard to conflicts or choice of law principles." Gioconda
Decl. Ex. A (April settlement agreement) ¶ 18. Thus, New York
contract law governs.*fn1 Under New York law, "[o]nly where there is
cause sufficient to invalidate a contract, such as fraud, collusion,
mistake or accident, will a party be relieved from the consequences of a
stipulation made during litigation." Hallock v. State, 64 N.Y.2d 224,
230, 474 N.E.2d 1178, 485 N.Y.S.2d 510 (N.Y. 1984); see also
Downes, 103 F. Supp.2d at 582 ("The court will set aside or modify
the terms of a settlement reached in open court only upon a showing of
good cause, such as fraud, collusion, mistake, accident, or lack of
Although defendants do not explicitly invoke Rule 60(b) of the Federal
Rules of Civil Procedure in their initial brief, Plaintiffs' Memorandum
of Law responds to defendants by arguing that defendants fail to meet the
requirements of Rule 60(b). Plaintiffs' Memorandum of Law in Opposition
to Defendants' Motion to Set Aside the Settlement Agreement ("Pl. Mem. of
Law") at 1, 2, 4, 7, 16. In their Reply, defendants argue that they are
"moving in the first instance to set aside the settlement agreement under
contract law, due to specific allegations of misconduct by Playboy and
other circumstances," and that after the settlement is vacated,
Rule 60(b) permits vacation of the consent judgment. Defendants' Reply
Memorandum of Law 3. Both the contract law arguments and the Rule 60(b)
arguments are analyzed below.
As noted, although defendants' memorandum of law is not presented as a
series of discrete arguments, the arguments in the memorandum break down
into two. First, defendants argue that the settlement agreement should be
set aside based on fraud, misrepresentation, duress, or mistake since
plaintiffs "intentionally and impermissibly" made reference during cross
examination of Mr. Cavalluzzo to the March 2003 permanent injunction by
stipulation, in breach of the March 2003 settlement agreement ("March
settlement agreement"), so as "to poison [the jury's] opinion of Mr.
Cavalluzzo." Def. Mem. of Law 2. Alternatively, also based on this
alleged breach of the March settlement agreement, defendants argue that
the April 9 settlement should be set aside because had the court had
access to a copy of the March settlement agreement on April 9, when the
cross examination of Mr. Cavalluzzo took place, "the Court seeing that
Playboy had impermissibly poisoned the jury, would no doubt have granted
a mistrial and likely would have awarded costs to Mr. Cavalluzzo." Def.
Mem. of Law 3.
Second, defendants argue that the settlement should be set aside
because they entered into the settlement agreement under duress and that
following the Court's admonition of defense counsel, "Playboy acted
swiftly to coerce Cavalluzzo into settlement, utilizing his weakened
position to induce a settlement with him that would not otherwise have
been reached." Def. Mem. of Law 4. Defendants state several additional
grounds for setting aside the settlement based on the above facts, namely
collusion, accident, intimidation, and coercion. Def. Mem. of Law 1, 4.
Only plaintiffs' second argument based on the court's admonition of
defense counsel may fairly be characterized as coercion, though for these
purposes the analysis for coercion and duress are the same and both are
dealt with in section (1)(b) below. With regard to the remaining claims,
defendants have failed to make even a prima facie showing in
support of their conclusory allegations of collusion, accident, or
(a) Alleged Breach of March Settlement Agreement
Defendants contend that during the cross examination of Mr. Cavalluzzo
on April 9, plaintiffs breached the March settlement agreement by
"intentionally and impermissibly" making reference in front of the jury
to the permanent injunction by stipulation agreed to by the parties as
part of the March settlement. Def. Mem. of Law 2. Defendants argue that
this constituted a breach of the provision of the March settlement
agreement by which the parties agreed that the settlement and injunction
"shall not be used as evidence at trial." Gioconda Decl. Ex. C.
Defendants further contend that plaintiffs "used this illegally obtained
upper hand as a sword to persuade Mr. Cavalluzzo to dramatically change
his settlement position." Def. Mem. of Law 2. Defendants conclude that
"[i]t would be inequitable to allow Playboy to benefit by its breach of
the March agreement, and there being no delay in this application
[it would be] just to place the parties into the same position they were
[sic] before the April 9th agreement." Def. Mem. of Law 3.
Although defendants contend that the parties should be restored to
their pre-settlement positions because plaintiffs breached the March
settlement agreement, it would be inappropriate to set aside the April
settlement agreement in this instance because the March settlement
agreement was not actually breached. The parties agreed that the
settlement and the permanent injunction would "not be used as evidence at
trial."Gioconda Decl. Ex. C. But in this instance, the reference to the
permanent injunction was not actually introduced as substantive evidence;
it was merely used to impeach testimony given by Mr. Cavalluzzo at trial.
Plaintiffs allege that at trial Cavalluzzo began to perjure himself on
the witness stand when he refused to acknowledge that
<www.sexyworkers.com> was his website, and when he denied that he
ever used the Playboy trademark as a metatag in the keywords of that
website. Pl. Mem. of Law 12; Gioconda Decl. Ex. G (containing April 7,
2003 Tr. 504:4-10, 507:3-14). Plaintiffs have alleged that defendants
own the website <www.sexyworkers.com> and, in their Amended
Complaint, charged defendants with infringing and diluting Playboy's
rights in relation to that site by using the Playboy trademark in the
metatags of that website. On March 10, 2003, defendants consented to
be permanently enjoined from this conduct and the charges relating to
<www.sexyworkers.com> were voluntarily dismissed from the
complaint. In order to impeach Cavalluzzo on the issue of his
previously-admitted ownership of the <sexyworkers.com> website, as
well as his use of Playboy as a metatag on the site, plaintiffs'
attorney asked: "Sir, were you charged in this case with a separate
charge of having Playboy listed in your metatag
keyword for Sexy Workers.Com and you agreed to a permanent
injunction, you agreed to take it out. . . ." Defendants objected and
were overruled. In reviewing the transcript of the cross examination of
Mr. Cavalluzzo, it is clear that plaintiffs' reference to the March
permanent injunction by consent was used properly to impeach Mr.
Cavalluzzo and was not introduced as evidence.
It is well-established in this circuit that impeachment by counsel of
inconsistent or perjured testimony does not constitute "evidence," for
questioning by counsel never constitutes evidence. Washington v.
Schriver, 225 F.3d 45, 61 (2d Cir. 2001); Tolbert v. Queens
College, 242 F.3d 58, 75 (2d Cir. 2001). Thus, the provision of the
settlement agreement providing that settlement and the permanent
injunction would "not be used as evidence at trial" was not breached.
Defendants argue that "[i]f a party's manifestation of assent is
induced by either a fraudulent or a material misrepresentation by the
other party, upon which the recipient is justified in relying, the
contract is voidable by the recipient," Def. Reply Mem. of Law 6 (quoting
Restatement (Second) of Contracts § 164 (1981)), and that
"Playboy's misrepresentation was both fraudulent and material and
therefore satisfies both of the requirements for the voiding of the
contract, either one of which was sufficient to cause rescission."
Id. This is indeed the law in New York. See, e.g., Seneca
Wire & Mfg. Co. v. A. B. Leach & Co., 247 N.Y. 1, 7-8,
159 N.E. 700, 702 (1928) ("a contract may be rescinded for fraud or
misrepresentation"); see also Horn Waterproofing Corp. v. Bushwick
Iron & Steel Co., 66 N.Y.2d 321, 325, 488 N.E.2d 56, 58,
497 N.Y.S.2d 310, 312 (1985) ("[W]here there is a real and genuine contest
between the parties and a settlement is had without fraud or
misrepresentation . . . such settlement should be upheld."). In
this instance, since the agreement was not breached and since
plaintiffs did not misrepresent the contents of the March settlement
agreement to the court, there was no fraud or misrepresentation. Thus,
the allegations of misrepresentation and fraud with respect to this claim
must fail. Likewise, any claim of mistake, misconduct, or duress based on
the alleged breach of the settlement agreement must also fail.
Defendants also argue that had the court had access to a copy of the
March settlement agreement on April 9, when the cross examination of Mr.
Cavalluzzo took place, "the Court seeing that Playboy had impermissibly
poisoned the jury, would no doubt have granted a mistrial and likely
would have awarded costs to Mr. Cavalluzzo." Def. Mem. of Law 3. There is
no ground for a mistrial in this case. Defendants had the opportunity to
move for a mistrial during the trial and chose not to do so. In fact, at
trial the court gave defendants the option of moving for a mistrial if
they felt it was warranted. Gioconda Decl. Ex. G (containing April 7,
2003 Tr. at 505:8-506:11) ("Mr. BOSTANY: I don't have a copy of the
settlement agreement with me, Judge, but I can bet you that what
[plaintiffs' counsel] is doing is laying grounds for a mistrial because
there is an agreement we have entered into and [plaintiffs' counsel]
refuses to produce his copy, I don't have my copy with me. . . . THE
COURT: I will let it in. We will look at the agreement tomorrow. If
you're right, you can renew your application."). Defendants chose not to
move for a mistrial; instead, they entered into the April settlement
agreement and consented to a permanent injunction in open court. Gioconda
Decl. Ex. H (containing April 10, 2003 Tr. at 2:19-20).
Furthermore, as previously pointed out, Playboy properly impeached
defendant Cavalluzzo's testimony upon cross examination. Thus, the
reference to the March settlement
agreement for this purpose does not provide a sufficient reason to
set aside the April 9 settlement agreement. The Federal Rules of Evidence
clearly state that although evidence of a settlement "is not admissible
to prove liability for [a] claim," the evidence need not be excluded
"when the evidence is offered for another purpose." Fed.R.Evid. 408.
Courts have held that evidence otherwise excludable pursuant to
Rule 408 is admissible for the purposes of impeachment. See, e.g., Cochenour
v. Cameron Savings and Loan, 160 F.3d 1187, 1190 (8th Cir. 1998) (an
offer to compromise may be used to rebut a party's prior testimony);
Reichenbach v. Smith, 528 F.2d 1072, 1075 (5th Cir. 1976)
("Rule 408 codifies a trend in case law that permits cross-examination
concerning a settlement for the purpose of impeachment."); Tribune
Co. v. Purcigliotti, No. 93-7222, 1996 WL 337277 (S.D.N.Y. June 19,
1996) (settlement discussions may be used for impeachment). Therefore,
evidence of a settlement could properly be used to impeach a witness on
cross-examination. Had defendants wanted to exclude the use of the
settlement for impeachment purposes, at a minimum an explicit provision
was required assuming the parties could agree to distort the
truth-finding function in this way. Furthermore, as discussed above,
questioning by an attorney does not constitute evidence. The court, in
its preliminary instructions to the jury, explained as much when it
stated that upon cross-examination of a witness "what is evidence in the
case are the responses to the questions not the questions themselves." PL
Mem. of Law 13 (citing Tr. at 17:6-9). Defendants' assertion that
plaintiffs "impermissibly poisoned the jury" is simply untrue. It is
clear that the reference during cross examination to the permanent
injunction by stipulation that accompanied the March settlement agreement
was appropriate and does not constitute a grounds for mistrial.
Consequently, defendants' contention that the court "would no doubt
have granted a mistrial" if it had been aware of the terms of the
settlement agreement is not at all a foregone conclusion. In fact, it is
highly unlikely that plaintiffs' line of questioning would have resulted
in a mistrial. For these reasons, defendants' argument that the April
settlement agreement should be set aside because the court would have
granted a mistrial must also fail.
And even if these facts provided sufficient grounds for a mistrial, it
is clear that defendants were given the option of moving for a mistrial
but opted to settle the claim instead. Defendants' request that the
settlement be set aside is an inappropriate attempt to relitigate a case
that already went to trial and was deliberately settled by both parties
prior to the trial's conclusion. If defendants felt that plaintiffs'
conduct amounted to misconduct justifying a mistrial, defendants should
not have agreed to settle. Rather, defendants should have created a clear
record in the course of trial and either moved for a mistrial or raised
the issue of plaintiffs' misconduct on appeal if the jury had rendered an
(b) Court's Admonition of Defense Counsel
Defendants also allege that Mr. Cavalluzzo entered into the settlement
agreement under duress and that "[f]ollowing the Court's threat to disbar
his attorney, Playboy acted swiftly to coerce Cavalluzzo into settlement,
utilizing his weakened position to induce a settlement with him that
would not otherwise have been reached." Def. Mem. of Law at 4. The
relevant portion of the transcript is as follows:
Q. Let's talk for a moment about these invoices.
Now, these invoices that you have that say On
Line on them and Bigcoin on them from January
of 1998, I asked you at your deposition
well, it wasn't me, actually, another
lawyer asked you at your
deposition when Bigcoin was formed and when On
Line was formed. Do you recall that testimony?
Q. I read some of it earlier today. You testified
at your deposition last summer that Bigcoin
wasn't even formed until late `98 and On Line
wasn't even formed until late `98?
A. I don't think I testified to On Line. I
probably said I don't know. How would I testify
to something I don't know?
Q. Were you asked this question and did you give
this answer under oath just last summer
MR. BOSTANY: This was read already and already
reviewed on direct and voir dire. THE COURT:
Overruled. Go ahead.
Q. "Question: You're saying we provided a service
that On Line paid for. Who is we?
"Answer:" This is you talking under oath.
"Bigcoin. That was not until late `98 though and
On Line Entertainment wasn't formed until late
`98." That was your testimony?
MR. BOSTANY: Objection. Did you read the entire
thing? I think he said I guess and maybe
THE COURT: Folks, please step inside. Do not
discuss the case.
(The jury exits the court room.)
THE WITNESS: Outside?
THE COURT: You can stay right there.
What do you think, this is a stage? Do you think
this is a stage? Do you think I give you
admonitions repeatedly, repeatedly, repeatedly
because I don't mean them, because I am trying
to make life difficult for you? Do you realize
you have some responsibilities here? This is not
Vaudeville, this is no stich, this is a court of
law. If this happens again you will not be a
member of this court of law. I am serious, this
is not a game. You don't invent evidence with you
MR. BOSTANY: Judge, if we read back the exact
THE COURT: You just keep your mouth shut. You
have a responsibility to abide by my rulings and
I've done my best to show my patience to you in
this case. You don't create evidence by innuendo
and snide comments. You don't 13
litigate in this courtroom by that kind of
behavior. I will not have it again. I am warning
you for the last time.
THE COURT: Bring them in.
MR. BOSTANY: Judge, I wanted to read from the
transcript, if that's possible, before the jury
THE COURT: Read what transcript?
MR. BOSTANY: If I can read either now or after
the jury comes in. I don't want to do the wrong
THE COURT: What do you want to do?
MR. BOSTANY: I just want to read the portion of
the testimony from the transcript.
MR. DESMARAIS: Your Honor, he can do it on
THE COURT: The question is have you read from it
and did you read it incompletely? If you have,
make it complete.
MR. BOSTANY: Thank you, Judge. (The jury enters
THE COURT: Thank you. Please be seated, folks.
I'm sorry for the interruption. I'm sure you can
appreciate the stresses confronting all counsel
in a case of this sort. They have significant
responsibilities to their respective clients, as
well as the Court. Occasionally it requires the
Court to intervene. If it does, it has nothing to
do with the merits of the issues that will be
decided and I want you to keep that firmly in
All right sir, please continue.
Gioconda Decl. Ex. G (containing Tr. 456:17-459:13).
This dialogue makes clear that defendants did not enter into the April
9 settlement agreement under duress. "Under New York law, which governs,
`[a] contract is voidable on the ground of duress when it is established
that the party making the claim was forced to agree to it by means of a
wrongful threat precluding the exercise of his free will.' [A]nd duress
may take the
form of unlawful restraint of property or use of wrongful economic
compulsion to force a party to yield to demands that would otherwise be
rejected." First National Bank v. Pepper, 454 F.2d 626
, 632 (2d
Cir 1972) (quoting Austin Instrument, Inc. v. Loral Corp.,
29 N.Y.2d 124, 130, 324 N.Y.S.2d 22, 25, 272 N.E.2d 533, 535 (1971));
see also McIntosh v. Consolidated Edison Co., No. 96-3624, 1999
WL 151102, at *2 (S.D.N.Y, Mar. 19, 1999) (holding that "[t]o void a
contract based on duress, one of three circumstances must be present:
duress by physical compulsion, duress by threat, or duress by undue
influence. Duress may not be found merely from the existence of a
difficult bargaining position or the pressure of financial circumstances.
To succeed on a theory that an agreement was procured by duress, a
plaintiff must show that he was compelled to agree to its terms by way of
wrongful and oppressive conduct that precluded the plaintiff from the
exercise of his own free will.") (citations omitted), aff'd 2001
WL 1669111 (2d Cir. June 8, 2000). Defendants have failed to meet the
burden of proving duress by physical compulsion, duress by threat, or
duress by undue influence.
Likewise, defendants have failed to prove coercion, for in this context
coercion is merely a form of duress. See Citibank, N.A. v. Real
Coffee Trading Co., N.V., 566 F. Supp. 1158, 1162 (S.D.N.Y. 1983)
("To set aside an agreement on the ground that it was the product of
economic duress, the party making the claim must make a convincing
showing that the agreement was coerced by means of a wrongful threat such
that the exercise of free will was precluded."); Record Club of
America, Inc. v. United Artists Records, Inc., 611 F. Supp. 211, 216
(S.D.N.Y. 1985) (equating coercion with economic duress and holding that
"there was no coercion because plaintiff's clear alternative to entering
into the side agreements was to proceed to trial"), vacated and
remanded on other grounds, 890 F.2d 1264 (2d Cir. 1989).
There is no merit to defendants' argument that the court's reprimand of
defense counsel, outside the presence of the jury, constituted duress or
was in any way improper. In fact, even after reprimanding defense counsel
for his conduct, the judge favorably responded to defense counsel's
objection by instructing plaintiffs' counsel to read the complete
transcript of the relevant portion of the deposition that was the subject
of cross examination. Moreover, though the jury was not present during
the admonition of defense counsel, the judge immediately issued an
instruction to the jury, upon its return, to the effect that they should
not allow the conduct of counsel to affect their determination of the
merits of the case. The conduct of the court in no way requires the
setting aside of the settlement agreement. Even if the court's conduct
amounted to coercion, intimidation, or duress and it does not
the proper remedy would be for the lawyer to create a record and
take an appeal from an unfavorable verdict. It certainly does not serve
the interests of justice to allow a party who fears an unfavorable trial
outcome because of a judge's presumed hostility to settle the claim prior
to its conclusion, and to then move to set aside the settlement and have
the case retried. Since the settlement agreement was not procured by
duress or coercion, it cannot be voided or set aside on this basis.
(c) Fed. Rule Civ. P. 60(b)
In order to give defendants the benefit of the doubt, and since
plaintiffs treat defendants' motion as a Rule 60(b) motion, the motion
will be analyzed as Rule 60(b) motion as well. Under Rule 60(b), the
Federal Rules of Civil Procedure provide that
[T]he court may relieve a party . . . from a
final judgment, order, or proceeding for the
following reasons: (1) mistake, inadvertence,
surprise, or excusable neglect; (2) newly
discovered evidence . . .; (3) fraud
. . ., misrepresentation, or other misconduct
of an adverse party; (4) the judgment is void; (5)
the judgment has been satisfied, released or
discharged, or a prior judgment upon which it is
based has been reversed or otherwise vacated, or
it is no longer equitable that the judgment should
have prospective application; or (6) any other
reason justifying relief from the operation of the
Fed.R.Civ.P. 60(b). Here, defendants do not specify which of the six
bases for relief under Rule 60(b) they seek to invoke. However, a review
of defendants' submissions reveals that only clauses (1), (3) and (6) are
potentially applicable as there is no claim of newly discovered evidence
and the judgment plaintiffs seek to vacate is not void nor has it been
As a general matter, there is a strong interest in the finality of
judgments, especially when the parties have entered into a settlement
agreement. See Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986)
("Properly applied Rule 60(b) strikes a balance between serving the ends
of justice and preserving the finality of judgments."). Because
Rule 60(b) "allows extraordinary judicial relief, it is invoked only upon a
showing of exceptional circumstances." Nemaizer, 793 F.2d at 61;
see also Mendell In Behalf of Viacom, Inc. v. Gollust,
909 F.2d 724, 731 (2d Cir. 1990) ("Motions under Rule 60(b) are addressed to
the sound discretion of the district court and are generally granted only
upon a showing of exceptional circumstances."). "Courts typically require
that the evidence in support of the motion for relief [under Rule 60(b)]
be `highly convincing,' that a party show good cause for the failure to
act sooner, and that no undue hardship be imposed on other parties."
Jedrejcic v. Croatian Olympic Committee, 190 F.R.D. 60, 77
(E.D.N.Y. 1999) (quoting Gonzalez v. Gannett Satellite Info. Network,
Inc., 903 F. Supp. 329, 331 (N.D.N.Y. 1995), aff'd,
101 F.3d 109 (2d Cir. 1996)).
To grant relief under Rule 60(b) "a court must find that (1) the
circumstances of the case present grounds justifying relief and (2) the
movant possesses a meritorious claim in the first instance."
Jedrejcic, 190 F.R.D. at 77 (quoting Cobos v. Adelphi
Univ., 179 F.R.D. 381, 385 (E.D.N.Y. 1998)). Moreover, in a
Rule 60(b) motion, "[a] movant's burden is even more formidable where the
movant has made a deliberate choice to enter into a settlement agreement as
opposed to having litigated the case on the merits and lost." Rand
Int'l Leisure Prods., Ltd. v. TekSource, L.C., No. 97-319, 1998 WL
372356 at *1 (E.D.N.Y. July 2, 1998) (citing Nemaizer, 793 F.2d
at 63); see also Ackermann v. United States, 340 U.S. 193, 198,
71 S.Ct. 209, 95 L.Ed. 207 (1950) ("There must be an end to litigation
someday, and free, calculated, deliberate choices are not to be relieved
Defendants' claims that the court would have granted a mistrial if it
had access to the March settlement agreement could be interpreted as a
motion to set aside the April 9 settlement based on "mistake."
Fed.R.Civ.P. 60(b)(1). See Tarkington v. United States Lines Co.,
222 F.2d 358, 360 (2d Cir. 1955) (holding that "mistake" under Rule 60(b) has
been held to include mistakes of law by the district court); Gey
Assocs. Gen. P'ship v. 310 Assocs. (In re 310 Assocs.), 346 F.3d 31,
35 (2d Cir. 2003) (holding that Rule 60(b)(1) is available for a district
court to correct mistakes of law, as well as mistakes of fact). As
discussed earlier in section (1)(a) of this Memorandum and Order, there
were no mistakes of law or fact in the trial leading up to the April 9
settlement. Thus, defendants have failed to make the showing of mistake
required under Rule 60(b)(1).
Defendants' contention that the settlement agreement should be set
aside because it was breached and because plaintiffs "intentionally and
impermissibly" made reference in front of the
jury to the settlement agreement and permanent injunction in order
"to poison [the jury's] opinion of Mr. Cavalluzzo," could be interpreted
as a motion to set aside the April 9 settlement based on "fraud . . .
misrepresentation, or other misconduct of an adverse party." Fed.R. Civ.
P. 60(b)(3). See also Walther v. Maricopa Intern. Inv. Corp.,
No. 97-4816, 2002 WL 31521078, at *3 (S.D.N.Y. Nov. 12, 2002) (citing
Stewart v. O'Neill, No. 00-8560, 2002 WL 1917888, at *1
(S.D.N.Y. Aug. 20, 2002) (quoting Fleming v. N.Y.U.,
865 F.2d 478, 484 (2d Cir. 1989))) ("With respect to a Rule 60(b)(3) motion
specifically, the moving party must demonstrate, by clear and convincing
evidence, that `material misrepresentations' were made and cannot use the
motion simply `as an attempt to relitigate the merits' of the case.");
Walther, 2002 WL 31521078, at *3 (citing Chnapkova v.
Koh, No. 88-6144, 1992 WL 203906, at *2 (S.D.N.Y. Aug.7, 1992)) ("In
addition to demonstrating fraud or other misconduct by clear and
convincing evidence, the movant must also show that `this conduct
prevented [the movant] from fully and fairly presenting his case.'").
Moreover, "Rule 60(b)(3) is typically `invoked where material information
has been withheld or incorrect or perjured evidence has been
intentionally supplied.'" Walther, 2002 WL 31521078, at *3
(citing Matter of Emerg. Beacon Corp. v. Barr, 666 F.2d 754, 759
(2d Cir. 1981)). As explained in section (1)(a) of this Memorandum and
Order, defendants have failed to make a showing of fraud,
misrepresentation, or misconduct. Thus, defendants fail to make the
showing required under Rule 60(b)(3).
Defendants' claim of duress could also be construed as a Rule 60(b)(6)
motion, which provides that Rule 60(b) may be invoked for "any other
reason justifying relief from the operation of the judgment" that is not
listed in clauses (1) through (5) of the rule. See McIntosh v.
Consolidated Edison Co., No. 96-3624, 1999 WL 151102, at *2
(S.D.N.Y. Mar. 19, 1999)
(denying a motion to set aside a settlement agreement under
Rule 60(b)(6) and holding that "[t]o void a contract based on duress, one of
three circumstances must be present: duress by physical compulsion,
duress by threat, or duress by undue influence. Duress may not be found
merely from the existence of a difficult bargaining position or the
pressure of financial circumstances. To succeed on a theory that an
agreement was procured by duress, a plaintiff must show that he was
compelled to agree to its terms by way of wrongful and oppressive conduct
that precluded the plaintiff from the exercise of his own free will.")
(citations omitted), aff'd, 2001 WL 1669111 (2d Cir. June 8,
2000). As explained in section (1)(b) of this Memorandum and Order,
defendants have failed to meet the burden of proving duress by physical
compulsion, duress by threat, or duress by undue influence. Therefore,
defendants have failed to make a showing of duress that could amount to a
"reason justifying relief from the operation of the judgment" under
None of the other claims raised by defendants could fall under
Rule 60(b)(6) because clause (6) is inapplicable when plaintiffs' asserted
grounds for relief are recognized in clauses (1) and (3) of the rule.
See Nemaizer v. Baker, 793 F.2d 58, 63 (2d Cir. 1986) (relief
under Rule 60(b)(6) is only appropriate when "the asserted grounds for
relief are not recognized in clauses (1)-(5) of the rule."); Cobos v.
Adelphi Univ., 179 F.R.D. 381, 386 n. 5 (E.D.N.Y.1998) ("Clauses (1)
and (6) are mutually exclusive."); Interactive Edge, Inc. v.
Martise, No. 97-3354, 1998 WL 35131 at *4 (S.D.N.Y. Jan. 30, 1998)
(noting the sixth subsection "is properly invoked only . . . when the
asserted grounds for relief are not recognized in clauses (1)-(5)")
(quoting Nemaizer, 793 F.2d at 63).
Thus, defendants' motion also fails when treated as a Rule 60(b)
Plaintiffs have filed two cross-motions in this case. The first
cross-motion is a request that the docket entries be sealed since the
very existence of the Settlement Agreement, as well as its contents, are
intended to be confidential by the written, express agreement of the
parties. April 21, 2003 Letter from Joseph C. Gioconda. Since the April 9
Settlement Agreement resulted in the dismissal of a trial that is on the
public record, the existence of the settlement agreement cannot be deemed
to be confidential and thus there is no reason to file under seal
documents that simply make reference to the settlement agreement. Thus,
the motion is granted in part and denied in part. As per the terms of the
April 9 Settlement Agreement, any copies of the April 9 Settlement
Agreement itself, including those contained as attachments to papers
filed in this motion, shall be filed under seal. All other papers,
including those making reference to the April 9 Settlement Agreement, do
not have to be filed under seal.
The second cross-motion is for an order to show cause requesting that
the court enforce the Permanent Injunction and Settlement Agreement by:
(1) ordering Mr. Cavalluzzo to immediately deliver all rights, passwords
and title to the <www.sexcourt.com> and
<www. pamelaandersonlee.net> domain names to Playboy; and (2) to
pay Playboy's costs and attorneys' fees associated with the preparation
of the papers related to the cross motion. Since defendants' instant
motion has been pending before the court, the court finds that it was
reasonable for defendants to wait for a decision by the court before
carrying out the terms of the Permanent Injunction Upon Consent and the
April 9 Settlement Agreement. Thus, defendants are not
currently deemed to have willfully violated the injunction and the
April 9 Settlement Agreement. Therefore, the cross-motion for an order to
show cause is denied with leave to renew if defendants fail to comply
with the terms of the Permanent Injunction Upon Consent of Defendants and
April 9 Settlement Agreement within 30 days of the date of this decision.
Accordingly, defendants' motion to set aside the April 9 settlement, to
vacate the April 10 permanent injunction and judgment, and to set a date
for a new trial is denied.
Plaintiffs' cross-motion requesting that the docket entries be sealed
is granted in part and denied in part, to the extent that any copies of
the April 9 Settlement Agreement itself, including those contained as
attachments to papers filed in this motion, shall be filed under Seal,
while all other papers, including those making reference to the April 9
Settlement Agreement, do not have to be filed under seal.
Plaintiffs' cross-motion for an order to show cause is denied with
leave to renew if defendants fail to comply with the terms of the
Permanent Injunction Upon Consent of Defendants and April 9 Settlement
Agreement within 30 days of the date of this decision.
The Clerk of the Court is directed to close the case.