FRCP 16: Pretrial Conference; Scheduling; Management

FRCP 68: Offer of Judgment

FRE 408: Compromise Offers and Negotiations

Judge cannot coerce an unwilling party to settle.

Kothe v. Smith (2^nd Cir. 1985), CB 19.

1. S.D.N.Y. judge threatened sanctions if the parties settled in a certain $ range after trial begins, instead of before. After 1^st day of trial, parties settle in that range, 16(f) sanctions on defendant

2. Circuit Court: abuse of 16(f). Attorneys can change their mind, especially after trial starts. Plus, settlements are not unilateral; why only sanction defendant?

Trial judges CAN set schedule/time limit for settling, and sanction for settling after. Newton v. A.C. & S. (3^rd Cir. 1990)

Example: Judge Weinstein in Agent Orange case (1986). Special settlement master got $200M settlement, judge rejected, didn’t want to encourage groundless mass toxic tort litigation. Eventually, $180M. Too much of a role? Judge or mediator? Making “legal” decisions?

Arbitrator decides dispute. Binding.

Becoming popular on the international dispute scene.

Federal Arbitration Act (FAA) of 1925 – federal courts enforce arbitration clauses and awards.

FAA, an award cannot be vacated for error in law OR fact. Only limited grounds, such as corruption, fraud, undue means, misconduct, or exceeding authority.

Many contracts require arbitration.

Unconscionability” the principal ground for challenging an arbitration clause.

1. Arbitration clause must: 1) allow all remedies available in court; 2) provide for adequate discovery; 3) require written arbitration award and judicial review; 4) not require claimant to pay arbitration costs. (Armendariz v. Foundation Health Psychcare Services, Cal. 2000)

Non-party facilitates agreement. Non-binding.

Two approaches: Therapeutic (work together to come to a settlement agreement) vs. Evaluative (former judge, mock trial, evaluates claims + makes suggestion at resolution).

FRE 408(a): Can’t use offers of settlement in trial. Can negotiate freely.

Pro: (1) Save money (usually); (2) settled solution leaves parties “happier” than trial, with a winner and a loser; (3) free up limited judicial resources. (4) Greater flexibility with solutions.

Con: (1) In arbitration, party with fewer resources at distinct disadvantage (no public funding for representation; parties shoulder cost of arbitrator); if employer pays arbiter, potential for biased arbiters. (2) No framework like FRCP, “softer” factors can come in. (3) Litigation a public process, law develops through cases – not as true with ADR. (4) Arbitration might “split the difference” in contract breach cases.

1938: Conceived as means of preparing a case for trial. Just before trial, finalize issues, witness and document lists, stipulations

1983: Amended to include “scheduling and planning” and “final”

1. Expedite depositions, discourage wasteful pretrial activities, improve quality/efficiency of trial, facilitate settlements.

2. Pleadings: Required less information with relaxed standard in 1938, so important to have good discovery. Discovery increased level of information by the time of trial.

FRCP doesn’t require pretrial conference, since some simple disputes don’t need, but some local rules might always require (e.g., S.D.N.Y, DC District)

Yes and Yes. G. Heileman Brewing Co. v. Joseph Oat Corp. (7th Cir. 1989). 6-5 Decision. CB 476.

Facts: District Court demanded a “corporate rep. with authority to settle” to appear for pretrial conference. Counsel for Oat Corp. appeared, but no principal or corp. rep. 16(f) Sanctions for $5,860 (costs + attorneys’ fees for opposing parties at conference)

Majority (Kanne)

1. Authority to Order Attendance: Courts free to use discretion in pretrial proceedings. Since 1983, Rule 16 purpose expressly included settlement. FRCP not completely describe and limit district court power. In the spirit of Rule 1 (speedy/efficient trial) and Rule 16 as broadening judicial power, District Courts can order represented parties to appear.

2. Exercise of Authority to Order Attendance: Can’t coerce settlement (Kothe), but can require a person with “authority to settle” to appear to consider the possibility. Advisory notes to 16(c)(9): providing neutral forum for settlement might foster it. It COULD be unreasonable to ask this (if onerous, clearly unproductive, so expensive). But here, a $4MM claim, facing a potential for a long trial, and did fly a lawyer to the conference – not a greater burden to fly a corporate rep.

Posner, Dissent: No duty to bargain in good faith over settlement, neither in Rule 16 or statute, and no power to coerce settlement. Oat made clear it did not want to settle. (Also, warning about power corrupts in giving judge power to call represented parties – hiring a lawyer for a reason. E.g., judge once scheduled a Labor Secretary to appear on day of his Senate confirmation)

Coffey, Dissent: Rule 16(a) is clearly only a lawyer, not a represented party.

Easterbrook, Dissent: (1) While court may be allowed to demand attendance of someone other than party’s counsel, (2) why can’t the party send a chosen agent (Oat’s sent a third-party attorney as representative)? (3) why must have “full settlement authority”? Have to send the entire Board of Directors? Also, no duty to negotiate in good faith – but even when there is, like labor disputes, still can use authorized agents.

FRCP 16(c)(1) amended post-Heileman. Can require party or its representative to be present or reasonably available to consider settlement, if appropriate.

Can set timelines for settlement, 16(f) Sanctions for not following. Has to apply equally to and π.

1. Newton v. A.C. & S. (3^rd Cir. 1990) – big asbestos settlement

Insurance cases – named party has no interest in the case. If insurance company sends a no-authority person, can judge sanction?

1. Lockhart v. Patel, E.D.Ky. 1987. judge strike defendant’s pleadings, declared in default, and show-cause for criminal contempt because insurer did not cooperate.

2. Contrast: In Re Novak (11th Cir. 1991): Court has power to require a party to send a person with settlement authority, but cannot sanction a nonparty insurer. But, court can threaten sanctions against the insured party to coerce cooperation.

1993 FRCP Amendment, include alternate means of communication. Telephone “not intended to limit reasonable exercise of the court’s inherent powers.”

1. In re Stone (5th Cir. 1993), “practical approach” to gov’t bodies, might include official with authority to be available by phone.

Issue of using the same judge for pretrial and trial, bias? (Sometimes use magistrate.) 28 U.S.C. § 455(a): judge should “disqualify if impartiality might reasonably be questioned.” But trial, with jury, judge OK. US v. Pfizer (8^th Cir. 1977)

Applying Rules Hypo: What a judge can do in response to a motion to dismiss for failure to state a claim…

1. 16(c)(2)(G): Judge ask π to identify evidence

2. 16(c)(2)(K): Judge dispose of pending motions

3. 16(c)(2)(O): Judge set reasonable time to present evidence

FRCP 26(f): directs parties to meet/confer at least 21 days before a scheduling conference is held or a scheduling order is due under rule 16(b). Generates a report to be submitted to the court, sets discovery plan, etc.

1. 16(b): After receiving report from 26(f), court issues scheduling order within 120 days after service of complaint on defendant or 90 days after any defendant has appeared. Order limits time to join other parties, amend pleadings, complete discovery, file motions, etc.

Rule 16 v. Rule 26: 26(a)(3) requires disclosure of witness 30 days before trial; Court in Rule 16 can require more (descriptions of witnesses, exhibits, etc.)

1. But, local court requirements can go too far (McCargo v. Hendrick, 4th Cir. 1976. CB 475. Court required 11 page pre-trial form, took months to fill out – not OK.)

Rule 16 v. Rule 15

1. 15(b) amending pleadings to conform to evidence if other party not prejudiced.

2. Rule 16, if final pretrial order is entered, governs action and may be changed only to prevent “manifest injustice.”

3. Higher burden in 16 than 15(b)? (See Wallin v. Fuller 5th Cir. 1973, Rule 16 not intended to make 15 obsolete)

4. But, should try to respect pretrial orders, otherwise undermines the process (See...