Relevant Rules

1. FRCP 16: Pretrial Conference; Scheduling; Management

2. FRCP 68: Offer of Judgment

3. FRE 408: Compromise Offers and Negotiations

Limits of Judicial Control to Encourage Settlement – Kothe v. Smith

4. Judge cannot coerce an unwilling party to settle.

5. 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?

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

7. 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?

Alternative Dispute Resolutions (ADR)

Arbitration

1. Arbitrator decides dispute. Binding.

2. Becoming popular on the international dispute scene.

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

4. 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.

5. Many contracts require arbitration.

6. 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)

Mediation

7. Non-party facilitates agreement. Non-binding.

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

Settlement

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

ADR Pros/Cons

10. 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.

11. 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.

Pretrial Conference – FRCP 16

History/Evolution/Purpose

12. 1938: Conceived as means of preparing a case for trial. Just before trial, finalize issues, witness and document lists, stipulations

13. 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.

14. 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)

Can court order litigants to appear at pretrial conference? Can court issue sanctions if the party doesn’t appear?

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

16. 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)

17. 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.

18. 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)

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

20. 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.

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