December 21, 2012 Articles

Limitations on Court's Discretion to Compel Attendance at Settlements

By Raymond A. Garcia and Ingrid C. Festin

Common wisdom is that settlements are more likely to occur if people who are fully authorized to settle cases attend mediations. The United States Court of Appeals for the Ninth Circuit has noted that while a court has the authority to direct a high-ranking government official who has full authority to settle a case to be present at a settlement conference, it is an abuse of discretion to order the high-ranking official's attendance absent facts indicating that the lower-ranking official who only has the authority to recommend settlement would be ineffective at the proceedings. U.S. v. U.S. Dist. Court for N. Mariana Islands, 694 F.3d 1051, 1059–61 (9th Cir. 2012). [Subscription required.]

Background
The Ninth Circuit observed that the United States District Court for the Northern Mariana Islands has local rules that enable the court to direct parties who have full authority to settle to appear for settlement conferences, saying:

"The court will routinely set a date for a settlement conference" in civil cases. D. N. Mar. I. Civ. R. 16.2CJ(e)(5). A subpart of that rule is explicit in mandating attendance at the conference by each party through a representative with "full authority" to settle the litigation: "Each party shall be required to attend the settlement conference, either personally or through a representative with full authority to participate in settlement negotiations and to effect a complete compromise of the case."

A senior judge who formerly sat on the U.S. District Court for the Northern Mariana Islands in the South Pacific ordered an assistant attorney general from the Tax Division of the Department of Justice (DOJ), who had full authority to settle the case and who resided in Washington, D.C., to attend a settlement conference in Couer d' Alene, Idaho, in September 2011. The plaintiff's lawyer resided in Dallas, Texas. Four orders were entered by district judges directing the government to produce a person with authority to settle the case at the settlement conference. The last order was entered on January 6, 2012, for a conference set to occur on February 29, 2012.

The Department of Justice filed a Writ of Mandamus in the Ninth Circuit, asking that the court excuse the principal deputy assistant attorney general who had authority to accept an offer of compromise in the case from attending the conference because the office of the assistant attorney general for the Tax Division of the Department of Justice was then vacant.

Discussion
Neither the issue of the location and timing of the conference nor the authority of the senior judge, who was not an Article III judge but rather a judge of the territorial court, was raised. This case was one of more than 549 cases then pending that involved tax refunds in excess of $2 million. Only one person at the DOJ had the authority to settle such cases. The DOJ offered to have an assistant attorney general who had the authority to recommend a settlement present at the conference. The DOJ represented to the court that in the past such practice had been effective in achieving settlements. The senior judge declined that proposal. The Ninth Circuit observed that the government framed the issues as follows:

The government's petition presents two questions, which it identifies as follows: (1) whether the district court has the authority to direct that the United States, its agencies, or its officers sued in their official capacities must appear at routine settlement conferences through a high-level official who has full settlement authority over the claim in dispute; and (2) whether, if such authority exists, it has been abused under the circumstances of this case.

U.S. Dist. Court for N. Mariana Islands, 694 F.3d at 1057.

The Ninth Circuit noted it had never been called upon to rule on such a question before but then analyzed and concluded that the senior judge could in fact direct the DOJ official with authority to settle the case to attend the conference. The court relied on Fed. R. Civ. P 16(c)(1), the Civil Justice Reform Act, 28 U.S.C. 473(b)(5), and the "inherent" power of the district court to control its docket. The government's arguments that the order of the court interfered with the exclusive authority assigned to the attorney general by Congress to undertake various activities were not significant.

The circuit court recognized that the power of the court was not unlimited and concluded that under the specific facts of this case, the district court had abused its discretion. Id. at 1059 (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980)).The court was particularly concerned that given the caseload of the single DOJ attorney, the potential to be dragged into courts all across the country for each of the pending cases might pose a serious burden on the office. The court also recognized that it may be good policy to not have one person with on-the-spot settlement authority for political accountability reasons.

Another significant reason was that this was the first settlement conference in the case. Because it was the first conference, the circuit court felt that the district judge did not have a significant factual basis to believe that compelling a high-ranking DOJ official to appear was, in fact, merited. The court took issue with the experiential support for the order: the district judge's articulated opinion that the senior DOJ official was critical to settlement. The court believed there was ample evidence in the form of representations from the DOJ to indicate that settlements have been achieved when the lower ranking official who had authority to recommend a settlement was in attendance.

The court then cited a Fifth Circuit decision, In re Stone, 986 F.2d 898, 905 (5th Cir. 1993), stating that in cases where the district court felt, based on the facts, that the high government official was necessary, requiring that official's attendance should be the last resort, not the first step.

Conclusion
Pursuant to appropriate rules and statutory authority, the district courts have the authority to order a high-ranking government official with authority to settle a case to attend a settlement conference. The exercise of this authority will be reviewed under an abuse of discretion standard. Absent evidence to the contrary, lower-ranking officials who only have authority to recommend a settlement should be adequate government representatives. Requiring the attendance of the high-ranking official should be a last resort.

Keywords: litigation, alternative dispute resolution, mediation, settlement conference, authority to settle, high-ranking government officials, tax appeal, tax refund