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January 22, 2018 Top Story

Magistrate May Not Dismiss Without Consent of Unserved Defendant

Posner, in one of the last dissents, writes, “A bigger waste of time … is thus hard to imagine”

By Candice A. Garcia-Rodrigo

A divided federal court of appeals widens a circuit split and restricts a magistrate judge's authority to dismiss cases, absent consent of all parties, even unserved defendants. ABA Section of Litigation leaders caution against a wide applicability of this case, due to its pro se, in forma pauperis status. They urge litigators to consider, however, the potential use in other contexts of the case's definition of "party."

Court restricts magistrate judge's authority to dismiss cases

Court restricts magistrate judge's authority to dismiss cases

Pexels | Tim-Gouw

An employee stipulated to a dismissal of his initial complaint for wrongful termination based on discrimination filed in U.S. District Court for the Eastern District of Wisconsin. The employee then filed a claim in the state Labor and Industry Review Commission's Equal Rights Division. The administrative law judge dismissed the case for the employee's failure to meet deadlines. The employee finally filed his second pro se suit in federal court claiming the commission denied him due process rights. He requested permission to proceed in forma pauperis (IFP) and consented to an Article I magistrate judge deciding the case.

After ordering the employee to amend his complaint to state a federal cause of action during the initial IFP screening process, the magistrate judge dismissed the case finding it did not state a federal cause of action under 28 U.S.C. §1915(e)(2). The employee had not yet served the defendant. The employee appealed the decision to the U.S. Court of Appeals for the Seventh Circuit. He argued that the magistrate judge did not have the consent of the parties to decide as required by Article III of the U.S. Constitution and section 1915(e)(2).

Even Unserved Defendants are "Parties"

The Magistrate Judges Act permits a magistrate to dismiss a case on its merits only with consent of the parties. Relying on the Act, Article III, and section 1915(e)(2), the Seventh Circuit reversed the magistrate judge's dismissal. The court found that all parties, including unserved defendants, must consent to the magistrate's decisions. The court reasoned that the statute defines "consent," either implicit or explicit. But, it noted that the identity of "the parties" is unclear in the applicable statutes and conflicting case law.

In earlier decisions, the Fifth and Seventh Circuits ruled that when screening a complaint for IFP purposes the statute's definition of "parties" did not include unserved defendants. The Eighth Circuit and in another Seventh Circuit case also excluded unserved defendants from the statutes' definition.

In the present case, the court determined that "parties" includes both plaintiffs and defendants. The court relied on the U.S. Supreme Court decision in Murphy Bros. v. Michetti Pipe Stringing, Inc. that the due process clause entitles a named defendant to procedural protections. Such protection includes choosing between an Article I and an Article III judge, the circuit court reasoned. In reversing the magistrate judge's decision, the court overruled its prior decision finding "parties" excludes unserved defendants.

Seventh Circuit Overrules Itself in Favor of Bright Line Test

The circuit strictly construed the statute requiring consent of all parties, "thus establishing a bright line test, rather than a situational approach," says Robert J. Will, St. Louis, MO, cochair of the Section of litigation's Pretrial Practice & Discovery Committee. There may be an instance when a defendant would not consent to dismissal of a claim against it, Will states.

"The Seventh Circuit debated a number of important issues, including the issue of when a defendant becomes a 'party' to the action," states Jeff Gardner, Phoenix, AZ, cochair of the Section's Trial Practice Committee. Normally, a litigation attorney does not consider a defendant a party until he or she is served, Gardner continues.

Two Seventh Circuit judges, Easterbrook and Sykes, who were not part of the three-person panel that issued the opinion, dissented from the denial of rehearing en banc, notes Gardner.  Judge Posner, as part of the panel, also dissented. "The dissenting views, however, may not reflect the Seventh Circuit majority's views," explains Gardner.

Judge Easterbrook's view on the issue is that only served defendants are bound by an adverse ruling; hence, any unserved defendants are not parties bound by the judgment, Will states. "His interpretation of the statutes seems more plausible than what the majority on the panel held," adds Will. It appears the majority of the Seventh Circuit prefers a safe ruling on the consent requirement the Section leaders conclude.

As a matter of judicial economy, Judge Easterbrook's approach appears to be the best, Gardner says. Easterbrook noted that Congress' intentional expansion of Article III powers saves resources and avoids duplication "because the unserved defendant should not have been viewed as a 'party' whose consent to use of the magistrate was required," Gardner adds. "After this reversal, the magistrate judge will recommend dismissal of the action to the district court judge, who will accept the recommendation," states Gardner. "Then the plaintiff will appeal the decision and the appellate court will affirm." Gardner believes the best approach is to follow the Fifth Circuit's ruling that a defendant is not a party until served.

Conflicting Precedent Deepens Circuit Split on Party Consent Issue

Section leaders acknowledge the Seventh Circuit overturned itself when reaching this decision. "Other judges, including one of the most famous judges in the country, Posner, dissented. This creates a larger split between the circuits," Gardner states. "If the circuit had followed its own prior decision and the Fifth Circuit, this case would not have been significant," Gardner says.

Although this case is technically limited to pro se cases filed in forma pauperis, litigators could cite this case in other contexts, states Will. It is possible that practitioners will argue "that you must have consent of all parties in every case, without exception, to permit a magistrate to hear a case instead of a district court judge," Will believes. "From a precedential standpoint, this case could muddy up other exceptions to the 'consent' rule that are currently recognized in the law," Will concludes.  


Candice A. Garcia-Rodrigo is an associate editor for Litigation News.

Hashtag: #litigation, #seventhcircuit, #appellatetwitter

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