Settlement at the Conference

Settlement at the Conference

Rule 16(a)(5) lists facilitating settlement as the last of the five purposes for which a court may order a pretrial conference, and Rule 16(c)(1) gives the court a tool for pursuing it: the court may, if appropriate, require a party or its representative to be present or reasonably available by other means to consider possible settlement.¹ Settlement stands apart from the other purposes. Expediting the disposition of the action reaches its fullest form when the parties agree, because a settlement removes the trial and the rulings that lead up to it.² Most of the other purposes improve how the court handles a case it will decide; settlement lets the case end without a decision.

That feature makes settlement the most contested part of a judge's role at a conference. A well-timed conference shows each side the real strengths and weaknesses of its case, and judges are drawn to the moment for that reason. Yet commentators warn that settlements reached under the court's influence can turn on factors other than the merits, particularly when the judge knows only part of the facts.³ The rule's verb is facilitate, not a verb of direction, and the choice reflects that risk.

Two ideas run through the subsections that follow, and each must stay in view while the other is applied. First, the rule promotes settlement: it names the goal as a purpose of conferences and lets the court see that people with power to settle are present or reachable while the conference is under way. Second, the rule gives the court no power to force a settlement. A court that asks a client with authority to be reachable by telephone during the conference is using the first idea; a court that orders that client to pay a stated sum has claimed a power the rule does not supply. Rule 16(c)(2)(C) likewise lists obtaining admissions and stipulations among the matters the court may consider,⁴ and the limits on compelling them are taken up in a later section of this chapter.

The first subsection below describes what facilitating settlement involves. The second turns to the court's power to require a party or its representative to be present or reachable. A later section gathers the limits on coercion in one place, so this unit concentrates on what the rule permits and on why the permissions stop where they do.

Facilitating Settlement

Rule 16 states the settlement goal in one place and the settlement topic in another. Rule 16(a)(5) lists facilitating settlement among the purposes for which the court may order a pretrial conference.⁵ Rule 16(c)(2)(I) then lets the judge take up settlement once the meeting is under way, by allowing the court to consider and take appropriate action on "settling the case and using special procedures to assist in resolving the dispute when authorized by statute or local rule."⁶ Both provisions are permissive, so the judge decides whether a given conference will address settlement at all. The closing clause of the second provision makes special procedures depend on a statute or local rule, a condition taken up below.

The rule's attention to settlement matches the way civil cases actually end. More than 90 percent of civil actions are ultimately settled, many on the eve of trial,⁷ so a conference procedure that ignored settlement would manage only the small minority of cases that go to trial. The 1983 amendments redirected the court's attention from the trial of a case to its resolution, whether at trial or before; in practice, that can mean referring litigants to mediators who work alongside the formal court process.⁸ Rule 16, as amended in 1983 and 1993, places significant emphasis on settlement as a goal, pursued directly or through alternative dispute resolution, in order to relieve crowded court calendars and the cost of trial.⁹ The 2006 and 2015 amendments turned the rule's attention to discovery.¹⁰ They emphasized the discovery and preservation of electronically stored information, agreements about the assertion of privileges and work-product protection, and the handling of discovery disputes.¹¹ Settlement is therefore one aim among several that a conference now serves.

A conference does its best settlement work after discovery. Before discovery, each side values the case by guessing at what the other side holds. The intensive development of the facts, and the parties' increasingly sophisticated understanding of the strengths and weaknesses of their positions, is what makes an equitable settlement possible, and the incentive to settle rises markedly as trial becomes an impending reality instead of a distant possibility.¹² A conference used properly to prepare for trial will often lead to settlement for the same reason: it makes the parties aware of how strong and how weak their cases are.¹³

The judge's role has a clear center. Most judges regard it as proper to suggest that settlement may be appropriate once the real issues are revealed, and one purpose of a conference is to see whether agreement is possible and trial can be avoided.¹⁴ In practice the judge may invite discussion, ask counsel for a candid assessment of the case, offer the conference as a neutral forum in which to talk about terms, and point the parties toward a procedure that a statute or local rule authorizes. Commentary on the merits, offered to move a client toward settling, is more contested; one casebook note asks whether such commentary should be grounds for disqualifying the judge from hearing the case.¹⁵

A judge may not, however, coerce a settlement. The judge treads a line between coercing the parties and helping them reach reasonable conclusions, and where the line falls is a matter of degree.¹⁶ Two risks explain why the rule says facilitate. The first is informational: a judge who knows only part of the facts may press a party toward terms that reflect something other than the merits.¹⁷ The second is structural: there is a difference of opinion over whether the judge who conducts the pretrial conference should also try the case, and a party that resists the judge's push must then face that same judge at trial.¹⁸

Rule 16(c)(2)(I) also reaches procedures beyond the conference itself, but only "when authorized by statute or local rule."¹⁹ A judge who lacks such authority cannot invent it from the rule. In Strandell v. Jackson County, as described in G. Heileman Brewing Co. v. Joseph Oat Corp., the Seventh Circuit held that a district court may not order an unwilling litigant to take part in a summary jury trial. Inherent judicial power must be exercised in harmony with the Federal Rules, and Rule 16, which addresses the court's power to insist on pretrial settlement proceedings, did not authorize mandatory summary jury trials.²⁰

The referral in that scene rests on firm ground because a local rule supplies the authority. Without an authorizing statute or local rule, the same referral would lack the footing that Rule 16(c)(2)(I) requires.²¹ On an exam, a judge who invites discussion, assesses the case, or refers the parties under an authorizing rule is facilitating settlement. A judge who orders a party to accept a figure, or conditions the progress of the case on agreement, is coercing it, and the rule gives no such power.

Compelling Party Attendance

The second sentence of Rule 16(c)(1) reaches past the lawyers to the people they represent: "If appropriate, the court may require that a party or its representative be present or reasonably available by other means to consider possible settlement."²³ The sentence before it concerns counsel's authority to stipulate, and the compulsory attendance of attorneys was covered earlier in this chapter.²⁴ The new sentence adds a power over the client's side of the table, and that matters because the person who controls a settlement decision is often not the lawyer who speaks in court. A judge who wants that decision-maker in the room, or on the line, therefore has an express tool, and some courts also require the presence of someone with settlement authority.²⁵

Attendance requirements carry sanctions. A federal district court has held that a lead lawyer's failure to attend a mediation session required by local rule justified sanctions,²⁶ and another district court dismissed an action under Rule 16(f) when Olson did not appear, with virtually no notice, at a settlement conference and no replacement lawyer came in his place.²⁷ The court reasoned that anything less than dismissal would reward Olson "for his failures to appear."²⁸ Sanctions under Rule 16(f) are taken up in a later section of this chapter.

The power exists because attorneys are often imperfect agents of their clients, and the few cases in which counsel resists producing the client may be the very ones in which the client's presence would do most to bring about a settlement.²⁹ The power also has costs. One reason people hire lawyers is to economize on their own time, and a defendant, for example, may not want its executives' time occupied with the litigation.³⁰ A litigant forced to appear against its will may also doubt that it will get a fair shake at trial if it resists the pressure to capitulate.³¹

The wording of the sentence builds in a balance. If appropriate makes the order a judgment the court must justify by the circumstances of the case. A party or its representative lets an entity comply by sending someone who speaks for it. Present or reasonably available by other means supplies a lighter alternative, since someone reachable by telephone bears far less burden than someone who must travel. And to consider possible settlement fixes the purpose at consideration, which prepares the line this section draws between requiring attendance and requiring agreement.

The leading illustration is G. Heileman Brewing Co. v. Joseph Oat Corp., decided by the Seventh Circuit sitting en banc.³² A magistrate judge ordered Oat Corporation to send a corporate representative with authority to settle to a pretrial conference, and Oat's failure to send a principal of the corporation violated the order.³³ Oat sent two lawyers, one representing its principals and the other the corporation, but no corporate representative attended.³⁴ The district court imposed a $5,860.01 sanction under Rule 16(f), the amount of the opposing parties' costs and attorneys' fees for attending the conference, and the en banc court affirmed.³⁵

Oat's first argument was textual. Rule 16 referred to "attorneys for the parties and any unrepresented parties," and Oat reasoned that, by negative implication, the rule barred a court from directing represented parties to attend.³⁶ The majority answered that the rule gives no direction on the point and that the mere absence of language authorizing a particular procedure does not imply a prohibition. The Federal Rules do not completely describe and limit the power of the federal courts, which retain the inherent power recognized in Link v. Wabash R.R. Co.³⁷ That power must be exercised in harmony with the Federal Rules,³⁸ but Rule 16 gives no direction on the point, so nothing in the rule displaces it. The majority read the entire thrust of the amendment to Rule 16 as urging judges to make wider use of their powers and to manage their dockets actively from an early stage.³⁹ It concluded that ordering represented parties to attend a settlement conference is one more application of a district judge's inherent authority to preserve the efficiency, and more importantly the integrity, of the judicial process.⁴⁰

Having found the power, the majority confined it. A district court cannot coerce settlement, so "authority to settle" means only that a representative comes to court in order to consider the possibility of settlement, not that the representative arrives willing to settle on someone else's terms.⁴¹ The majority added that a representative sanctioned for refusing to make an offer to pay money would present a different case, one the court said it would not countenance.⁴²

The majority also tested the order for proportionality. It acknowledged that requiring a corporate representative, or any litigant, to attend could be an abuse of discretion if the requirement were so onerous, so clearly unproductive, or so expensive in relation to the size, value, and complexity of the case.⁴³ Heileman was not such a case. The claim was substantial, the issues were complex, and trial was expected to be long, so the burden of sending one representative was small beside the benefit of a conference attended by someone able to commit the company to a position.⁴⁴ Timing hurt Oat as well. It contacted the magistrate's office about the order's requirements and was told what they were, but it never objected, either when the order issued or when it sought clarification. Its only course was to comply fully and argue about reasonableness afterward.⁴⁵

The sanction followed from the same facts. The majority drew a clear distinction between an attorney representing a corporation and a corporate representative, who is a person holding "a position with the corporate entity."⁴⁶ Oat's lawyers represented its principals and the corporation, but no corporate representative attended as the order required, so the court properly sanctioned Oat under Rule 16(f).⁴⁷ The order was a pretrial order, and Rule 16(f) permits sanctions against a party that fails to obey a scheduling or other pretrial order.⁴⁸

Several judges dissented in separate opinions, and their objections are the source of the lingering doubts about the power. One dissent hesitated to bar the order outright. It acknowledged that attorneys are often imperfect agents of their clients and that heavy dockets counsel against depriving district courts of a potentially useful tool for effecting settlement.⁴⁹ It nevertheless warned that the power invites judicial high-handedness, and it gave an example: a district judge once ordered the Acting Secretary of Labor to appear for settlement discussions on the very day he was scheduled to appear before the Senate for his confirmation hearing.⁵⁰ The broader concern was that judges, in their zeal to settle cases, may ignore the value of other people's time, since one reason people hire lawyers is to economize on their own time.⁵¹ That dissent would have reversed on narrower ground. The demand that Oat send an executive with "full settlement authority" would be defensible only if litigants had a duty to bargain in good faith over settlement before trial, and neither Rule 16 nor any other rule, statute, or doctrine imposes such a duty.⁵² It left open whether the power to order attendance exists at all.⁵³

A second dissent objected to the power itself, and its argument was textual. Rule 16 specifies whom the court may order to appear, namely attorneys and unrepresented parties, and the dissent read that choice as excluding represented parties.⁵⁴ Rule 45 reinforced the point, it argued: the rule authorizes subpoenas for hearings and trials, not for pretrial conferences, so neither the Supreme Court nor Congress has given courts the authority to direct litigants' attendance at them.⁵⁵ That dissent also noted that Rule 16(f) authorizes sanctions when "no appearance is made on behalf of a party," not when a party fails to appear, and it found that choice of language significant.⁵⁶ A dissent also doubted that a litigant forced to appear against his will, perhaps to hear a judge or the opposing party berate his position, would expect a fair hearing at trial if he resisted the pressure to capitulate.⁵⁷ The two dissents contest different things: the first challenged the demand made in this case and left the power open, while the second denied the power altogether.

Heileman was decided on a version of Rule 16 that, as the majority and the dissenters alike described it, referred to attorneys and unrepresented parties and said nothing about requiring a represented party to attend.⁵⁸ The sentence in Rule 16(c)(1) quoted at the start of this section speaks to that question directly, so the textual objection no longer arises for the basic power, and a court need not rest on inherent authority to order a party or its representative to be present or reasonably available.⁵⁹ Much of Heileman's reasoning remains useful all the same. Its reading of authority to settle explains what kind of representative satisfies an order, its proportionality analysis is the natural content of if appropriate, and its refusal to countenance coerced offers marks the edge of the power. The words reasonably available by other means also answer the burden objections in the dissents, because a court can ask for a telephone connection to someone with authority when an in-person trip would cost more than the conference is likely to yield.

Today both that order and the one in Heileman would rest on the same sentence of the rule, and what separates them is the stakes and the burden. The Heileman order protected a substantial, complex case from a conference attended only by outside counsel, while the order in the scene above would send a company's executive across the country to hear a position the company had already stated. Compliance also has a clear boundary. A company whose representative attends, listens to the other side's proposal, and declines to make any offer has obeyed the order, while a company that sends only outside lawyers, however well authorized to speak, has not.⁶⁰