Sanctions Under Rule 16

Sanctions Under Rule 16

Rule 16(f) gives the rest of Rule 16 its force. On motion or on its own, the court may issue just orders, including those that Rule 37(b)(2)(A)(ii)-(vii) authorizes, when a party or its attorney commits any of three defaults.¹ The defaults are:

1. failing to appear at a scheduling or other pretrial conference;²
2. being substantially unprepared to participate in a conference, or not participating in it in good faith;³ and
3. failing to obey a scheduling or other pretrial order.⁴

Each default breaches a duty taught earlier in this chapter. Once the court has called a conference, the attorneys must attend, and the court may require preparation beforehand.⁵ Pretrial orders matter only if the court enforces them, which one commentator calls the best way to make the conference an effective means of controlling or shaping the trial.⁶ The stakes are real because a conference is where counsel, talking informally with the judge, agree on the issues in dispute and plan the trial,⁷ and a series of conferences may schedule discovery and set deadlines for pretrial motions.⁸ A party that skips the meeting, arrives unprepared, or ignores the resulting order defeats that work and leaves the compliant side to absorb the cost.

Two verbs organize the rule. Paragraph (1) says the court may issue just orders, so the judge decides both whether to sanction and which sanction fits. Paragraph (2) says the court must order payment of the reasonable expenses, including attorney’s fees, that the noncompliance caused, unless the noncompliance was substantially justified or other circumstances make an award unjust.⁹ The options under paragraph (1) include those Rule 37(b)(2)(A)(ii)-(vii) authorizes; in practice, sanctions for a Rule 16 default run from costs through striking a defense or excluding evidence to dismissal in an extreme case.¹⁰ The subsections below take the three grounds in turn, then the fee provision, then the limits courts place on dismissal and default.

Failure to Appear

The first ground is the plainest: a party or its attorney “fails to appear at a scheduling or other pretrial conference.”¹¹ The phrase reaches every conference this chapter has described, from the early scheduling conference to the final pretrial conference, and once the court has called one, the attorneys’ attendance is compulsory.¹² Rule 16(e) adds a demand for the final conference by requiring the attorney who will conduct the trial to attend when the court formulates the trial plan.¹³ In Switzer v. Much, Shelist, Freed, Denenberg, Ament, Bell & Rubenstein, a federal district court held that the absence of lead counsel from a mediation session required by local rule justified sanctions.¹⁴

An absence wastes the conference at once. The judge has set time aside, the opposing lawyer has prepared, and no issue can be narrowed or schedule fixed without the missing side. Rule 16(a) speaks of “establishing early and continuing control so that the case will not be protracted because of lack of management,”¹⁵ and a party that stays away works against that control.

Rule 16(f) names no single penalty for a missed conference. One commentator describes a range that runs from an assessment of costs against a party who is late in filing a memorandum to the entry of a default or a dismissal for failure to prosecute when a party fails to attend at all, fails to file a required memorandum, or fails to obey the pretrial order.¹⁶ A default ends a defendant’s chance to contest the claim, and a dismissal ends the plaintiff’s claim. The graded scale lets the judge fit the response to the default: a lawyer who forgot the date and a client who boycotts the case have both failed to appear, and no single fixed penalty would suit both.

The top of the scale is easy to reach for and hard to defend. In Olson’s age and disability suit against Alick’s Drugs, Inc., the district court dismissed under Rule 16(f) after Olson withdrew his consent to a settlement conference and apparently arrived five minutes late to the final pretrial conference, and the court of appeals vacated the dismissal.¹⁷ The last subsection of this unit works through why. For now, a missed conference opens the door to sanctions, and it does not by itself justify dismissal.

An exam stem that reports a no-show and asks whether the court may dismiss poses two questions, and the usual error is to answer only the first. The first is whether a party or its attorney failed to appear at a scheduling or other pretrial conference, which makes just sanctions available. The second is whether the harshest sanction fits, and that turns on whether the conduct amounts to extreme delay or contumacious conduct or, if it is only ordinary misconduct, whether the court first warned the party and found dismissal appropriate.¹⁸ An answer that leaps from a missed conference straight to dismissal skips that second question.

Unprepared or Bad-Faith Participation

A lawyer can obey an order to attend and still waste the conference, and Rule 16(f)(1)(B) addresses that case. It lets the court issue just orders when a party or its attorney “is substantially unprepared to participate—or does not participate in good faith—in the conference.”²⁰ Rule 16 once authorized only an order directing the attorneys to appear, and its current text also reaches the party who appears but is substantially unprepared or does not participate in good faith.²¹ Because the two grounds are joined by or, each stands alone: a lawyer can be unprepared yet sincere, or prepared yet obstructive.

Unpreparedness is measured against the conference agenda. A final pretrial conference may take up the issues in dispute, exhibits, challenges to admissibility, witnesses, settlement, pending motions, and the order of proof.²² A lawyer who cannot answer questions on those subjects gives the judge a person in a chair and nothing more. The word substantially sets the threshold: needing to check a single date does not cross it, but being unable to say which issues are contested does.

Preparation begins before the conference. Rule 16(f)(1)(B) indirectly underscores the Rule 26(f) meeting, which helps identify electronic discovery issues early, and once those issues are identified the parties must be ready to discuss any problematic ones at the Rule 16 conference.²³ Amendments in 2006 and 2015 emphasized electronically stored information, agreements about privilege and work-product protection, and the handling of discovery disputes, so a lawyer should expect to discuss those subjects.²⁴ Rule 16(b) also requires a scheduling order that provides for the disclosure or discovery of electronically stored information and for any agreement on asserting privilege after production.²⁵ Two purposes of the conference, early and continuing control and discouraging wasteful pretrial activity, are the ones an unprepared lawyer defeats.²⁶

The bad-faith ground is easier to misread. A tempting view treats good faith as a willingness to settle, so that a party who attends and refuses to pay has failed to participate in good faith. The authorities point the other way. The purpose of a conference is to achieve voluntary agreements, and a court may not force concessions or settlement on unwilling parties.²⁷ A judge may suggest settlement and may require that someone with settlement authority be available, but the judge may not coerce the parties into settling.²⁸ In G. Heileman Brewing Co. v. Joseph Oat Corp., the court said that if Oat Corporation had sent a corporate representative and been sanctioned because that person refused to make an offer to pay money, it would face a decidedly different issue, one it would not countenance.²⁹ If a refusal to pay counted as bad faith, Rule 16(f)(1)(B) would become a back door to the coercion the rule withholds.

Stipulations follow the same logic. The court may take up the obtaining of admissions and stipulations about facts and documents to avoid unnecessary proof,³⁰ yet it may not force concessions on parties unwilling to make them.³¹

Good faith still has content. Courts have required parties to engage in various alternative-dispute-resolution procedures and to do so in good faith.³² The duty therefore governs how a party takes part, which means coming ready and engaging with the procedure, and it leaves untouched what the party decides about settlement.

What separates the landlord from the defense lawyer in the earlier lease case is readiness and engagement, and neither turns on the answer about money. The defense lawyer who ignored the Rule 26(f) meeting could be sanctioned even if the client was entitled to refuse every offer. The landlord kept its right to refuse because it did everything else the conference required. The usual error runs the analysis backward, treating the refusal to settle as the proof of bad faith when the sanctionable conduct lies in preparation and participation.

A stem on this ground is best taken in three questions. Did the party or lawyer appear, since failure to appear is a separate ground? Could counsel address the agenda and the discovery plan? And does the complaint concern how the party took part or what it decided about settlement? Only the first kind of complaint, about preparation and participation, supports sanctions here.

Violating an Order

The third ground measures conduct against a written command. Rule 16(f)(1)(C) lets the court issue just orders when a party or its attorney “fails to obey a scheduling or other pretrial order.”³⁴ The command may come from any order this chapter has described: a scheduling order, a direction about who must attend a conference, or the final pretrial order. The inquiry is plain. What did the order require, did the party do it, and what response fits the shortfall?

An order governs a case only if it binds before anyone finishes arguing about its wisdom. If a party could disregard an order and contest it afterward, the court’s management would be optional for the side that finds compliance inconvenient. Enforcing pretrial orders is the best way to make the conference an effective means of controlling or shaping the trial,³⁵ and the ground reaches the party and the attorney alike.³⁶

G. Heileman Brewing Co. v. Joseph Oat Corp. shows the ground operating against a client. The court first held that Rule 16 does not limit, but is enhanced by, the inherent authority of federal courts to order litigants represented by counsel to attend pretrial conferences to discuss settlement.³⁷ It then held that Oat Corporation violated the order requiring it to have a corporate representative attend the December 19, 1984 settlement conference, and that the district court did not abuse its discretion by sanctioning the violation.³⁸ Clarity mattered, and later clarification counted. The court found that Oat was well aware of what was expected: the November order may have been somewhat ambiguous, but the magistrate’s remarks from the bench on December 14, a written order of December 18, and the direction counsel obtained from the magistrate’s clerk eliminated any ambiguity.³⁹ The sanction was $5,860.01, the costs and attorneys’ fees of the opposing parties who attended the conference.⁴⁰

Oat’s failure to object shows what a party in its position should do. Oat never objected to the order, either when it issued or when Oat contacted the magistrate’s office and was told what the order required, so only one course remained: Oat “had to comply fully with the letter and intent of the order and argue about its reasonableness later.”⁴¹ The Ninth Circuit applied the same principle in Malone v. United States Postal Service: counsel who believes an order is erroneous is not relieved of the duty to obey it, and Malone’s refusal to abide by the pretrial order was not justified.⁴² A lawyer who thinks an order is wrong therefore objects, complies, and presses the point later, remembering that objections to a pretrial order are waived if not raised at the outset of trial and lead to reversal only if the order was an abuse of discretion.⁴³

The manufacturer and Oat faced orders of similar burden, and the difference lies in what each did. The manufacturer objected and then performed. Oat never objected and then did not send the corporate representative the order required. Two errors are likely on an exam stem. One treats counsel’s presence as satisfying an order that requires the client’s own representative, although Heileman upheld sanctions against a represented corporation that failed to send the representative the order named. The other treats a party’s belief that an order is wrong as a defense to disobeying it, when that belief supports only an objection and a later challenge.

Disobedience opens the whole range of just orders. A party that fails to comply with a pretrial order risks having a defense stricken, evidence excluded, or, in an extreme case, the action dismissed.⁴⁴ At the mild end, the Heileman award covered the costs and fees of the parties who attended,⁴⁵ and an award of fees and costs for failing to obey an order about participating in a settlement conference was likewise held not to be an abuse of discretion in Official Airline Guides, Inc. v. Goss. The severe end is taken up in the last subsection of this unit.

Mandatory Fee Shifting

Rule 16(f)(2) directs that, instead of or in addition to any other sanction, the court must order the party, its attorney, or both to pay the reasonable expenses, including attorney’s fees, incurred because of any noncompliance with Rule 16, unless the noncompliance was substantially justified or other circumstances make an award unjust.⁴⁷ The verb marks the contrast with paragraph (1), which says the court may issue just orders when a party or its attorney fails to appear, is substantially unprepared or does not participate in good faith, or fails to obey an order.⁴⁸ Once noncompliance is shown, an award of expenses is the default, and the court departs from it only by finding one of the two exceptions that close the sentence.

The opening words, instead of or in addition to, place the fee award among the other sanctions. It can be the court’s whole response, or it can accompany a harsher one such as striking a defense. A judge who decides that dismissal or exclusion of evidence would be too severe has therefore not finished, because the question of expenses remains. The mandate also responds to who bears the cost of a default. When a lawyer skips a conference or ignores a deadline, the opposing side has usually already prepared, traveled, and billed its client for the time, so the money has been spent by the party that followed the rules. A mandatory award moves that expense to whoever caused it.

The provision also fixes the measure of the award. The court orders reasonable expenses, which screens out extravagant charges, and only those incurred because of the noncompliance, which screens out costs the opponent would have borne anyway. In Heileman, the sanction of $5,860.01 equaled the costs and attorneys’ fees of the opposing parties who attended the conference,⁴⁹ so the award tracked what the corporation’s noncompliance cost them.

Two exceptions limit the mandate. Substantial justification asks whether the party had a good reason for the failure, and a lawyer who misses a conference because of a genuine emergency and reports it promptly is the paradigm case. The second exception, that other circumstances make an award unjust, is a residual safety valve for a default that has no justification but for which payment would still be unfair. Together the exceptions keep the mandate from punishing honest mishap, and the court has no other way out.⁵⁰

The reason for the absence and the speed of the report separate the hospitalized lawyer from a lawyer who simply forgot the date. Forgetfulness is no justification, and the same trip would then produce a mandatory award.

The rule names three possible payors, the party, its attorney, or both, and ranks none of them. The court can therefore direct payment by the lawyer alone when the lawyer caused the default. Suppose a manufacturer’s lawyer, without telling the client, ignores an order to file a joint report before a scheduling conference. The default has no justification, so expenses must be awarded, but the text lets the court order the lawyer to pay rather than the client who knew nothing of it.

A stem that reports a missed conference and asks whether the court may award fees invites the wrong verb. The word may belongs to the choice of sanction under Rule 16(f)(1), while the fee award uses must, so the better answer is that fees are required unless one of the two exceptions is shown. If the stem adds that the judge declined to dismiss or to exclude evidence, that refusal leaves the fee question open, because fees can stand instead of any other sanction.

Limits on Severe Sanctions

Disobeying an order is a ground for sanctions, and the sanctions available under Rule 16(f) can go as far as dismissal of the offending party’s case.⁵² Courts nonetheless reserve dismissal and default for the extreme case, and the reason lies in what the sanction does. It ends the lawsuit without anyone deciding who was right, no later payment can repair it, and its cost falls on a client who may have contributed little to the lapse. The law therefore attaches conditions that a fee award does not need.

Olson states those conditions. Dismissal is a harsh sanction, employed only in extreme situations of delay or contumacious conduct (willful defiance of the court), and the inquiry turns on the egregiousness of the party’s conduct, the frequency and magnitude of its errors, and the merit of its case.⁵³ Misconduct short of that level is “ordinary misconduct,” and the court may dismiss for it only after a warning and a determination that dismissal is appropriate in the circumstances.⁵⁴ The court must also consider whether the suit has any possible merit before dismissing for ordinary misconduct.⁵⁵ Each condition does separate work. The three factors measure how far the conduct departs from ordinary litigation, the warning gives a party a chance to change course, and the determination forces the judge to ask whether dismissal is the right response. The merits inquiry keeps a claim with substance from being forfeited to a procedural slip.

Donn Olson sued Alick’s Drugs, Inc., alleging that it fired him as a pharmacist because of a disability and his age.⁵⁶ The court set trial for December 13, 1999, and the final pretrial conference for November 30.⁵⁷ Olson withdrew his consent to take part in a settlement conference. Billing records later showed that he told his lawyers on November 11 that he could not find a replacement for work, yet they waited until the next day to tell opposing counsel and the magistrate judge that he had chosen not to attend.⁵⁸ The district court granted the motion to withdraw, deferred ruling on Olson’s request for a continuance, and advised him in a written order to attend the November 30 conference in person or through new counsel.⁵⁹ When the conference began at 1:05 p.m., neither Olson nor a new lawyer was present. Asked whether he had a motion, defense counsel said the defense was “always agreeable to a dismissal” and would be “more than happy to move for that.” Concluding that anything less would reward Olson “for his failures to appear,” the district court dismissed under Rule 16(f) and later denied reconsideration.⁶⁰

The court of appeals vacated the dismissal and remanded.⁶¹ It found that the district court had failed to consider the likely merits of Olson’s claims. The defendants had never moved for dismissal or summary judgment before the final pretrial conference and had been willing participants in settlement negotiations, which told the court that they thought the case more than baseless, and the court should have inquired further before inviting a hasty motion from defendants who were “more than happy” to comply.⁶²

Measured against the standard, the record is thin. The conduct was a withdrawn consent and an apparent five-minute lateness, far from the extreme delay the standard demands. The written order that preceded the final conference “advised” Olson to attend, and it is not described as a warning that his case was at risk. The merits went unexamined. The court of appeals closed with the missing merits inquiry, and the first two problems follow from applying the standard to these facts.

Dismissals that survive look different. Under Rule 16(f), sanctions can be much more severe than fees, up to and including dismissal of the offending party’s case. The Tenth Circuit refused to disturb a dismissal imposed for failing to comply with discovery orders and failing to appear at a settlement conference in Bud Brooks Trucking, Inc. v. Bill Hodges Trucking Co.; see also Griffin v. Wilshire Credit Corp.⁶³ Bud Brooks involved more than one default, noncompliance with discovery orders together with a missed settlement conference, while Olson involved a withdrawn consent and a few minutes’ lateness.

The two scenes differ in the facts the standard measures. This plaintiff was warned, ignored order after order, and offered no excuse, while Olson received no reported warning of dismissal and was only apparently five minutes late after one withdrawn consent. A stem that reports a late arrival or a single cancelled conference followed by dismissal is asking for exactly that comparison.

Sanctions under Rule 16 therefore form a scale. At the base, expenses are the default, and the court must order them unless the noncompliance was substantially justified or an award would be unjust.⁶⁴ Above that, the court may strike a defense or exclude evidence.⁶⁵ At the top, default or dismissal is available for complete nonattendance, failure to file a required memorandum, or failure to obey the pretrial order,⁶⁶ but the court may dismiss only for extreme delay or contumacious conduct or, for ordinary misconduct, after a warning and a finding that dismissal fits.⁶⁷ Olson shows what happens to a dismissal that skips those conditions.