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Settlement
Conferences in the
United States District Court for the
Western District of Arkansas:
AN ATTORNEY'S GUIDE
by United States Magistrate Judge Bobby E.
Shepherd |
| (Note:
The author acknowledges the contributions to this article
of his colleagues the Hon. Beverly Stites Jones, United
States Magistrate Judge in the United States District
Court for the Western District of Arkansas, and the
Hon. Jerry Cavaneau, United States Magistrate Judge
in the United States District Court for the Eastern
District of Arkansas.) |
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For years, the United
States Magistrate Judges in the United States District
Courts have, from time to time, conducted settlement
conferences in civil cases pending in the courts. With
the enactment of the Alternative Dispute Resolution
Act of 1998, 28 U.S.C. § 651 et seq., the district
courts are required to formalize their alternate dispute
resolution programs. Under the act, the district court
must provide litigants in civil cases with at least
one alternative dispute resolution process. 28 U.S.C.
§ 652(a). In 1999, in response to the act, the
United States District Court for the Western District
of Arkansas formally designated "the provision
of settlement conferences conducted by a United States
Magistrate Judge ... as the ADR process of the court."
General Order No. 32.
Since 1998, the Magistrate
Judges of the Western and Eastern Districts of Arkansas
have conducted settlement conferences in hundreds of
cases. This article is not intended as a guide to mediation
prepared by a professional mediator. The fine private
mediators who are available to litigants in our state
would no doubt have a different perspective on mediation
methodology and practice. Instead, the following is
intended as an explanation of the settlement conference
process in the Western District and as a commentary
upon the actions of counsel that may encourage and discourage
settlement.
While this article focuses
upon the procedures utilized in the United States District
Court for the Western District of Arkansas, it is believed
that these procedures are substantially the same as
those followed in the Eastern District, and the principles
discussed should be applicable to any court sponsored
settlement conference.
By its general order,
the United States District Court for the Western District
of Arkansas affirmed the commitment of the court to
affording litigants an opportunity to reach a mutually
satisfactory resolution of disputes prior to trial.
Under this framework, the court's program of court sponsored
alternate dispute resolution has proven to be very productive,
and the court has seen a dramatic reduction in the number
of civil trials actually conducted.
Under the court's general
order, all civil cases are eligible for alternate dispute
resolution with the exception of: appeals from administrative
agencies; social security cases; bankruptcy appeals;
habeas corpus and extraordinary writs; and, prisoner
civil rights cases.
A settlement conference
will be scheduled before a Magistrate Judge in an eligible
civil case: if either party requests the same and the
court determines that a settlement conference would
be useful; or, if the presiding district judge refers
the case for settlement conference. Under the terms
of the general order, such settlement conferences are
"conducted at such times and under the procedures
as may be established by the respective United States
Magistrate Judges."
In order for a determination
to be made as to whether a particular case would benefit
from a settlement conference, the parties are required
to submit to the Magistrate Judge a "settlement
conference statement," which is not filed with
the clerk of the court and which need not be served
upon opposing counsel. The settlement conference statement
contains a brief statement as to: the evidence the party
expects to produce at trial; an itemization of damages
claimed or other relief sought; and, a description of
settlement discussions to date, including the details
of any settlement proposals made. This information is
used by the Court in determining whether a settlement
conference would be helpful and to assist the presiding
judge in preparing for the settlement conference.
In the event that a settlement
conference is found to be appropriate, a second order
is entered, shortly before the scheduled settlement
conference date, advising the parties of the date, time
and place of the conference.
The scheduling of the
settlement conference presents a dilemma. In the ideal
world, the court's settlement conference would take
place well in advance of the scheduled trial, in order
to save the parties the time and expense of trial preparation
in the event that a settlement is reached. On the other
hand, experience has shown that the best chance of settlement
exists when the parties are prepared for trial. When
a party enters the settlement conference unprepared
for trial, that party will frequently have an unrealistic
concept of the strength of the party's own case, as
well as the merits of the opposing party's position.
Such a situation makes settlement extremely unlikely.
Accordingly, since the most earnest trial preparation
seems to take place immediately before trial, the court
customarily sets the settlement conference to take place
shortly (one to three weeks) before the trial date.
Under the court's order
setting the settlement conference, the parties are advised
that they must attend the conference along with the
attorney who will actually try the case. A corporate
party is ordered to appear by a duly authorized representative.
The parties are required to appear with authority to
settle the case upon the opposing parties' last stated
settlement terms. An insured party is instructed to
appear by a representative of the insurer who is vested
with complete authority to agree to a settlement up
to the policy limits of liability. The order setting
the settlement conference further encourages the parties
to communicate directly and exchange settlement proposals
prior to the date of the conference.
Unfortunately, frequently,
the parties appear by insurance or corporate representatives
with no authority to settle or with a preestablished
limit on his or her settlement authority. Such representatives
typically must relay by telephone settlement proposals
which exceed their authority to superiors in offices
far away. This, of course, imposes a severe handicap
upon the settlement conference process and inhibits
the ability of the participants to react and change
their positions based upon information received, arguments
presented and developments observed during the conference.
In such circumstances the Court has the authority to
impose sanctions upon parties and attorneys who fail
to comply with the provisions of the order setting settlement
conference. See Nick v. Morgan's Foods, Inc.,
99 F.Supp.2d. 1056 (E.D. Mo. 2000); Universal Cooperatives,
Inc. v. Tribal Co-operative Marketing Development Federation
of India, LTD., 45 F.3d 1194, 1196-97 (8th Cir.
1995).
Settlement conference procedure
The Court's settlement
conferences are typically conducted in an informal setting
and the proceedings are "off the record,"
until a settlement is actually reached. In order to
encourage candor and good faith participation, the participants
are advised by the presiding judge that the matters
discussed during the conference, including proposals
and counter proposals made, will be held in confidence
by the judge and will not be disclosed to the District
Judge to whom the case is assigned or to others.
Settlement conferences
in the Western District are customarily conducted in
the court house for the division in which the case is
pending. The initial portion of the conference is typically
conducted in the courtroom with all parties and counsel
present. After counsel for the parties make short opening
statements, the respective parties, party representatives
and their attorneys adjourn to separate rooms for the
balance of the conference.
With the parties separated,
the presiding Magistrate Judge confers privately with
each party, discussing the case, questioning the parties
and counsel, suggesting settlement alternatives and
eliciting settlement proposals and counter proposals
which are conveyed by the presiding judge. The conference
proceeds in this fashion, with the judge moving between
the parties, until a settlement is reached or it becomes
clear that no settlement will be achieved. Upon the
request of a party or counsel, specific information
disclosed to the judge in these separate sessions will
be held in confidence and will not be revealed to the
opposing party.
If a settlement is reached,
the parties and counsel return to the courtroom where
the terms of the settlement are placed on the record.
In the event of settlement, an order is promptly entered
dismissing the case subject to the terms of the settlement.
It is important that the terms
of the settlement be immediately placed on the record
and that the parties themselves, as well as counsel,
agree on the record, to those terms, so that the settlement
can be final, enforceable and the action dismissed.
Experience has shown that it is a risky proposition
to reach a settlement during the conference, and then
permit the parties, through counsel, to "work out
the details," rather than having the terms of the
settlement agreed upon, in open court, on the record.
Such a procedure runs the risk of parties having second
thoughts and, in fact, reneging upon the agreed upon
settlement.
In the event that no settlement
is achieved, the parties return to the courtroom for
the adjourning of the conference. Often, the Magistrate
Judge will continue to communicate with counsel in the
days and weeks following the conference in order to
monitor and encourage further settlement discussions.
A court conducted settlement
conference typically has no hard and fast time limit,
and it is important for counsel and the parties to be
prepared to work until settlement is reached or until
the settlement conference judge adjourns the conference.
Often a settlement conference
can reach a point where a stalemate exists and one or
both parties refuse to move further. In such a circumstance,
the settlement conference judge may attempt to break
the stalemate by proposing that a party make a particular
move or by proposing that both parties agree to move
to suggested positions
Furthermore, in situations
in which it is clear that no further progress will be
made during the conference, the settlement conference
judge may adjourn the conference but send with each
of the parties, under seal, the judge's own proposal
as to settlement. Each party is instructed to open the
court's proposal only after the conference adjourns.
Should a party be agreeable to the proposed settlement,
counsel for that party is instructed to immediately
notify the settlement conference judge of that party's
agreement. If the judge receives notification of agreement
from all parties, the judge advises the parties of the
agreement and a settlement is achieved. If notification
of agreement is received from less than all of the parties,
no further action is taken by the judge. This procedure
is best suited for use in cases in which settlement
can be achieved based upon payment of a sum certain
to one or more parties. In cases in which settlement
must be based upon agreement on non-monetary issues,
this procedure is not well-suited.
Counsel's role
Counsel may participate
in the settlement conference procedure outlined above
with one of two mindsets. The first views the settlement
conference as a nuisance, a useless obligation which
the court imposes in order to comply with a congressional
mandate. On the other hand, counsel may approach the
settlement conference with an eye towards: utilizing
the auspices of the United States District Court to
reach a settlement in the case; learning more about
the opposing parties' case; obtaining the reaction of
a neutral judge to counsel's case and theories of recovery
or defense; and, utilizing the opinions and efforts
of the judge in encouraging counsel's client to realistically
consider the merits of the case.
Experience has shown that
counsel can enhance the utility of the settlement conference
by taking and avoiding specific actions.
The following actions
by counsel, prior to participating in a court sponsored
settlement conference will enhance the prospects of
settlement:
•
determine the real interest and objectives of the client:
monetary, non-monetary, principle, apology/admission,
future reform, changes in policy, "pound of flesh";
•
evaluate the circumstances of the party that may impact
upon the prospects for settlement: economic position,
sources of income, litigation/business experience, sophistication,
identity of the "real" decision maker;
•
consider the potential settlement with imagination and
creativity;
•
prepare the party for the settlement conference procedure;
•
prepare the party for necessary compromise; and,
•
proceed to the settlement conference with a good faith
desire to reach a settlement.
As the settlement conference
begins and counsel are called upon to present their
opening presentations, counsel should remember that
the presiding Magistrate Judge has no decision- making
function at the conference and counsel should resist
the temptation to direct his comments to the judge or
opposing counsel. Counsel's opening presentation should
not be presented as an argument to a fact finder. Instead,
counsel can be most effective by speaking directly to
the opposing party or that party's decision maker in
attendance at the conference. Counsel should point out
those facts, issues and considerations which the opposing
party may not have considered or which may not have
been brought to the party's attention. Counsel should
take advantage of this rare opportunity to speak directly
to a represented party without having counsel's comments
screened by opposing counsel. Often, this opening presentation
will help a participating party recognize those facts
and considerations which favor the opposing party and
bring home to the party the possibility that their case
may not be as strong as previously thought or that the
opposing party's case may be stronger than originally
believed.
Counsel is most effective
in the opening presentation phase by resisting the temptation
to present a detailed recitation of the facts or procedural
background. It should be remembered that the parties
and their attorneys participating in the conference
are, in theory, well aware of the facts and history
of the case and it is not necessary for the presiding
judge to be educated in detail.
The demeanor of counsel
during this opening phase of the conference is important.
An effort should be made to avoid poisoning the atmosphere
of the conference by incendiary, confrontational or
accusatory remarks. Posturing is not a positive.
Occasionally, a party
or counsel will seek to ask questions in response to
an attorney's opening presentation or to present a "rebuttal"
presentation. Rarely can anything good come of such
actions and, if permitted, parties can become so angered
or insulted that the prospects for success at the conference
are eliminated. Accordingly, questions posed to opposing
parties or counsel and rebuttal presentations are rarely
permitted.
Certain conduct by counsel
during the opening phase of the settlement conference
creates significant impediments to a successful settlement
conference, including:
•
posturing by counsel: boasting as to expertise, experience
or past success, •
performing" for the benefit of the client, threats/promises
as to the outcome of litigation, threats to end negotiations,
the announcing of "bottom line" positions;
•
poor knowledge of facts or law;
•
"long- winded" presentations; and,
•
the use of incendiary words or phrases which insult
or demean opposing parties or counsel.
Effective opening presentations are typically:
•
short and to the point;
•
directed to the opposing party or party representative;
and,
•
include the mention of issues, facts and developments
of which the opposing party may not be aware, or may
not have fully considered.
Further, an effective
opening presentation may also include reference to and
the presentation of photographs, videos, documents or
specific items of persuasive evidence. Finally, a presentation
which carries the impression that counsel is well-prepared
for the settlement conference, and, thus for trial invariably
aids in motivating settlement.
As the parties and counsel
confer privately and separately with the presiding settlement
conference judge, certain conduct by counsel impairs
settlement prospects, for example:
•
failure to carefully consider the realistic range of
acceptable settlement;
•
failure to discuss with the client realistic settlement
expectations and encourage realistic expectations;
•
failure to assure that the real decision makers are
in attendance;
•
negative comments such as, "that proposal is an
insult," "they obviously are not interested
in settling this case"; and,
•
the announcement of ultimatums, as in "if they
don't accept this proposal we will go to trial."
By the same token, experience
has taught that certain actions and attitudes by counsel
during the conference encourage and facilitate settlement.
These include:
•
exhibiting the courage to speak realistically about
potential and likely trial outcomes;
•
encouraging the
client to carefully consider each settlement proposal
presented;
•
recognizing that a settlement conference can be time
consuming, exhibiting the necessary patience, and encouraging
the client to exhibit patience; and,
•
utilizing the settlement conference judge to test and
reenforce counsel's own evaluation of the case.
Participants in a settlement
conference should be prepared to face questioning by
the settlement conference judge as to the facts of the
case, the legal issues involved and the positions taken.
The settlement conference judge will often challenge
a party as to their position and even suggest that the
position is unreasonable or not supported by the facts
or the applicable law. Counsel should prepare his client
for this approach and should insure that the party understands
that the judge is not "taking sides," but
is attempting to assure that all aspects of the case
are considered.
Conclusion
Finally, it should be
emphasized that, although the court has a great deal
of confidence in its alternate dispute resolution program,
neither the parties nor counsel should depend upon the
settlement conference to resolve the case. Preparation
for trial should proceed, and, in fact, inevitably,
those parties and attorneys who are well prepared for
trial will achieve the most satisfactory results from
the court sponsored settlement conference.• |
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