Stauble v. Warrob, Inc.

USCA1 Opinion









October 13, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT




_________________________

No. 92-1102

ALFRED STAUBLE, INDIVIDUALLY AND F/U/B WARROB, INC.,
Plaintiff, Appellee,

v.

WARROB, INC., ET AL.,
Defendants, Appellants.
____________________

No. 92-1103

ALFRED STAUBLE, INDIVIDUALLY AND F/U/B
MONTECHUSETTS LEASING CORP.,
Plaintiff, Appellee,

v.

MONTECHUSETTS LEASING CORP., ET AL.,
Defendants, Appellants.

_________________________

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. A. David Mazzone, U.S. District Judge]
___________________

_________________________

Before

Torruella and Selya, Circuit Judges,
______________
and Zobel,* District Judge.
______________
_________________________

Robert S. Potters, with whom Potters & Brown was on brief,
_________________ _______________
for appellants.
Peter S. Terris, with whom Harvey Nosowitz and Palmer &
_________________ ________________ ________
Dodge were on brief, for appellee.
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_________________________

_______________
*Of the District of Massachusetts, sitting by designation.
































































SELYA, Circuit Judge. This appeal requires us to
SELYA, Circuit Judge.
______________

delineate for the first time the outer boundaries of a district

judge's power to refer liability determinations to a special

master. After assessing the constraints that Article III of the

Constitution imposes on Fed. R. Civ. P. 53, we conclude that

referring fundamental issues of liability to a master for

adjudication, over objection, is impermissible. Accordingly, we

vacate the judgment below.

I. THE SETTING
I. THE SETTING

Plaintiff-appellee Alfred Stauble is a shareholder and

director of two closely held corporations, Warrob, Inc. and

Montechusetts Leasing Corp. The saga of Stauble's shareholder

suits is scarcely a short story.1 Our burden of exegesis is

reduced, however, because our focus is less on the vicious

infighting and Byzantine business practices that plagued the

parties' dealings inter sese than on the procedural path
_____ ____

traversed below.

In 1978, after Stauble's relationship with a fellow

shareholder and several other directors first soured, then

curdled, he brought suit in his own right and on behalf of the

two corporations, alleging a host of misdeeds (including, but by

no means limited to, breach of fiduciary duty, diversion of

corporate assets, and misappropriation of corporate

opportunities). The defendants included the shareholder with

____________________

1Although Stauble brought two suits, the cases were
consolidated below. Hence, we treat them as if they comprised a
single civil action.

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whom Stauble had feuded (Warren Katz); five corporate directors

(Richard King, Robert Gottsegen, Larry Gottsegen, Stuart

Gottsegen, and Lawrence Wald); and four corporations (Amarin

Plastics, Inc., R.L.S.L. Corp., Montechusetts Chem. Corp., and

Montechusetts Chem. DISC, Inc.). Neither side requested a jury

trial.

A magistrate policed discovery at the outset of the

litigation. After witnessing two years of acrimonious bickering,

the district court, on its own initiative, referred the case to a

special master to manage pretrial discovery.2 None of the

parties objected to this reference. The discovery period

extended over several years. When discovery was finally closed,

the district court adopted the master's report in toto.

In mid-1986, the case was trial-ready. Acting sua
___

sponte, the district court referred the case to the same special
______

master for trial on the merits. The defendants immediately

objected to the reference. Their objection was overruled and

their motion to vacate the order of reference was denied. They

then sought relief by way of mandamus. Concerned that the record

was incomplete, we issued an order directing the court below to

provide additional information as to why it thought the reference

was desirable. The district court obliged. It noted, among

other things, that the record was voluminous, the defendants


____________________

2The district court selected as special master the Honorable
Walter H. McLaughlin, Sr., a retired chief judge of the
Massachusetts Superior Court. Judge McLaughlin's credentials are
conceded by all concerned.

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numerous, and the issues complex; that the master's wealth of

experience, gained while overseeing discovery, augured an economy

and efficiency that the court could not aspire to match; that the

history of the litigation foretold a lengthy and disputatious

trial, occurring at a time when the court's docket was

burgeoning; that damages were difficult to compute and would

involve a full-scale accounting; and that the imbrication between

the facts and the law, and between liability and damages, made it

impractical to bifurcate the trial and militated in favor of a

single trier. After considering the district court's detailed

response, we declined to issue an extraordinary writ.

Trial began before the master on January 12, 1988.

Because Stauble's claims turned in good measure on the

defendants' knowledge and intent, witness credibility comprised

an important aspect of the trial. After approximately thirty-

five trial days and the submission of over four hundred exhibits,

the master resolved the credibility questions, found against the

defendants, and recommended that a judgment be entered in the

amount of $756,206.41. The master's final report was submitted

on January 8, 1990, a year and a half after completion of the

trial.

Almost nine months later, the district court confirmed

the report, accepting the master's findings and recommendations

in their entirety. Thereafter, the court entered final judgment

and awarded fees in excess of $900,000 to Stauble's attorneys,

plus costs of roughly $60,000. King and Amarin Plastics have


5














made their peace with Stauble. The other defendants appeal.3

II. STANDARD OF REVIEW
II. STANDARD OF REVIEW

We believe that the fundamental issue before us

delineating the purview of the district court's power to refer

cases to masters presents a pure question of law. It is,

therefore, appropriate that we review the exercise of that power

de novo. See, e.g., Dedham Water Co. v. Cumberland Farms Dairy,
__ ____ ___ ____ ________________ _______________________

Inc., ___ F.2d ___, ___ (1st Cir. 1992) [No. 91-2116, slip op. at
____

8] (confirming that, where the question on appeal is whether the

district committed an error of law, appellate review is plenary);

Brewer v. Madigan, 945 F.2d 449, 452 (1st Cir. 1991) (same); New
______ _______ ___

England Legal Found. v. Massachusetts Port Auth., 883 F.2d 157,
_____________________ _________________________

167 (1st Cir. 1989) (same).

The standard of review is not altered by reason of our

earlier denial of appellants' petition for writ of mandamus. It

is, after all, black letter law that mandamus is not a substitute

for direct appeal. See In re Recticel Foam Corp., 859 F.2d 1000,
___ _________________________

1005 (1st Cir. 1988); United States v. Kane, 646 F.2d 4, 9 (1st
_____________ ____

Cir. 1981). Unlike an appeal, which almost always lies as a

matter of right, mandamus is an extraordinary remedy. See Allied
___ ______

Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 34 (1980) (per
____________ _____________

curiam). The writ's "currency is not profligately to be spent."

____________________

3The two appeals parallel the two underlying lawsuits. See
___
supra note 1. Although the appeals focus primarily on the
_____
propriety of the district court's reference of the liability
determination to a master, the defendants assign error in other
respects as well. Inasmuch as we remand for a new trial before
the district court, see infra, we do not pass upon the additional
___ _____
assignments of error.

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Boreri v. Fiat S.P.A., 763 F.2d 17, 26 (1st Cir. 1985). To
______ ____________

ensure that the remedy is used judiciously, courts have usually

required that a mandamus petitioner who seeks to vacate an

interlocutory order "demonstrate that something about the order,

or its circumstances, would make an end-of-case appeal

ineffectual or leave legitimate interests unduly at risk."

Recticel, 859 F.2d at 1005-06. Put another way, mandamus is
________

generally inappropriate when the petitioner has an adequate

remedy by a direct appeal following the entry of final judgment.

See In re Bushkin Assocs., Inc., 864 F.2d 241, 243 (1st Cir.
___ _____________________________

1989); United States v. Sorren, 605 F.2d 1211, 1215 (1st Cir.
_____________ ______

1979).

Because of the special standards affecting review by

way of mandamus, the general rule is that the denial of a

petition for mandamus is not ordinarily entitled to any

preclusive effect when the unsuccessful petitioner later

prosecutes his direct appeal. See, e.g., United States v.
___ ____ _____________

Shirley, 884 F.2d 1130, 1135 (9th Cir. 1989); Key v. Wise, 629
_______ ___ ____

F.2d 1049, 1054-55 (5th Cir. 1980), cert. denied, 454 U.S. 1103
_____ ______

(1981). While a different rule might obtain in a case where the

denial of mandamus specifically addressed, and rested on, the

merits of the decision below, see, e.g., Skil Corp. v. Millers
___ _____ ___________ _______

Falls Co., 541 F.2d 554, 558 (6th Cir.), cert. denied, 429 U.S.
_________ _____ ______

1029 (1976), this is not such a case. The panel that considered

the petition did not venture to decide whether the order of

reference was erroneous. Rather, the panel simply declined to


7














issue the writ on the record before it. Moreover, there was

ample reason, unrelated to the merits, for going that route,

since the order of reference, even if improvident, presented no

danger of irreparable harm.4 Compare, e.g., Bushkin, 864 F.2d
_______ ____ _______

at 243-44 (holding that an order disqualifying a party's

preferred trial counsel can effectively be reviewed following the

entry of final judgment and, therefore, does not justify review

by way of mandamus). It follows that our earlier ruling is not

entitled to any deferential weight today.

III. DISCUSSION
III. DISCUSSION

A.
A.
__

While it is axiomatic that the "judicial power of the

United States must be exercised by courts having the attributes

prescribed in Art. III," Northern Pipeline Constr. Co. v.
________________________________

Marathon Pipe Line Co., 458 U.S. 50, 59 (1982) (plurality op.),
______________________

federal judges handling civil calendars have long relied on

assistants, such as magistrates and special masters, who do not

possess the distinct attributes of Article III status.5 This

____________________

4To be sure, appellants were forced to undergo a trial
before they could test the validity of the order of reference on
direct appeal. But, we have consistently "rejected the general
burden-someness of litigation as a basis for assuming mandamus
jurisdiction." In re Justices of the Supreme Court of Puerto
_________________________________________________
Rico, 695 F.2d 17, 20 (1st Cir. 1982); see also Bushkin, 864 F.2d
____ ___ ____ _______
at 244 & n.1.

5While Article III courts also review determinations of
adjudicators who do not possess Article III stature, the Supreme
Court has long recognized distinctions between judicial
assistants (such as masters) and, for example, administrative
courts. See generally Northern Pipeline, 458 U.S. at 50; Crowell
___ _________ _________________ _______
v. Benson, 285 U.S. 22, 54-64 (1932). Our analysis today deals
______
exclusively with the former category, that is, those who assist

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reliance has grown in direct proportion to the length of the

federal court docket. Although these assistants do not satisfy

the criteria set by Article III for the exercise of judicial

power, they may appropriately perform a wide variety of

preparatory functions, e.g., overseeing discovery and
____

spearheading pretrial factual inquiries in complicated

controversies. They may also appropriately perform a variety of

consummatory functions, e.g., superintending the execution of
____

consent decrees and the implementation of structural injunctions.



The realm of Fed. R. Civ. P. 53 includes, but extends

somewhat beyond, these tasks. The rule empowers the district

court to appoint special masters for more than these limited

purposes, Fed. R. Civ. P. 53(a), but cautions that:

A reference to a master shall be the
exception and not the rule. . . . [I]n
actions to be tried without a jury, save in
matters of account and of difficult
computation of damages, a reference shall be
made only upon a showing that some
exceptional condition requires it.

Fed. R. Civ. P. 53(b). Although the parties to a civil case may

consent to the appointment of a master under any circumstances,

see Peretz v. United States, 111 S. Ct. 2661, 2669 (1991)
___ ______ _____________

("litigants may waive their personal right to have an Article III

judge preside over a civil trial"); Goldstein v. Kelleher, 728
_________ ________

F.2d 32, 35 (1st Cir.) (same), cert. denied, 469 U.S. 852 (1984),
_____ ______

____________________

judges in "the performance of specific judicial duties, as they
may arise in the progress of a cause." Ex Parte Peterson, 253
_________ ________
U.S. 300, 312 (1920).

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Rule 53 anticipates, and practice bears out, that in respect to

the conduct of trials proper, masters are most helpful where

complex quantitative issues bearing on damages must be resolved.

Indeed, the district court may appoint a master to determine

"matters of account, and of difficult computation of damages,"

Fed. R. Civ. P. 53(b), even over the objection of one or more of

the parties, without providing a further rationale for the

appointment.

When the issues referred to a master go beyond hard-to-

measure damages or an accounting, however, the waters grow more

turbid. In that event, only an "exceptional condition" can

justify a reference. Id. The Supreme Court shed some light on
___

the meaning of the term in La Buy v. Howes Leather Co., 352 U.S.
_______ _________________

249 (1957). There, the trial court referred a complex antitrust

case to a master, over objection, because the court's docket was

"extremely congested" and the trial promised to be protracted.

Id. at 253. The Supreme Court vacated the reference, holding
___

that neither a crowded calendar nor the presence of complicated

issues warranted appointment of a master. Id. at 259. The Court
___

noted that litigants in complex cases are no less entitled to

trial before a court than their counterparts in more mundane

disputes. Id. What is more, if congestion or complexity were
___

sufficient to meet the "exceptional condition" criterion

established by Rule 53, the exception would jeopardize the rule.

Id. The wisdom of La Buy is evident: crowded dockets and
___ ______

complex business disputes such as the one we confront today are


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dismayingly commonplace; thus, predicating access to auxiliary

adjudicators on the incidence of such circumstances would likely

trivialize Article III.

B.
B.
__

In this case, Stauble urges that more than mere

complexity (if an oxymoron can be forgiven) is involved. He

asserts that the interweaving of liability and damages

constitutes the requisite "exceptional condition." As a

practical matter, Stauble's position has some superficial appeal.

On closer scrutiny, however, the perceived imbrication seems to

be the same old whine in a different bottle. Saying that

liability and damages are inextricably intertwined is just an

alliterative way of saying that a given case suffers from a

particular strain of complexity.

We need not probe this point too deeply for, in the

last analysis, we cannot constitutionally forge an "exceptional

condition" test for cases of blended liability and damages. The

overriding consideration, applicable in this case, is that the

Constitution prohibits us from allowing the nonconsensual

reference of a fundamental issue of liability to an adjudicator

who does not possess the attributes that Article III demands.

Because Rule 53 cannot retreat from what Article III requires, a

master cannot supplant the district judge. Accord In re
______ ______

Bituminous Coal Operators' Ass'n, Inc., 949 F.2d 1165, 1168 (D.C.
______________________________________

Cir. 1991). Determining bottom-line legal questions is the

responsibility of the court itself. See Reilly v. United States,
___ ______ _____________


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863 F.2d 149, 158 (1st Cir. 1988); Reed v. Cleveland Bd. of
____ _________________

Educ., 607 F.2d 737, 747-48 (6th Cir. 1979); see also Madrigal
_____ ___ ____ ________

Audio Labs., Inc. v. Cello, Ltd., 799 F.2d 814, 818 (2d Cir.
__________________ ___________

1986) (that judge did not "understand anything about . . . patent

or trademark" law and was "not about to educate [him]self" was

not sufficient reason to justify appointment of a master to hear

and determine the entire case). Thus, Article III bars a

district court, "of its own motion, or upon the request of one

party," from "abdicat[ing] its duty to determine by its own

judgment the controversy presented, and devolve that duty upon

any of its officers." Kimberly v. Arms, 129 U.S. 512, 524
________ ____

(1889).

To be sure, Article III does not require that a

district judge find every fact and determine every issue of law
_____ _____

involved in a case. In respect to preparatory issues (such as,

say, the appropriateness of class certification) or consummatory,

remedy-related issues (such as, say, the performance of an

accounting), when the reference otherwise comports with Rule 53 a

master may be appointed to make findings of fact and recommend

conclusions of law. By the same token, a master who is appointed

to oversee pretrial discovery will often investigate the parties'

compliance with the relevant Federal Rules as part of his or her

factfinding. As long as the district court discerns sufficient

supporting evidence and is satisfied that the master applied the

correct legal standards, it may rely on the master's report as

part of its own determination of liability. See, e.g., Crowell
___ ____ _______


12














v. Benson, 285 U.S. 22, 51 (1932); In re Armco, Inc., 770 F.2d
______ __________________

103, 105 (8th Cir. 1985) (holding that the district court could

properly delegate broad pretrial authority, including

responsibility for conducting evidentiary hearings, to a

master);6 see also In re Bituminous, 949 F.2d at 1169 (stating
___ ____ _________________

that a trial court's use of a special master is acceptable at the

remedy-implementation stage of ongoing litigation).

Yet, there is an important distinction between such

collateral issues, on the one hand, and fundamental

determinations of liability, on the other hand. The former

comprise table setting and table clearing, while the latter

comprise the meal itself. As the Court has observed, where a

district judge does not hear and determine the main course, i.e.,
____

the meat-and-potatoes issues of liability, there is an

"abdication of the judicial function depriving the parties of a

trial before the court on the basic issues involved in the

litigation." La Buy, 352 U.S. at 256. Because determining a
______

fundamental question of liability goes beyond mere assistance and

reaches the essential judicial function identified by Article

III, Rule 53 does not allow the responsibility for making such

judgments to be delegated to masters (or other persons not of




____________________

6Inexplicably, the Armco court indicated that it would have
_____
approved the determination of dispositive pretrial motions by the
___________
master. In re Armco, 770 F.2d at 105 (dictum). The Sixth
____________
Circuit was "unable to follow the [Armco] court's reasoning" on
this point. In re United States, 816 F.2d 1083, 1091 (6th Cir.
____________________
1987). We, too, are baffled.

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Article III stature) in the face of a contemporaneous

objection.7

C.
C.
__

In plotting the intersection where Article III and Rule

53 cross, we do not write on a pristine page. The four circuit

courts that have confronted this issue in the post-Northern
________

Pipeline era have refused to allow references of liability to
________

masters over timely objection.8 See In re Bituminous, 949 F.2d
___ ________________

at 1169 (holding that, under Article III and Rule 53, the

district judge must decide "dispositive issues of fact and law");

Burlington N. R.R. v. Department of Revenue, 934 F.2d 1064, 1073
___________________ _____________________

(9th Cir. 1991) (ruling that the district court's reference of

the issue of liability to a master violated Rule 53, and its

____________________

7We think it is instructive that in drafting the Federal
Magistrates Act of 1979, codified as amended at 28 U.S.C. 631-
639 (1988), Congress was careful to avoid granting magistrates
the power to rule on dispositive motions or determine liability
without the parties' consent. Magistrates may proffer
recommendations on such matters, but, if any party objects, the
district court must make a de novo determination, which may
__ ____
include recalling witnesses where credibility is critical to the
inquiry. See 28 U.S.C. 636(b)(1)(B). We have previously
___
warned that if a magistrate's authority was not so limited, "we
would find this . . . troubling indeed." Goldstein, 728 F.2d at
_________
35.

8Some circuits have not decided the issue directly, but have
authored dicta supportive of one position or the other. Compare,
_______
e.g., Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d
____ __________________________ __________________
698, 712-13 (7th Cir.) (if objection had been preserved, the
court "might well [have] reverse[d]" reference of summary
judgment proceedings to a master), cert. denied, 469 U.S. 1018
_____ ______
(1984) with, e.g., Sims Consol., Ltd. v. Irrigation Power Equip.,
____ ____ __________________ ________________________
Inc., 518 F.2d 413, 417 (10th Cir.) (suggesting that it would
____
have been proper to refer the case to a master for trial because
of the great distance the witnesses had travelled), cert. denied,
_____ ______
423 U.S. 913 (1975). We note that Sims, unlike Jack Walters, was
____ ____________
decided before the Supreme Court handed down Northern Pipeline.
_________________

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subsequent failure independently to determine liability violated

Article III); In re United States, 816 F.2d 1083, 1092 (6th Cir.
____________________

1987) (holding that the reference of dispositive motions to a

master violated the litigants' "right to have the basic issues

heard by the district judge"); In re Armco, 770 F.2d at 105
____________

(concluding that, under Rule 53, the "district court erred in

granting the master authority to preside at trial on the merits

of this case"). But see Loral Corp. v. McDonnell Douglas Corp.,
___ ___ ___________ _______________________

558 F.2d 1130 (2d Cir. 1977) (upholding over objection, in pre-

Northern Pipeline era, district court's reference of liability
_________________

issues to a master on the ground that the importance of

classified materials to the litigation constituted an exceptional

condition).

Here, the district court, understandably frustrated

with the snail's pace of the litigation, referred the entire case

to a special master for findings of fact and conclusions of law,

with no boundaries on the master's authority and no provision for

anything remotely resembling de novo review. The court lacked
__ ____

the authority to handle the case in this fashion. Nonconsensual

reference of fundamental issues of liability to a master for

adjudication is not consonant with either Rule 53 or Article III.

D.
D.
__

Nor does the district court's summary confirmation of

the master's final report rend harmless the overly ambitious

reference. The court's entire rescript consumed less than two

pages and stated that the judge's review "was made in the light


15














of the strong presumption of validity" that he accorded to the

master's findings and conclusions. We have regularly held that

the mere "laying on of hands" by a district judge who adopts a

magistrate's or master's recommendation of liability pro forma
___ _____

cannot inoculate a proceeding against the pathology that

invariably follows from noncompliance with Article III. See Reed
___ ____

v. Board of Election Comm'rs, 459 F.2d 121, 123 (1st Cir. 1972);
__________________________

Rainha v. Cassidy, 454 F.2d 207, 208 (1st Cir. 1972); see also
______ _______ ___ ____

Burlington N. R.R., 934 F.2d at 1074 (ruling that the district
___________________

court violated Article III where its review "provided no

substantive explanation for affirming" the master's findings).

In the circumstances of this case, the judicial determination of

liability was not sufficiently independent to save the day.

Like the bark of a dog to Sherlock Holmes, see Arthur
___

Conan Doyle, Silver Blaze, in The Complete Original Illustrated
__________________________________

Sherlock Holmes 117 (1976), the indicia of independent review are
_______________

telling in this case by their absence. The district court

adopted the master's report without a hearing, without any stated

analysis of the evidence, and without any discussion of the

master's legal conclusions. A master's legal conclusions, unlike

his or her findings of fact, must be reviewed de novo. See Polin
__ ____ ___ _____

v. Dun & Bradstreet, Inc., 634 F.2d 1319, 1321 (10th Cir. 1980)
_______________________

(describing district court scrutiny of master's legal conclusions

as "essential"); D. M. W. Contracting Co. v. Stolz, 158 F.2d 405,
________________________ _____

407 (D.C. Cir. 1946) (similar), cert. denied, 330 U.S. 839
_____ ______

(1947). Moreover, the controversy between Stauble and the


16














defendants turned almost entirely on credibility and the

district court heard no witnesses. If a transcript of the

hearings before the master exists a point which is not clear

from the record there is no sign that the district court read

it.9 Finally, although the defendants objected in considerable

detail to the master's report, the district court did not comment

in any particularized way on their objections. Mindful of how

the matter was handled below, we reluctantly conclude that the

district judge's contribution to the adjudication of Stauble's

claims was not sufficiently participatory to cure the

constitutional infirmity.

IV. THE REMEDY
IV. THE REMEDY

This litigation recently mourned its fourteenth

anniversary. It has already consumed inordinate time and

resources.10 At this point, the principal beneficiaries are

____________________

9The record on appeal contains no transcript of the trial
before the master. The district court docket does not show that
a transcript was filed (or even prepared). The district judge's
rescript does not mention a transcript. In what seems a contrary
vein, the rescript recites that the court reviewed "the Special
Master's Final Report and defendants' objections thereto," along
with "the plaintiff's application for adoption of the Final
Report, supporting memorandum and appendices, and, finally, the
defendants' opposition."

10The history of these lawsuits bears out the Court's
warning that indiscriminate references of cases to masters may
actually increase, rather than shorten, the amount of time
necessary to bring litigation to fruition. See La Buy, 352 U.S.
___ ______
at 253 n.5. Although this case was trial-ready in mid-1986,
final judgment was not entered below until December 19, 1991. Of
the intervening five and one-half years, roughly eighteen months
was spent fighting over whether the case should be referred to a
master; a period of approximately eight months was needed to
produce thirty-five trial days; a year and one-half elapsed from
the trial's end to the rendition of the master's report; another

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the litigators, not the litigants: the award of attorneys' fees

already dwarfs the award of damages.

Against this lugubrious backdrop, the appellee argues

that, even if the lower court lapsed into error, we ought not to

perpetuate the litigation, but should decide it here and now. In

support of this proposition, he cites Adventures in Good Eating,
__________________________

Inc. v. Best Places to Eat, Inc., 131 F.2d 809 (7th Cir.
____ ___________________________

1942).11 There, the Seventh Circuit was "unable to find any

exceptional conditions such as the rule . . . contemplates" and

held that the district court erred in referring the entire case

to a master. Id. at 814. The court of appeals nevertheless
___

reviewed the record and upheld the master's conclusion, finding

it to be "one which was well nigh inescapable." Id.
___

Despite our fervent wish that it were otherwise, this

is not such a case. Unlike Adventures in Good Eating, the record
_________________________


____________________

eight months went by before the district court acted on the
defendants' objections to the report; and over a year passed
before the court disposed of the prevailing party's claims for
attorneys' fees and costs and entered final judgment.

11Stauble also relies on Johnson Fare Box Co. v. National
_____________________ ________
Rejectors, Inc., 269 F.2d 348 (8th Cir. 1959) for the same
________________
proposition. Such reliance is mislaid. In Johnson, the court
_______
held that the reference to a master for trial was not justified
and punished the defendants (who had sought the reference in the
first place) by taxing an extra share of the costs against them.
Id. at 351. Johnson's approach is not helpful where, as here,
___ _______
neither party requested the reference. Moreover, although the
Johnson court stated as an aside that an "improvidently or
_______
improperly granted" order of reference would not necessarily
"entitle the [losing party] to a reversal," id. (dictum), a later
___
opinion of the Eighth Circuit aligns that court with the views we
announce today and, in the bargain, divests the Johnson dictum of
_______
the significance that Stauble attaches to it. See In re Armco,
___ ___________
770 F.2d at 103.

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in this case is voluminous, the factual issues are tangled, and

the legal issues are largely factbound. On several key points,

the testimony is capable of supporting conflicting conclusions.

Credibility is vital to a reasoned determination of the

litigation. In such straitened circumstances, even the most

searching review of the record by an appellate court would not be

a satisfactory substitute for a trial conducted in accordance

with Article III. See Dedham Water, ___ F.2d at ___ [slip op. at
___ ____________

22] (appellate factfinding is generally "permissible only when no

other resolution of a factbound question would, on the compiled

record, be sustainable") (collecting cases). While we deeply

regret the colossal waste of time and resources that has plagued

this litigation, the case must be tried by the district

court.12 The Constitution offers no other principled choice.

V. CONCLUSION
V. CONCLUSION

Article III requires that the judicial power of the

United States be exercised by federal judges appointed for life

tenure and protected from diminished compensation. Although

parties to litigation may agree, at the behest of a judge or at

their own contrivance, to make alternative arrangements for


____________________

12At oral argument before us, Stauble conceded that, if we
found the proceedings below to have been constitutionally
deficient and declined to decide the merits ourselves, the
appropriate remedy on the facts of this case would be a full new
trial before the district court. Because the parties agree on
this point, we leave for another day the possibility that a
master's findings and conclusions on a fundamental issue of
liability might perhaps be salvaged, even after appeal, by having
the district court conduct a deeper, more participatory sort of
review.

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dispute resolution at the hands of judicial assistants or even

private citizens, parties who object to such a departure may not

be forced to have the fundamental issues of their disagreement,

which would otherwise come within the jurisdiction of an Article

III court, decided by non-Article III surrogates.13 It follows

that, in this instance, the district court delegated too much

judicial power by asking a special master, over the defendants'

timely objection, to determine the entire case, liability

included.

We need go no further. The order of reference is

reversed, the judgment below is vacated, and the cause is

remanded to the district court for a new trial. All parties

shall bear their own costs.



So Ordered.
So Ordered.
__________


















____________________

13A judge may, of course, refer the fundamental issue of
liability to a master without running afoul of the Constitution,
so long as the judge is prepared to afford de novo review or
__ ____
otherwise to honor Article III's commands.

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