United States Court of Appeals
For the First Circuit
No. 02-1339
IN RE ATLANTIC PIPE CORPORATION,
Petitioner.
ON PETITION FOR A WRIT OF MANDAMUS
TO THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., Senior U.S. District Judge]
Before
Boudin, Chief Judge,
Selya, Circuit Judge,
and Greenberg,* Senior Circuit Judge.
Fernando J. Fornaris, with whom Cancio, Nadal, Rivera, Diaz &
Berríos was on brief, for petitioner.
Jose L. Gonzalez-Castañer, with whom Gonzalez-Castañer,
Morales & Guzman, Hector Saldaña Egozcue, and Saldaña, Saldaña-
Egozcue & Vallecillo, PSC were on brief, for respondents United
States Fidelity & Guaranty Co. and United States Surety and
Indemnity Co.
Carlos A. Rodríguez Vidal, with whom Jessica Hernández Sierra
and Goldman, Antonetti & Cordova, P.S.C. were on brief, for
respondent Thames Water International, Ltd.
Salvador Antonetti Zequeira, with whom Luis A. Oliver-
Fraticelli and Fiddler, Gonzalez & Rodriguez LLP were on brief, for
respondents Thames-Dick Superaqueduct Partners and Dick Corp.
Diane K. Kanca for respondent Zurich Ins. Co.
September 18, 2002
_____________
*Of the Third Circuit, sitting by designation.
SELYA, Circuit Judge. This mandamus proceeding1 requires
us to resolve an issue of importance to judges and practitioners
alike: Does a district court possess the authority to compel an
unwilling party to participate in, and share the costs of, non-
binding mediation conducted by a private mediator? We hold that a
court may order mandatory mediation pursuant to an explicit
statutory provision or local rule. We further hold that where, as
here, no such authorizing medium exists, a court nonetheless may
order mandatory mediation through the use of its inherent powers as
long as the case is an appropriate one and the order contains
adequate safeguards. Because the mediation order here at issue
lacks such safeguards (although it does not fall far short), we
vacate it and remand the matter for further proceedings.
I. BACKGROUND
In January 1996, Thames-Dick Superaqueduct Partners
(Thames-Dick) entered into a master agreement with the Puerto Rico
Aqueduct and Sewer Authority (PRASA) to construct, operate, and
maintain the North Coast Superaqueduct Project (the Project).
Thames-Dick granted subcontracts for various portions of the work,
including a subcontract for construction management to Dick Corp.
1
Although the petition seeks the issuance of a writ of
mandamus, the relief sought is more in the nature of a writ of
prohibition. Because the two writs have much in common — one is
merely the obverse of the other — we follow past practice and make
no distinction between them. See, e.g., United States v. Horn, 29
F.3d 754, 769 n.18 (1st Cir. 1994).
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of Puerto Rico (Dick-PR), a subcontract for the operation and
maintenance of the Project to Thames Water International, Ltd.
(Thames Water), and a subcontract for the fabrication of pipe to
Atlantic Pipe Corp. (APC). After the Project had been built, a
segment of the pipeline burst. Thames-Dick incurred significant
costs in repairing the damage. Not surprisingly, it sought to
recover those costs from other parties. In response, one of
PRASA's insurers filed a declaratory judgment action in a local
court to determine whether Thames-Dick's claims were covered under
its policy. The litigation ballooned, soon involving a number of
parties and a myriad of issues above and beyond insurance coverage.
On April 25, 2001, the hostilities spilled over into
federal court. Two entities beneficially interested in the master
agreement — CPA Group International and Chiang, Patel & Yerby, Inc.
(collectively CPA) — sued Thames-Dick, Dick-PR, Thames Water, and
various insurers in the United States District Court for the
District of Puerto Rico, seeking remuneration for consulting
services rendered in connection with repairs to the Project. A
googol of claims, counterclaims, cross-claims, and third-party
complaints followed. Some of these were brought against APC (the
petitioner here). To complicate matters, one of the defendants
moved to dismiss on grounds that, inter alia, (1) CPA had failed to
join an indispensable party whose presence would destroy diversity
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jurisdiction, and (2) the existence of the parallel proceeding in
the local court counseled in favor of abstention.
While this motion was pending before the district court,
Thames-Dick asked that the case be referred to mediation and
suggested Professor Eric Green as a suitable mediator. The
district court granted the motion over APC's objection and ordered
non-binding mediation to proceed before Professor Green. The court
pronounced mediation likely to conserve judicial resources;
directed all parties to undertake mediation in good faith; stayed
discovery pending completion of the mediation; and declared that
participation in the mediation would not prejudice the parties'
positions vis-à-vis the pending motion or the litigation as a
whole. The court also stated that if mediation failed to produce
a global settlement, the case would proceed to trial.
After moving unsuccessfully for reconsideration of the
mediation order, APC sought relief by way of mandamus. Its
petition alleged that the district court did not have the authority
to require mediation (especially in light of unresolved questions
as to the court's subject-matter jurisdiction) and, in all events,
could not force APC to pay a share of the expenses of the
mediation. We invited the other parties and the district judge to
respond. See Fed. R. App. P. 21(b)(4)-(5). Several entities
(including Thames-Dick, Dick-P.R., and Thames Water) opposed the
petition. Two others (third-party defendants United States
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Fidelity & Guaranty Company and United Surety and Indemnity
Company) filed a brief in support of APC. We assigned the case to
the oral argument calendar and stayed the contemplated mediation
pending our review.
Prior to argument in this court, two notable developments
occurred. First, the district court considered and rejected the
challenges to its exercise of jurisdiction. Second, APC rejected
an offer by Thames-Dick to pay its share of the mediator's fees.
II. JURISDICTION
In an effort to shut off further debate, the respondents
asseverate that mandamus is improper because APC will not suffer
irreparable harm in the absence of such relief. They rest this
asseveration on the notion that "[m]andamus is ordinarily
appropriate [only] in those rare cases in which the issuance (or
nonissuance) of an order presents a question anent the limits of
judicial power, poses some special risk of irreparable harm to the
appellant, and is palpably erroneous." United States v. Horn, 29
F.3d 754, 769 (1st Cir. 1994). The problem, however, is that these
limitations typically apply only to supervisory mandamus. Id. at
769 & n.19. In the tiny class of cases in which advisory mandamus
is appropriate, irreparable harm need not be shown. Id. at 769-70.
We believe that this case is fit for advisory mandamus
because the extent of a trial court's power to order mandatory
mediation presents a systemically important issue as to which this
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court has not yet spoken. See In re Prov. Journal Co., 293 F.3d 1,
9 (1st Cir. 2002) (discussing criteria for advisory mandamus).
Moreover, that issue is capable of significant repetition prior to
effective review. See Jennifer O'Hearne, Comment, Compelled
Participation in Innovative Pretrial Proceedings, 84 Nw. U. L. Rev.
290, 317 (1989) (noting that, as a practical matter, lawyers often
are unable to challenge pretrial innovations even when they may be
invalid). That fact militates in favor of advisory mandamus. See
Horn, 29 F.3d at 770. We conclude, therefore, that invoking
advisory mandamus is prudent under the circumstances.
Consequently, the existence vel non of irreparable harm is a non-
issue. We turn, then, to the merits.
III. THE MERITS
There are four potential sources of judicial authority
for ordering mandatory non-binding mediation of pending cases,
namely, (a) the court's local rules, (b) an applicable statute, (c)
the Federal Rules of Civil Procedure, and (d) the court's inherent
powers. Because the district court did not identify the basis of
its assumed authority, we consider each of these sources.
A. The Local Rules.
A district court's local rules may provide an appropriate
source of authority for ordering parties to participate in
mediation. See Rhea v. Massey-Ferguson, Inc., 767 F.2d 266, 268-69
(6th Cir. 1985) (per curiam). In Puerto Rico, however, the local
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rules contain only a single reference to any form of alternative
dispute resolution (ADR). That reference is embodied in the
district court's Amended Civil Justice Expense and Delay Reduction
Plan (CJR Plan). See D.P.R. R. app. III.
The district court adopted the CJR Plan on June 14, 1993,
in response to the directive contained in the Civil Justice Reform
Act of 1990 (CJRA), 28 U.S.C. §§ 471-482. Rule V of the CJR Plan
states:
Pursuant to 28 U.S.C. § 473(b)(4), this
Court shall adopt a method of Alternative
Dispute Resolution ("ADR") through mediation
by a judicial officer.
Such a program would allow litigants to
obtain from an impartial third party — the
judicial officer as mediator — a flexible non-
binding, dispute resolution process to
facilitate negotiations among the parties to
help them reach settlement.
D.P.R. R. app. III (R. V.). In addition to specifying who may act
as a mediator, Rule V also limns the proper procedure for mediation
sessions and assures confidentiality. See id.
The respondents concede that the mediation order in this
case falls outside the boundaries of the mediation program
envisioned by Rule V. It does so most noticeably because it
involves mediation before a private mediator, not a judicial
officer. Seizing upon this discrepancy, APC argues that the local
rules limit the district court in this respect, and that the court
exceeded its authority thereunder by issuing a non-conforming
mediation order (i.e., one that contemplates the intervention of a
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private mediator). The respondents counter by arguing that the
rule does not bind the district court because, notwithstanding the
unambiguous promise of the CJR Plan (which declares that the
district court "shall adopt a method of Alternative Dispute
Resolution"), no such program has been adopted to date.
This is a powerful argument. APC does not contradict the
respondents' assurance that the relevant portion of the CJR Plan
has remained unimplemented, and we take judicial notice that there
is no formal, ongoing ADR program in the Puerto Rico federal
district court. Because that is so, we conclude that the District
of Puerto Rico has no local rule in force that dictates the
permissible characteristics of mediation orders. Consequently,
APC's argument founders.2
B. The ADR Act.
There is only one potential source of statutory authority
for ordering mandatory non-binding mediation here: the Alternative
2
This holding renders it unnecessary for us to discuss the
respondents' alternate contention that the CJR Plan is a dead
letter because the legislation that prompted its enactment — the
CJRA — expired in 1997. See, e.g., Carl Tobias, Did the Civil
Justice Reform Act of 1990 Actually Expire?, 31 U. Mich. J.L.
Reform 887, 892 (1998) (exploring the uncertainty regarding whether
the CJRA expired and whether local plans adopted pursuant to it are
still effective). By like token, this holding renders moot the
respondents' claim that the district court could disregard Appendix
III even if an ADR program were in force. See D.P.R. R. 105 ("When
a judge of this court issues any order in a specific case which is
not consistent with these rules, such order shall constitute a
suspension of these rules for such case and only to the extent that
it is inconsistent therewith."). Accordingly, we take no view of
the meaning or validity of Local Rule 105.
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Dispute Resolution Act of 1998 (ADR Act), 28 U.S.C. §§ 651-658.
Congress passed the ADR Act to promote the utilization of
alternative dispute resolution methods in the federal courts and to
set appropriate guidelines for their use. The Act lists mediation
as an appropriate ADR process. Id. § 651(a). Moreover, it
sanctions the participation of "professional neutrals from the
private sector" as mediators. Id. § 653(b). Finally, the Act
requires district courts to obtain litigants' consent only when
they order arbitration, id. § 652(a), not when they order the use
of other ADR mechanisms (such as non-binding mediation).
Despite the broad sweep of these provisions, the Act is
quite clear that some form of the ADR procedures it endorses must
be adopted in each judicial district by local rule. See id. §
651(b) (directing each district court to "devise and implement its
own alternative dispute resolution program, by local rule adopted
under [28 U.S.C.] section 2071(a), to encourage and promote the use
of alternative dispute resolution in its district"). In the
absence of such local rules, the ADR Act itself does not authorize
any specific court to use a particular ADR mechanism. Because the
District of Puerto Rico has not yet complied with the Act's
mandate, the mediation order here at issue cannot be justified
under the ADR Act.
The respondents essay an end run around this lacuna:
they contend (borrowing a phrase from the court below) that the
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"spirit" of the ADR Act authorizes the mediation order because the
Act was intended to promote experimentation with ADR techniques.
We reject this attempt to press the ADR Act into service by
indirection.
Although the ADR Act was designed to promote the use of
ADR techniques, Congress chose a very well-defined path: it
granted each judicial district, rather than each individual judge,
the authority to craft an appropriate ADR program. In other words,
Congress permitted experimentation, but only within the
disciplining format of district-wide local rules adopted with
notice and a full opportunity for public comment. See 28 U.S.C. §
2071(b). To say that the Act authorized each district judge to
disregard a district-wide ADR plan (or the absence of one) and
fashion innovative procedures for use in specific cases is simply
too much of a stretch.
We add, however, that although the respondents cannot use
the ADR Act as a justification, neither can APC use it as a
nullification. Noting that the Act requires the adoption of local
rules establishing a formal ADR program, APC equates the absence of
such rules with the absence of power to employ an ADR procedure
(say, mediation) in a specific case. But that is wishful thinking:
if one assumes that district judges possessed the power to require
mediation prior to the passage of the ADR Act, there is nothing in
the Act that strips them of that power. After all, even the
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adoption of a federal procedural rule does not implicitly abrogate
a district court's inherent power to act merely because the rule
touches upon the same subject matter. See Chambers v. Nasco, Inc.,
501 U.S. 32, 42-43 (1991) (rejecting the argument that the adoption
of various provisions of the Civil Rules eliminated the district
court's inherent power to impose other sanctions); Link v. Wabash
R.R., 370 U.S. 626, 630 (1963) (explaining that neither the
permissive language of Fed. R. Civ. P. 41(b) nor the policy behind
it justified a conclusion that it was meant to limit the district
courts' inherent power to dismiss a case for want of prosecution).
The case before us is analogous to Chambers and Link.
Even though Congress may cabin the district courts' inherent
powers, its intention to do so must be clear and unmistakable. See
Weinberger v. Romero-Barcelo, 456 U.S. 305, 313 (1982). Not so
here: we know of nothing in either the ADR Act or the policies
that undergird it that can be said to restrict the district courts'
authority to engage in the case-by-case deployment of ADR
procedures. Hence, we conclude that where, as here, there are no
implementing local rules, the ADR Act neither authorizes nor
prohibits the entry of a mandatory mediation order.
C. The Civil Rules.
The respondents next argue that the district court
possessed the authority to require mediation by virtue of the
Federal Rules of Civil Procedure. They concentrate their attention
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on Fed. R. Civ. P. 16, which states in pertinent part that "the
court may take appropriate action[] with respect to . . . (9)
settlement and the use of special procedures to assist in resolving
the dispute when authorized by statute or local rule . . . ." Fed.
R. Civ. P. 16(c)(9). But the words "when authorized by statute or
local rule" are a frank limitation on the district courts'
authority to order mediation thereunder,3 and we must adhere to
that circumscription. See Schlagenhauf v. Holder, 379 U.S. 104,
121 (1964) (explaining that the Civil Rules "should not be expanded
by disregarding plainly expressed limitations"). Because there is
no statute or local rule authorizing mandatory private mediation in
the District of Puerto Rico, see supra Parts III(A)-(B), Rule
16(c)(9) does not assist the respondents' cause.4
3
We think it is pertinent here to quote the advisory
committee's note:
The rule acknowledges the presence of statutes
and local rules or plans that may authorize
use of some [ADR] procedures even when not
agreed to by the parties. The rule does not
attempt to resolve questions as to the extent
a court would be authorized to require such
proceedings as an exercise of its inherent
powers.
Fed. R. Civ. P. 16, advisory committee's note (1993 Amendment)
(citations omitted).
4
The cases that the respondents cite for the proposition that
Rule 16 sanctions mandatory ADR procedures even in the absence of
an enabling statute or local rule are inapposite. All of them
predate the 1993 amendments, which added the pertinent language to
Rule 16. See, e.g., Fed. Reserve Bank v. Carey-Canada, Inc., 123
F.R.D. 603, 606 (D. Minn. 1988); Arabian Am. Oil Co. v. Scarfone,
119 F.R.D. 448, 448-49 (M.D. Fla. 1988).
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D. Inherent Powers.
Even apart from positive law, district courts have
substantial inherent power to manage and control their calendars.
See Link, 370 U.S. at 630-31; see generally Brockton Sav. Bank v.
Peat, Marwick, Mitchell & Co., 771 F.2d 5, 11 (1st Cir. 1985)
(explaining that "the rules of civil procedure do not completely
describe and limit the power of district courts"). This inherent
power takes many forms. See Fed. R. Civ. P. 83(b) (providing that
judges may regulate practice in any manner consistent with federal
law and applicable rules). By way of illustration, a district
court may use its inherent power to compel represented clients to
attend pretrial settlement conferences, even though such a practice
is not specifically authorized in the Civil Rules. See Heileman
Brewing Co. v. Joseph Oat Corp., 871 F.2d 648, 650 (7th Cir. 1989)
(en banc).
Of course, a district court's inherent powers are not
infinite. There are at least four limiting principles. First,
inherent powers must be used in a way reasonably suited to the
enhancement of the court's processes, including the orderly and
expeditious disposition of pending cases. Coyante v. P.R. Ports
Auth., 105 F.3d 17, 23 (1st Cir. 1997). Second, inherent powers
cannot be exercised in a manner that contradicts an applicable
statute or rule. Chambers, 501 U.S. at 47. Third, the use of
inherent powers must comport with procedural fairness. Id. at 50.
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And, finally, inherent powers "must be exercised with restraint and
discretion." Id. at 44.
At one time, the inherent power of judges to compel
unwilling parties to participate in ADR procedures was a hot-button
issue for legal scholars. Compare, e.g., O'Hearne, supra at 320
(arguing that inherent power should not be used to compel
participation in pretrial settlement proceedings), with Lucille M.
Ponte, Putting Mandatory Summary Jury Trial Back on the Docket:
Recommendations on the Exercise of Judicial Authority, 63 Fordham
L. Rev. 1069, 1094 (1995) (urging the opposite conclusion).
Although many federal district courts have forestalled further
debate by adopting local rules that authorize specific ADR
procedures and outlaw others, e.g., D.N.H. R. 53.1 (permitting
mandatory mediation); D. Me. R. 83.11 (permitting only voluntary
mediation); D. Mass. R. 16.4 (permitting mandatory summary jury
trials but only voluntary mediation), the District of Puerto Rico
is not among them. Thus, we have no choice but to address the
question head-on.
We begin our inquiry by examining the case law. In
Strandell v. Jackson County, 838 F.2d 884 (7th Cir. 1987), the
Seventh Circuit held that a district court does not possess
inherent power to compel participation in a summary jury trial.5
5
A summary jury trial is an ADR technique in which the
opposing attorneys present their case, in abbreviated form, to a
mock jury, which proceeds to render a non-binding verdict. See In
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In the court's view, Fed. R. Civ. P. 16 occupied the field and
prevented a district court from forcing "an unwilling litigant [to]
be sidetracked from the normal course of litigation." Id. at 887.
But the group that spearheaded the subsequent revision of Rule 16
explicitly rejected that interpretation. See Fed. R. Civ. P. 16,
advisory committee's note (1993 Amendment) ("The [amended] rule
does not attempt to resolve questions as to the extent a court
would be authorized to require [ADR] proceedings as an exercise of
its inherent powers."). Thus, we do not find Strandell persuasive
on this point.
The Strandell court also expressed concern that summary
jury trials would undermine traditional discovery and privilege
rules by requiring certain disclosures prior to an actual trial.
838 F.2d at 888. We find this concern unwarranted. Because a
summary jury trial (like a non-binding mediation) does not require
any disclosures beyond what would be required in the ordinary
course of discovery, its principal disadvantage to the litigants is
that it may prevent them from saving surprises for the time of
trial. Since trial by ambush is no longer in vogue, that interest
does not deserve protection. See Fed. Reserve Bank v. Carey-
Canada, Inc., 123 F.R.D. 603, 606 (D. Minn. 1988).
re NLO, Inc., 5 F.3d 154, 156 (6th Cir. 1993); see generally Thomas
D. Lambros, The Summary Jury Trial Report to the Judicial
Conference of the United States, 103 F.R.D. 461 (1984).
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Relying on policy arguments, the Sixth Circuit also has
found that district courts do not possess inherent power to compel
participation in summary jury trials. See In re NLO, Inc., 5 F.3d
154, 157-58 (6th Cir. 1993). The court thought the value of a
summary jury trial questionable when parties do not engage in the
process voluntarily, and it worried that "too broad an
interpretation of the federal courts' inherent power to regulate
their procedure . . . encourages judicial high-handedness . . . ."
Id. at 158 (citation and internal quotation marks omitted).
The concerns articulated by these two respected courts
plainly apply to mandatory mediation orders. When mediation is
forced upon unwilling litigants, it stands to reason that the
likelihood of settlement is diminished. Requiring parties to
invest substantial amounts of time and money in mediation under
such circumstances may well be inefficient. Cf. Richard A. Posner,
The Summary Jury Trial and Other Methods of Alternative Dispute
Resolution: Some Cautionary Observations, 53 U. Chi. L. Rev. 366,
369-72 (1986) (offering a model to evaluate ADR techniques in terms
of their capacity to encourage settlements).
The fact remains, however, that none of these
considerations establishes that mandatory mediation is always
inappropriate. There may well be specific cases in which such a
protocol is likely to conserve judicial resources without
significantly burdening the objectors' rights to a full, fair, and
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speedy trial. Much depends on the idiosyncracies of the particular
case and the details of the mediation order.
In some cases, a court may be warranted in believing that
compulsory mediation could yield significant benefits even if one
or more parties object. After all, a party may resist mediation
simply out of unfamiliarity with the process or out of fear that a
willingness to submit would be perceived as a lack of confidence in
her legal position. See Campbell C. Hutchinson, The Case for
Mandatory Mediation, 42 Loy. L. Rev. 85, 89-90 (1996). In such an
instance, the party's initial reservations are likely to evaporate
as the mediation progresses, and negotiations could well produce a
beneficial outcome, at reduced cost and greater speed, than would
a trial. While the possibility that parties will fail to reach
agreement remains ever present, the boon of settlement can be worth
the risk.
This is particularly true in complex cases involving
multiple claims and parties. The fair and expeditious resolution
of such cases often is helped along by creative solutions —
solutions that simply are not available in the binary framework of
traditional adversarial litigation. Mediation with the assistance
of a skilled facilitator gives parties an opportunity to explore a
much wider range of options, including those that go beyond
conventional zero-sum resolutions. Mindful of these potential
advantages, we hold that it is within a district court's inherent
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power to order non-consensual mediation in those cases in which
that step seems reasonably likely to serve the interests of
justice. Cf. Reilly v. United States, 863 F.2d 149, 156-57 (1st
Cir. 1988) (finding that district courts have inherent power to
appoint technical advisors in especially complex cases).
E. The Mediation Order.
Our determination that the district courts have inherent
power to refer cases to non-binding mediation is made with a
recognition that any such order must be crafted in a manner that
preserves procedural fairness and shields objecting parties from
undue burdens. We thus turn to the specifics of the mediation
order entered in this case. As with any exercise of a district
court's inherent powers, we review the entry of that order for
abuse of discretion. See Chambers, 501 U.S. at 50; Reilly, 863
F.2d at 156.
As an initial matter, we agree with the lower court that
the complexity of this case militates in favor of ordering
mediation. At last count, the suit involves twelve parties,
asserting a welter of claims, counterclaims, cross-claims, and
third-party claims predicated on a wide variety of theories. The
pendency of nearly parallel litigation in the Puerto Rican courts,
which features a slightly different cast of characters and claims
that are related to but not completely congruent with those
asserted here, further complicates the matter. Untangling the
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intricate web of relationships among the parties, along with the
difficult and fact-intensive arguments made by each, will be time-
consuming and will impose significant costs on the parties and the
court. Against this backdrop, mediation holds out the dual
prospect of advantaging the litigants and conserving scarce
judicial resources.
In an effort to parry this thrust, APC raises a series of
objections. Its threshold claim is that the district court erred
in ordering mediation before resolving a pending motion to dismiss
for lack of subject-matter jurisdiction (or, alternatively, to
abstain). See, e.g., Bouchard Transp. Co. v. Fla. Dep't of Envtl.
Prot., 91 F.3d 1445, 1448-49 (11th Cir. 1996) (vacating a mediation
order and directing the lower court first to consider the objecting
party's assertion of Eleventh Amendment immunity).
Given what has transpired, this argument is fruitless.
While this proceeding was pending, the district court denied the
motion in question and confirmed the existence of its subject-
matter jurisdiction. See CPA Group Int'l, Inc. v. Am. Int'l Ins.
Co., No. 01-1483, slip op. at 16-25 (D.P.R. May 23, 2002). Thus,
even if it were error to enter the mediation order before passing
upon the motion to dismiss,6 the error was harmless: it would be
6
Although we take no view of this aspect of APC's argument, we
note that when a jurisdictional question involves disputed facts,
the district court sometimes "may defer resolution of the
jurisdictional issue until the time of trial." Valentin v. Hosp.
Bella Vista, 254 F.3d 358, 363 n.3 (1st Cir. 2001). How this
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an empty exercise to vacate the mediation order on this ground when
the lower court has already rejected the challenges to its exercise
of jurisdiction. See, e.g., Gibbs v. Buck, 307 U.S. 66, 78 (1939);
Aoude v. Mobil Oil Corp., 862 F.2d 890, 895 (1st Cir. 1988).
Next, APC posits that the appointment of a private
mediator proposed by one of the parties is per se improper (and,
thus, invalidates the order). We do not agree. The district court
has inherent power to "appoint persons unconnected with the court
to aid judges in the performance of specific judicial duties." Ex
parte Peterson, 253 U.S. 300, 312 (1920). In the context of non-
binding mediation, the mediator does not decide the merits of the
case and has no authority to coerce settlement. Thus, in the
absence of a contrary statute or rule, it is perfectly acceptable
for the district court to appoint a qualified and neutral private
party as a mediator. The mere fact that the mediator was proposed
by one of the parties is insufficient to establish bias in favor of
that party. Cf. TechSearch, L.L.C. v. Intel Corp., 286 F.3d 1360,
1379 n.3 (Fed. Cir. 2002) (noting that technical advisors typically
would be selected from a list of candidates submitted by the
parties).
We hasten to add that the litigants are free to challenge
the qualifications or neutrality of any suggested mediator (whether
proposition affects a trial court's ability to issue interim orders
designed to move litigation forward while it ponders a challenge to
its jurisdiction is a matter that we leave for another day.
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or not nominated by a party to the case). APC, for example, had a
full opportunity to present its views about the suggested mediator
both in its opposition to the motion for mediation and in its
motion for reconsideration of the mediation order. Despite these
opportunities, APC offered no convincing reason to spark a belief
that Professor Green, a nationally recognized mediator with
significant experience in sprawling cases, is an unacceptable
choice. When a court enters a mediation order, it necessarily
makes an independent determination that the mediator it appoints is
both qualified and neutral. Because the court made that implicit
determination here in a manner that was procedurally fair (if not
ideal), we find no abuse of discretion in its selection of
Professor Green.7
APC also grouses that it should not be forced to share
the costs of an unwanted mediation. We have held, however, that
courts have the power under Fed. R. Civ. P. 26(f) to issue pretrial
cost-sharing orders in complex litigation. See In re San Juan
Dupont Plaza Hotel Fire Litig., 994 F.2d 956, 965 (1st Cir. 1993).
Given the difficulties facing trial courts in cases involving
multiple parties and multiple claims, we are hesitant to limit that
power to the traditional discovery context. See id. This is
7
We say "not ideal" because, in an ideal world, it would be
preferable for the district court, before naming a mediator, to
solicit the names of potential nominees from all parties and to
provide an opportunity for the parties to comment upon each others'
proposed nominees.
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especially true in complicated cases, where the potential value of
mediation lies not only in promoting settlement but also in
clarifying the issues remaining for trial.
The short of the matter is that, without default cost-
sharing rules, the use of valuable ADR techniques (like mediation)
becomes hostage to the parties' ability to agree on the concomitant
financial arrangements. This means that the district court's
inherent power to order private mediation in appropriate cases
would be rendered nugatory absent the corollary power to order the
sharing of reasonable mediation costs. To avoid this pitfall, we
hold that the district court, in an appropriate case, is empowered
to order the sharing of reasonable costs and expenses associated
with mandatory non-binding mediation.
The remainder of APC's arguments are not so easily
dispatched. Even when generically appropriate, a mediation order
must contain procedural and substantive safeguards to ensure
fairness to all parties involved. The mediation order in this case
does not quite meet that test. In particular, the order does not
set limits on the duration of the mediation or the expense
associated therewith.8
8
We do not assign significant weight to Thames-Dick's belated
offer to pay APC's share of the mediator's fee. There are other
expenses involved, and there is too much of a risk that "free
rider" status will itself breed problems.
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We need not wax longiloquent. As entered, the order
simply requires the parties to mediate; it does not set forth
either a timetable for the mediation or a cap on the fees that the
mediator may charge. The figures that have been bandied about in
the briefs — $900 per hour or $9,000 per mediation day — are quite
large and should not be left to the mediator's whim. Relatedly,
because the mediator is to be paid an hourly rate, the court should
have set an outside limit on the number of hours to be devoted to
mediation. Equally as important, it is trite but often true that
justice delayed is justice denied. An unsuccessful mediation will
postpone the ultimate resolution of the case — indeed, the district
court has stayed all discovery pending the completion of the
mediation — and, thus, prolong the litigation. For these reasons,
the district court should have set a definite time frame for the
mediation.
The respondents suggest that the district court did not
need to articulate any limitations in its mediation order because
the mediation process will remain under the district court's
ultimate supervision; the court retains the ability to curtail any
excessive expenditures of time or money; and a dissatisfied party
can easily return to the court at any time. While this might be
enough of a safeguard in many instances, the instant litigation is
sufficiently complicated and the mediation efforts are likely to be
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sufficiently expensive that, here, reasonable time limits and fee
constraints, set in advance, are appropriate.9
A court intent on ordering non-consensual mediation
should take other precautions as well. For example, the court
should make it clear (as did the able district court in this case)
that participation in mediation will not be taken as a waiver of
any litigation position. The important point is that the
protections we have mentioned are not intended to comprise an
exhaustive list, but, rather, to illustrate that when a district
court orders a party to participate in mediation, it should take
care to assuage legitimate concerns about the possible negative
consequences of such an order.
To recapitulate, we rule that a mandatory mediation order
issued under the district court's inherent power is valid in an
appropriate case. We also rule that this is an appropriate case.
We hold, however, that the district court's failure to set
reasonable limits on the duration of the mediation and on the
mediator's fees dooms the decree.
IV. CONCLUSION
We admire the district court's pragmatic and innovative
approach to this massive litigation. Our core holding — that
9
We do not mean that a mediation order in such a case must be
etched in stone. The mediator and the parties remain free, for
good cause shown, to ask the district court to extend or modify the
original order.
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ordering mandatory mediation is a proper exercise of a district
court's inherent power, subject, however, to a variety of terms and
conditions — validates that approach. We are mindful that this
holding is in tension with the opinions of the Sixth and Seventh
Circuits in NLO and Strandell, respectively, but we believe it is
justified by the important goal of promoting flexibility and
creative problem-solving in the handling of complex litigation.
That said, the need of the district judge in this case to
construct his own mediation regime ad hoc underscores the greater
need of the district court as an institution to adopt an ADR
program and memorialize it in its local rules. In the ADR Act,
Congress directed that "[e]ach United States district court shall
authorize, by local rule under section 2071(a), the use of
alternative dispute resolution processes in all civil actions . .
. ." 28 U.S.C. § 651(b). While Congress did not set a firm
deadline for compliance with this directive, the statute was
enacted four years ago. This omission having been noted, we are
confident that the district court will move expediently to bring
the District of Puerto Rico into compliance.
We need go no further. For the reasons set forth above,
we vacate the district court's mediation order and remand for
further proceedings consistent with this opinion. The district
court is free to order mediation if it continues to believe that
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such a course is advisable or, in the alternative, to proceed with
discovery and trial.
Vacated and remanded. Costs shall be taxed in favor of
the petitioner.
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In Re Atlantic Pipe Corp.
Court: Court of Appeals for the First Circuit
Date filed: 2002-09-18
Citations: 304 F.3d 135
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