UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 94-10938
_____________________
JOHNNIE DAWSON,
Plaintiff,
versus
UNITED STATES OF AMERICA,
Defendant-Appellant,
and
R. WAYNE HUGHES and
CLAUDE D. BROWN,
Appellants.
_________________________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
_________________________________________________________________
(October 31, 1995)
Before SMITH, BARKSDALE, and BENAVIDES, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
At issue are sanctions imposed by United States District Judge
John H. McBryde against Assistant United States Attorneys R. Wayne
Hughes and Claude D. Brown, based on a local rule that civil
litigants "make a good-faith effort to settle" -- in this instance,
a pro se Federal Tort Claims Act claim by a federal prisoner for
injuries from voluntary recreation, in which Hughes and Brown were
counsel for the United States. The district court abused its
discretion; we REVERSE.
I.
In early 1992, Johnnie Dawson, incarcerated at the Fort Worth
Federal Correctional Institution, filed, pro se, an FTCA action,
alleging that, while pursuing a fly ball in a prison softball game,
he collided with a pole and was injured. Because of the district
court's meticulous recitation of, and reliance upon, numerous facts
and actions (and non-actions) by the appellant attorneys, and
especially because of its numerous findings of fact (made from the
bench and in two opinions totalling 70 pages, and quoted
extensively in this opinion) extremely critical not only of their
conduct, but of them personally, it is necessary to develop
similarly the facts in great detail. Moreover, the juxtaposition
of the basis for the action (pro se prisoner suit for injury while
chasing fly ball) against the resulting time, expense, and
potential injury to the professional reputations of two attorneys
for the United States, underscores the increasing need for better
means of resolving prisoner suits.
In his complaint, Dawson alleged that, while chasing the ball,
he injured his shoulder when he tripped on a cord located three
feet away from, and parallel to, an unpadded pole in the outfield,
and collided with the pole; that he had surgery on his shoulder,
but had not regained full control and use of it; and that he had
sustained "severe mental distress and emotional injury". Dawson
claimed that his injuries were caused by the negligence of prison
employees in failing to warn about, as well as mark and pad, the
- 2 -
pole and cord; and he sought $600,000 in actual, and $300,000 in
punitive, damages, plus attorney's fees.
Attached as an exhibit to the complaint was the Bureau of
Prisons' detailed denial of Dawson's administrative claim for $1
million. The denial was based, inter alia, on the conclusion that
Dawson's "inattention to [his] location while catching the fly ball
was the proximate cause of [his] injury".
In its answer, the Government admitted that Dawson was injured
by the collision, but denied liability. As affirmative defenses,
it asserted that the complaint failed to state a claim upon which
relief could be granted; that Dawson was not entitled to, inter
alia, punitive damages or attorney's fees; that his injuries were
not caused by the Government's negligence, but by his own; and that
recovery was barred under Texas law, because Dawson's negligence
was equal to or greater than any negligence of the Government.
After the Government answered, a district court order issued
for the parties to confer and submit a joint status report. Among
other things, they (including a representative with unlimited
settlement authority) and their counsel were to meet, prior to
filing the report, in order to discuss settlement; and they were
instructed that "[t]he court expects the parties to comply with the
requirements of Local Rule 9.1 that the parties make a good-faith
effort to settle".1 The report was, inter alia, to
1
Local Rule 9.1(a) of the United States District Court for the
Northern District of Texas, which has been in effect since December
15, 1977, provides:
(a) General Policy. The parties in every
- 3 -
detail[] the date on which the settlement
conference was held, [and] the persons who
were present, including the capacity of any
representative who was present, ... state[]
... whether meaningful progress toward
settlement was made, and ... state[] ... the
prospects of settlement.
The joint status report, filed in mid-August 1992, stated that
a settlement conference had been held at the prison on August 10,
attended by Dawson, appellant Brown (who had authority to settle on
behalf of the Government), appellant Hughes (the attorney of record
for the Government), Lori Cunningham (Bureau of Prisons, Attorney
Advisor), and Linda DuBose (Bureau of Prisons, Paralegal).2 The
parties reported that
Mr. Dawson had previously advised Wayne Hughes
that he would accept an amount between $0.00
to $500,000.00 to settle this case.... Little
progress towards settlement was made at this
time because discovery has not been completed
and there remains [sic] many disputed facts
which must be resolved. Both parties agree
that the prospect for a settlement will always
be open and will be diligently pursued when
they are in a better position to engage in
informed negotiations after more information
about the case is developed.
civil action must make a good-faith effort to
settle; and settlement negotiations shall be
entered into at the earliest possible time,
well in advance of any pretrial conference.
2
On August 18, the district court ordered the Government to
provide an exact description of the settlement authority of each of
the persons attending the settlement conference on behalf of the
Government. The United States responded that Brown was its sole
representative with authority to settle the case at the settlement
conference, and that his authority was unlimited.
- 4 -
(As discussed infra, although the Government did not make a
monetary offer, it did discuss providing Dawson with additional
surgery, if needed.)
On August 18, the district court entered a scheduling order,
directing the parties and their counsel to meet to discuss
settlement at least 10 days before the pretrial conference (set for
March 1, 1993; rescheduled for March 4), and at least 14 days prior
to trial (set for late April). Once again, the order provided
that:
[t]he court expects the parties to comply with
the requirements of Local Rule 9.1 that the
parties make a good faith effort to settle.
Within seven ... days of such settlement
conference, the parties shall jointly prepare
and file a written report, which shall be
signed by all counsel for each party,
detailing the date on which the settlement
conference was held, the persons present,
including the capacity of any representative
present, a statement regarding whether
meaningful progress toward settlement was
made, and a statement regarding the prospects
of settlement.
The Government moved in January 1993 to dismiss or,
alternatively, for summary judgment. Relying on the Texas
recreational use statute, Tex. Civ. Practice & Rem. Code § 75.001,
et seq., which provides that a landowner who makes its property
available for recreational use is liable only if it has been
grossly negligent, or has acted with malicious intent or bad faith,
the Government asserted that Dawson had not pleaded, and could not
prove, a claim against it under the FTCA, under which the
Government is liable only "if a private person would be liable to
the claimant in accordance with the law of the place where the act
- 5 -
or omission occurred". 28 U.S.C. § 1346(b); see also 28 U.S.C. §
2674.
The parties reported on February 22 that a settlement
conference, attended by Dawson, Brown, and Hughes, was conducted on
February 17, at the United States Attorney's office.3 They
reported that
[a] discussion about the merits of the case
and the evidence was held and [Dawson]
submitted an offer of settlement. The
[Government] did not submit a counter-offer,
telling [Dawson] the reasons therefore [sic].
[Dawson] would advise the Court that there was
no good faith offer made by the [Government],
reason being that [Dawson] cannot prove
negligence by the United States. The
conference ended and the parties agreed to
meet on April 8, 1993 for further settlement
discussions.
(Emphasis added.)4
Although Dawson signed a proposed pretrial order, he did not
attend the March 4 pretrial conference. But, while the court and
the Government's counsel waited in vain for him to appear, the
court questioned Hughes about the Government's summary judgment
motion, and his familiarity with 18 U.S.C. § 4042, which provides
that the Bureau of Prisons is to provide safekeeping and care for
3
Dawson was no longer incarcerated. Although the conference
was scheduled for 10:00 a.m., he did not arrive until around 2:00
p.m. By that time, the Bureau of Prisons representatives had
understandably left.
4
Hughes' notes from the second settlement conference, which the
district court obtained over the Government's objection, reflect
that Dawson offered to accept $10,000. Language almost identical
to the above emphasized portion of the report concerning Dawson's
position appears in blue ink, in different handwriting, in Hughes'
conference notes, which were in pencil. Apparently, the language
was added to the report at Dawson's request.
- 6 -
federal prisoners. Hughes stated that he was "[v]aguely" familiar
with the statute, but did not think it applicable to an FTCA
action. When asked why he thought the Texas recreational use
statute was applicable, Hughes replied that the field where Dawson
was injured was used for recreational purposes by both prisoners
and other groups. The court ruled that the Texas statute was
inapplicable, because Dawson was not in prison for recreational
purposes; it therefore denied the summary judgment motion. (In its
subsequent opinion to that effect, the court stated that it was
"disappointed that the government would rely on [the Texas
recreational use statute] in light of its blatant inapplicability
to the facts of this action", and held that the Bureau of Prisons'
duty of care was established by 18 U.S.C. § 4042, independent of an
inconsistent state rule.)
The court next questioned Hughes about settlement, inquiring
whether any dollar amounts had been discussed in the negotiations.
Hughes replied that Dawson had made an offer, but the Government
had not. Upon the court inquiring why the Government so acted,
Hughes cited (1) the Government's then pending summary judgment
motion; and (2) his belief that the action was frivolous. At the
conclusion of the conference, the court stated:
If this was a suit involving a private party,
as opposed to the government, it would be a
very serious liability suit. And I guess the
only reason the government doesn't consider it
to be a serious liability suit is it doesn't
take things seriously a lot of times when it
should.
Now, it may get out of this case because
of the failure of the plaintiff to do what he
- 7 -
ought to do, but this is a serious liability
suit, and the government should have treated
it as a serious liability suit.
I don't think you have acted in good
faith. I think you have acted in bad faith.
The district court ordered Dawson to appear on March 11 to
show cause why he should not be sanctioned for failing to appear
for the pretrial conference. It stated also that disclosures made
by the Government's counsel at that conference suggested that the
Government and its counsel "have not taken seriously, and probably
have violated, the duties imposed on them relative to settlement
matters", and ordered that, at the March 11 hearing, the Government
and its counsel show cause why they should not be sanctioned for
violation of their obligations in respect to settlement matters as
established by the court's prior orders and the Local Rule.
In its brief in response to the order to show cause, the
Government insisted that it had complied with all of the court's
orders. In addition, it asserted that a good-faith effort to
settle does not require it to make a settlement offer, and
maintained that the court had no power to compel it to do so.
As usual, Dawson did not appear at the March 11 show-cause
hearing. A lengthy hearing was then held on possible sanctions;
the Government, Hughes, and Brown were represented by counsel from
the United States Department of Justice. In response to the
district court's inquiry, the Government agreed, "[i]n principle",
that, as stated by the court,
the issue ... to be decided is the fact issue
... whether ... the government engaged in a
good-faith effort to settle, and that may or
- 8 -
may not have included ... making ... a
settlement offer.
The court then questioned Hughes and Brown.
Hughes responded that, at the first settlement conference, the
Government made a non-monetary offer to Dawson, which he refused;
and that it did not make a monetary offer because (1) it was
unlikely that Dawson could prove his case, in that the pole was
open and obvious; (2) Dawson did not demand a specific dollar
amount; (3) the non-monetary offer to Dawson was appropriate; (4)
the Government needed more discovery and more information; and (5)
Dawson was representing himself, and his vague responses to
interrogatories and requests for admissions, and his failure to
list any witnesses or medical experts, indicated a lack of interest
in prosecuting the action.
Hughes stated that, at the second settlement conference,
Dawson proposed a monetary settlement, but the Government did not
counter-offer because (1) its dispositive motion was pending, and
Dawson's response was due that day; (2) Dawson had stated that
other accidents had occurred on the prison softball field, but did
not provide the names of the persons involved, and the Government
wanted to ascertain if any such accidents had been reported; and
(3) the Government was not liable, in his opinion, because the post
was open and obvious. Hughes stated further that he thought there
was "a good possibility" that the Government might have made a
settlement offer if it had known that the court would deny its
dispositive motion. The court then chastised Hughes for relying on
- 9 -
the Texas recreational use statute, because it had not been pleaded
as an affirmative defense.5
Brown responded that he never reached a decision not to make
a monetary offer, because he was waiting for additional information
to be developed. He stated that no offer was made at the first
settlement conference because the Government wanted (1) to have
Dawson re-evaluated by a doctor and, if necessary, have additional
surgery; and (2) to evaluate its liability with respect to the open
and obvious pole. Brown stated that no offer was made at the
second conference because (1) the Government wanted to verify what
Dawson had said about other accidents; (2) the Government's
dispositive motion was pending; (3) Dawson's negligence appeared
greater than any by the Government, because the pole was open and
obvious; and (4) it would not be good policy, or in the best
interest of the United States, in his opinion, to make a settlement
with a prisoner that might encourage more litigation by other
prisoners, who are a "very litigious group".
At the conclusion of the hearing, and over the Government's
objection, the court ordered Hughes and Brown to produce their
notes from the settlement conferences, as well as all material
pertaining to the case in the United States Attorney's office, to
5
Assuming the Texas statute should have been presented as an
affirmative defense, we need not reach whether counsels' raising it
in both the summary judgment motion and proposed pretrial order
(signed by Dawson) cured the error. Simply put, and in light of
Dawson's pro se status, persuasive points can be made for both
sides of the issue. Equally, whether this failure, or counsels'
raising the Texas statute by other means, merited the court's
scathing rebuke, as quoted infra, is another matter upon which we
will not comment.
- 10 -
be placed under seal. (More than a year later, after advising
counsel that he was going to do so, the court reviewed the notes.)
The court made the following findings from the bench: (1) there was
at least a 50-75% possibility that the Government was liable; (2)
if a private party were involved, it would be viewed as "a very
significant case for potential liability"; (3) the Government did
not prepare itself with the necessary factual and legal knowledge
to evaluate settlement;6 (4) counsel did not act in good-faith at
the second settlement conference by relying on the Texas
recreational use statute, because it had not been pleaded as an
affirmative defense, and, in addition, was "totally without
6
The court was critical of counsel for not deposing Dawson:
The government blindfolded itself ... by
not taking his deposition. So I don't know
how [its attorneys] could really evaluate what
they were looking at by way of damages. And I
think ... that is in bad faith to go into that
second settlement conference without more
knowledge of the facts than the government
attorneys had. But they had made up their
mind, in my opinion, that they weren't going
to offer this man anything in settlement for
invalid reasons or inappropriate reasons and
bad-faith reasons.
....
Again, I will repeat that if the
government's attorneys had done their job and
taken [Dawson's] deposition ... and adequately
explored it, there may have been other factors
that came forward, but I believe I have heard
all the information the government's attorneys
had at this hearing, and I don't see[] a great
deal they would have to argue about at a trial
of this case in support of a position that ...
Dawson[] should have seen that line when he
was running out to catch a fly [ball].
- 11 -
merit";7 (5) the summary judgment motion was filed in bad faith;8
7
The court stated:
There is no allegation in [the answer] of
any Texas statute or any statute that would
support the contention that the law of Texas
prohibits recovery by persons who enter upon
land for recreational use. That would be an
affirmative defense. That defense was not
asserted. That pleading was never amended to
assert that defense. So that was never a
defense available to the government in this
case, even if it otherwise would have
potential merit. Obviously, the lack of
availability of that offense, even if it
otherwise had potential merit, should have
been taken into account at both settlement
conferences.
The court also excoriated counsel for including that defense in the
proposed pretrial order:
In my judgment that was put in the
pretrial order in bad faith by counsel for the
government with full knowledge that counsel
for the government had no right to rely on
that. Counsel for the government was [us]ing
the pretrial order in an attempt to amend its
pleading when counsel for the government knew
the pretrial order should state the
contentions of the parties that are
legitimately in the case. Those contentions
are defined by the pleadings, and the
government's counsel knew it had no support in
pleading that and put that in there to see if
it could get away with it, as far as the Court
and defendant [were] concerned.
8
The finding that the summary judgment motion was filed in bad
faith was based on the Government's failure to plead the Texas
recreational use statute as an affirmative defense, as well as the
court's view that the position lacked merit:
The defendant knew that it had not
pleaded that statute as a defense. It knew
that it had no right to assert that statute as
a defense in this case, even if it otherwise
was a viable defense.
And, in addition to that, if the
- 12 -
(6) Hughes was not telling the truth when he said that he had no
knowledge of the applicability of 18 U.S.C. § 4042 until the court
called it to his attention; and (7) the explanations at the show-
cause hearing on why a settlement offer was not made were "unworthy
of belief", "frivolous and in bad faith".9 At the conclusion of
defendant had conducted the slightest amount
of research the defendant would have known
that had nothing to do with this lawsuit. If
the defendant had used an ounce of logic, the
defendant would have known that had nothing to
do with this lawsuit and that [Dawson] was
there as an inmate of the prison system. He
didn't come on those premises for recreational
purposes. He wouldn't have been there at all,
if he hadn't ... been an inmate in the prison.
9
The court found that the Government tried to take advantage of
Dawson's pro se status and to mislead him about the value of his
claim:
I am satisfied that one of the factors
that [the Government] took into account in
dealing with Mr. Dawson was the prospect that,
because he was a pro se plaintiff, they could
get away with what they were doing, and that
because he was a pro se plaintiff they might
by default win the case, as perhaps they
have....
....
And I am not going to say that is not a
legitimate thing for the government to
consider in evaluating whether or not to
settle the case, but I don't think it is
appropriate in this case, or was proper in
this case, to withhold the making of
settlement offers at the two settlement
conferences because of the possibility he
might stub his toe. That is not good faith.
....
The way I see it, the attorneys, at least
at the second settlement conference, did
probably sense that there was a good chance
- 13 -
that the defendant would stub his toe and
overreacted to that, and unfairly and in bad
faith reacted to that, when they should have
been at that point in time making some kind of
settlement offer in order to try to bring the
case to a conclusion at that time.
In its opinion imposing sanctions, the court stated that it did
not consider significantly relevant to the
sanction issues the fact that Dawson did not
prosecute his claim with diligence, thus
leading to its dismissal for that reason.
There is nothing in the record to reflect the
reason for Dawson's failure at the last minute
to pursue his claim other than the suggestion
that counsel for defendant made inappropriate
representations to him concerning the merit of
his claim and things he would be required to
do in order to successfully pursue it.
And, in denying the Government's motion to alter or amend the
sanctions order, it stated:
[T]he court remains persuaded that the most
reasonable inferences to be drawn from the
record are that Brown and Hughes had no
intention of engaging in serious or meaningful
settlement negotiations with Dawson and that
their goal at each of the "settlement
conferences" was to lead Dawson into walking
away from his claim. In other words, the
conduct of Hughes and Brown at each of the
settlement conferences had as its goal "to
discourage the poorer litigant and diminish
his ... resolve to proceed to final judgment".
... At each of the meetings with Dawson,
Hughes and Brown tried to persuade Dawson that
defendant did not owe him a duty of ordinary
care, first contending that the absence of
such a duty was based on the open and obvious
nature of the condition and then, having
failed to dissuade Dawson, by contending, at
the second conference, that the Texas
recreational statute caused defendant not to
have a duty to exercise ordinary care for
Dawson's safety. And, the court has no doubt
that Hughes and Brown suggested to Dawson at
the second settlement conference that in no
- 14 -
the hearing, the court made the following remarks about the local
United States Attorney's office to counsel from the Justice
Department:
For your information, ... this [is] not a
very pleasant thing for me to do. I have not
enjoyed doing this, but, unfortunately, in the
Civil Section of the U.S. Attorney's office
here in Fort Worth there are more times than
one where I had problems.... I just have the
feeling that the Civil Section of the U.S.
Attorney's office here in Fort Worth is not
always candid with the Court and that the
material I receive from that office has not
been thought out and prepared. And it's very
disappointing to me that I have to do the sort
of things that I am doing today in this case.
But I want it known to everyone that
comes in my court that I take seriously the
local rules of my court that includes Local
Rule 9.1 and my orders that deal with
settlement conferences, and I don't think the
U.S. Attorney's office takes that seriously,
and they certainly haven't taken it seriously
in this case.[10]
event would he be entitled to receive any
settlement payment unless he could produce
someone who had experienced a similar
accident. Statements were made to Dawson that
were calculated to affirmatively mislead him.
10
It bears noting that the district court and the Government had
disagreed earlier about the extent of the court's inherent power to
maintain a standing order requiring the Government to send a
representative with full settlement authority to settlement
conferences in all civil cases. See In re Stone, 986 F.2d 898,
900, 903 (5th Cir. 1993) (per curium) (district court has "general
inherent power to require a party to have a representative with
full settlement authority present--or at least reasonably and
promptly accessible--at pretrial conferences", but such power
should be "very sparingly used"). Our court's opinion in Stone was
rendered on March 12, 1993, one day after the show-cause hearing in
this case, and approximately 16 months prior to the order imposing
sanctions. We are most confident that this issue had no bearing on
the district court's actions here, as it so noted. When referring
to other problems with the United States Attorney's office in Forth
Worth, the court stated:
- 15 -
The district court ordered Dawson to file an affidavit by
March 22, explaining why he failed to appear at both the pretrial
conference and the show-cause hearing, or suffer dismissal with
prejudice, without further notice. Once again, Dawson did not
comply; his action was dismissed with prejudice on March 23, 1993.
Sixteen months later, in July 1994, the district court
rendered a 33-page opinion and order, supplementing its bench
findings from the show-cause hearing. It concluded that Hughes and
Brown should be sanctioned, pursuant to the court's inherent
powers, because, contrary to the Local Rule, the Government had not
made a good-faith effort to settle.11 The court found that Hughes
And I am not talking about the problem of the
U.S. Attorney's office in not honoring the
obligation that I have imposed to have someone
present with settlement authority because I
recognize that's a legal issue the Fifth
Circuit is going to have to decide, and I am
not taking that into account in anything I am
doing here.
As discussed infra, the court stated in its subsequent opinion
imposing sanctions that they were "of significantly less magnitude
than would have been imposed" had the Government and its counsel
not shown an improvement in their willingness to engage in
meaningful settlement negotiations during the 16 months between the
show-cause hearing and the imposition of sanctions.
11
The reason given for "most" of the extreme delay in rendering
the opinion was "an extensive delay in the obtaining by the court
of a transcript that had been ordered by the defendant from the
court's former court reporter over one year ago". In light of the
extreme and immediate attention to detail required of counsel by
the district court, not to mention the bench findings of bad faith
by counsel, it would seem that the district court would have
rendered its opinion immediately after the hearing. We are
confident that the district court requires no less of itself than
it does of counsel. In sum, whatever the reasons for the
transcript delay, the court, no doubt, could have caused its
preparation (or its receipt) to be expedited, so that this most
serious matter, including the cloud over counsel, could be resolved
- 16 -
failed to prepare adequately for participation in settlement
negotiations, engaged in affirmative misconduct in anticipation of,
and during, the negotiations, and was not candid with the court
when describing reasons for action taken at the settlement
conferences.12 It imposed the following sanctions on him: (1) a
promptly.
12
The following are illustrative of the court's findings of
intentional misconduct:
1. In its bench findings at the show-cause hearing, the
court found that Hughes had not told the truth when he said he had
no knowledge of the potential applicability of 18 U.S.C. § 4042
until it was called to his attention at the March 4 hearing:
To me, that defies comprehension that
members of the staff of the U.S. Attorney's
office in Fort Worth, Texas where a federal
prison is located have never been curious
enough about what the duty owed to those
inmates is by the United States government....
I don't believe that they didn't know
about it. I am going to have to conclude Mr.
Hughes is not telling me the truth....
I think he intentionally misrepresented
to me at the last hearing that he didn't know
about it or that it did not have anything to
do with the tort claims case when he knew that
it had something to do with this case.
The opinion rendered more than a year later reflects that the court
persisted in that belief:
Giving Hughes the benefit of having an average
level of competence, he inescapably would have
learned over those years of, and would have
understood, the federal statute that creates
and defines the duty of care owed by the
Bureau of Prisons to a prisoner.
2. The court found that, by relying on the Texas statute as
an affirmative defense, counsel "were trying to create a false
appearance of the government's position in this case in order to
justify a bad faith decision not to make an offer of settlement in
- 17 -
strong reprimand that his conduct in relation to the settlement
negotiations was highly inappropriate and unacceptable, and (2)
attendance at a 15-hour course on an attorney's ethical
responsibilities. The court found Brown's conduct less serious;
the case".
3. At the show-cause hearing, the court stated that "both
Mr. Brown and Mr. Hughes made up their minds before each of these
settlement conferences that there would be no financial offer made
to [Dawson]". Similarly, in its opinion imposing sanctions, it
found that the Government and its counsel "had predetermined" prior
to both settlement conferences "that no good faith settlement offer
would be made to Dawson and that counsel for defendant would merely
pretend that they were engaging in settlement negotiations instead
of honestly engaging in such negotiations".
4. The court found that, at both settlement conferences,
counsel "made misrepresentations to Dawson of pertinent factors
relative to his claim" (referring to the "alleged open and obvious
nature of the conditions that caused his accident and injuries",
and the "nonmeritorious motion for summary judgment"). At the
show-cause hearing, the court stated:
No doubt they urged on Dawson at th[e]
[second] settlement conference the notion that
their summary judgment had merit and that
defendant did not owe Dawson the duty to
exercise ordinary care for his safety.
Moreover, the statements of defense counsel
lead the court to infer that they suggested to
Dawson that he would not be entitled to
receive any payment in settlement of his claim
unless he could produce someone who had
experienced an accident similar to his as a
result of the conditions that caused his.
And, in its opinion imposing sanctions, the court stated:
Undoubtedly, counsel for defendant devoted
significant time at both settlement
conferences to falsely describing to Dawson
the merit of his claim and the applicable law.
They certainly have been less than candid in
their presentations to the court on those
subjects; and, there is no reason to think
that they did not make statements to Dawson
that were at least equally lacking in candor.
- 18 -
but, because he joined in "the charade that appears to have been
orchestrated by Hughes at the two settlement conferences", the
court found that he should be sanctioned by "a strong reprimand
that his conduct in relation to the settlement negotiations in this
case was highly inappropriate and unacceptable". The court
explained why it selected these forms of sanctions:
During the extended period of time that
has elapsed between the time the show cause
hearing was held ... , and the preparation of
this memorandum opinion and order, [the]
United States of America and the attorneys
representing her have shown significant
improvement in their willingness to engage in
meaningful settlement negotiations and, if
appropriate to do so, to conclude by
settlement civil cases to which she or one of
her agencies is a party. Nevertheless, the
court has concluded that sanctions should be
imposed on Hughes and Brown, though of
significantly less magnitude than would have
been imposed if the change in attitude
mentioned above had not occurred.
The Government moved to alter or amend the sanctions order.13
In its supporting brief, it contended that, as construed, the Local
Rule exceeded the court's authority over settlement matters and
violated the separation of powers doctrine; and, that the district
court made significant factual and legal errors.
In a 37-page opinion denying the motion and supplementing the
findings made both at the show-cause hearing and in the opinion
imposing sanctions, the court found that "settlement negotiations,
and any realistic chance of settlement, ... were thwarted when
Hughes and Brown went to the settlement conferences with the
13
The district court granted appellants' motion to stay
sanctions pending ruling on the motion to alter or amend.
- 19 -
intention from the outset of not seriously engaging in settlement
negotiations". It found further that Hughes' and Brown's "lack of
respect for the requirements of the local rule ... alone justifies
the sanctions", as demonstrated by the Government's position that
"if in an attorney's view the making of a settlement offer is not
in his client's best interest, no offer should be forthcoming".
The court was "dismayed" that Hughes and Brown "would openly
maintain that the `good-faith effort to settle' and `settlement
negotiations' requirements of Local Rule 9.1(a) permit them to
refuse to offer any money to an inmate-plaintiff `simply because
they thought the plaintiff would be unable to present his case
adequately at trial'". Moreover, it was "disappointed" that Hughes
and Brown maintained that a refusal to engage in meaningful
settlement negotiations could be justified by a desire to
discourage future prisoner litigation.14
The court found that the assertion that Hughes and Brown had
the absolute right to refuse to make a settlement offer "is really
14
The court stated:
If a party is faced with recurring frivolous
litigation, a declination to make a settlement
offer in a frivolous action for the purpose of
discouraging other frivolous actions would be
legitimate and come within the parameters of
good-faith efforts to settle. However, the
court cannot countenance conduct that, in
effect, manifests an attitude by the
government that it is entitled to decline to
engage in meaningful settlement negotiations
simply for the purpose of discouraging future
prisoner litigation without regard to the
merits of the litigation. Such an attitude
flies directly in the face of the requirements
of Local Rule 9.1(a).
- 20 -
a contention that [they] had the right arbitrarily to disregard the
requirements of [the] Local Rule";15 and it rejected the Seventh
Circuit's suggestion in G. Heileman Brewing Co., Inc. v. Joseph Oat
Corp., 871 F.2d 648, 653 (7th Cir. 1989) (en banc), that a sanction
cannot be based on a party's refusal to make a monetary offer. The
district court stated:
An essential element of any good-faith effort
to settle and meaningful settlement
negotiations is a willingness to make a
monetary offer if a good-faith evaluation of
the respective positions of the parties in the
case would indicate that such an offer would
be appropriate and adequate resources are
available.
Finally, as an alternative basis for sanctions, the court
concluded that they were justified because Hughes and Brown did not
attend the settlement conferences with an "open mind" and,
therefore, had not made a good-faith effort to settle.16
15
The court criticized the Government's assertion that the
decision whether to risk an adverse judgment was for the Attorney
General and her delegates, not the court:
This argument is the equivalent of assertions
by Movants that the court has absolutely no
power to make an inquiry into the propriety of
the settlement conduct of the government and
that, therefore, Local Rule 9.1 is, for
practical purposes, unenforceable against
Movants. Obviously, if the court cannot make
inquiry into a party's settlement conduct, and
sanction the party for misconduct, the local
rule requiring specified kinds of settlement
conduct becomes an empty shell.
16
After the district court denied a stay of sanctions pending
appeal, our court granted it.
- 21 -
II.
The appellants contend, inter alia, (1) that the district
court exceeded its authority by imposing sanctions based on its
construction of the Local Rule to include, as an essential element
of a "good faith effort to settle", making an offer commensurate
with the party's litigation exposure; and (2) that the court's
finding of bad faith is otherwise clearly erroneous.17 Although we
conclude that the district court's application of the Local Rule is
a sufficient ground for vacating the sanctions, we address, as
well, its alternative basis for sanctions -- the ultimate finding
of bad faith by Hughes and Brown as a result of their conduct. We
do so because of the serious cloud on their professional
reputations caused, not only by that finding, but also by the
findings upon which it was based.
Sanctions are reviewed for abuse of discretion. American
Airlines, Inc. v. Allied Pilots Ass'n, 968 F.2d 523, 529 (5th Cir.
1992). "[T]he threshold for the use of inherent power sanctions is
high". Elliott v. Tilton, 64 F.3d 213, 217 (5th Cir. 1995).
Accordingly, "[i]n order to impose sanctions against an attorney
under its inherent power, a court must make a specific finding that
the attorney acted in `bad faith'." Chaves v. M/V Medina Star, 47
F.3d 153, 156 (5th Cir. 1995). And, a "district court would
17
Because we conclude that the district court abused its
discretion by imposing sanctions based both on its interpretation
of the Local Rule, and on its alternative finding of bad faith, we
need not address the contentions that the rule, as applied,
violates the separation of powers doctrine, or that due process was
violated because the court acted as investigator, prosecutor, and
adjudicator.
- 22 -
necessarily abuse its discretion if it based its ruling on an
erroneous view of the law or on a clearly erroneous assessment of
the evidence". Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405
(1990). See also Smith v. Our Lady of the Lake Hosp., Inc., 960
F.2d 439, 444 (5th Cir. 1992). "Generally, an abuse of discretion
only occurs where no reasonable person could take the view adopted
by the trial court. If reasonable persons could differ, no abuse
of discretion can be found." Lorentzen v. Anderson Pest Control,
64 F.3d 327, 330 (7th Cir. 1995) (Rule 11 sanctions).
Although we review a district court's use
of its inherent power [to sanction] only for
abuse of discretion, ... our review is not
perfunctory. As the Supreme Court has
explained, "[b]ecause inherent powers are
shielded from direct democratic controls, they
must be exercised with restraint and
discretion." ... The Court has also cautioned
restraint in the use of inherent powers
"[b]ecause of their very potency."
Shepherd v. American Broadcasting Companies, Inc., 62 F.3d 1469
(D.C. Cir. 1995) (citations omitted) (reviewing district court's
use of inherent power to punish litigation misconduct by entry of
default judgment).
The district court held that, in order to comply with the
Local Rule,
the party must (a) acquire sufficient
knowledge of the facts and the applicable law
to evaluate the party's litigation exposure,
(b) make an honest appraisal of that exposure
based on applicable legal rules and the known
facts, (c) honestly and objectively conduct
settlement discussions with the opposing
party, and (d) make a settlement offer
commensurate with the party's litigation
exposure.
- 23 -
(Emphasis added.) On the other hand, the court acknowledged that
a party should not be forced to settle at any cost, or sacrifice an
uncompromisable principle in order to accomplish settlement; but,
it found no such principle involved in this case, which, it opined,
could have been settled for $10,000, or less, at the second
settlement conference. Similarly, in denying the motion to alter
or amend, the district court disclaimed any "goal [of] forcing any
party to make a settlement offer if the party has a legitimate
reason for not making an offer".
1.
The district court's assessment of the Government's litigation
exposure appears to have been based primarily on its conclusion
that the Texas recreational use statute, relied upon by the
Government to contend that Dawson could not recover unless he
proved gross negligence, malice, or bad faith, was inapplicable.18
18
At the show-cause hearing, the court also voiced skepticism
about the Government's contention in the pretrial order that the
proximate cause of Dawson's injuries was his failure to care for
his own safety and to keep a proper look-out:
That may well be what the conclusion
would be on the merits of the trial of this
case, but the facts of this case are such that
certainly it is not a foregone conclusion that
those facts would be determined because it
occurs to me when somebody is chasing a fly
ball they are expected to look for the ball
and not the wires. And when you have put
wires out in the middle of the playing field,
you ought to know people are going to be
looking at balls and not wire and someone is
going to get hurt when they trip over the
wires in that playing field. I believe the
attorneys for the government are smart enough
to realize that, and I believe they were smart
enough to know, and continue to be smart
- 24 -
As noted, the court found that the Government acted in bad faith by
relying on state law, holding that the standard of care was
established instead by 18 U.S.C. § 4042. We need not decide
whether § 4042 or the Texas statute governed in this FTCA action;
suffice it to say that this is a question of law on which
reasonable minds could differ.19 And, needless to say, a district
court's disagreement with the merits of a position asserted in good
faith by counsel cannot serve as the basis for sanctions. See
F.D.I.C. v. Calhoun, 34 F.3d 1291, 1298-99 (5th Cir. 1994)
(district court abused its discretion by imposing FED. R. CIV. P. 11
sanctions where argument was not "implausible, unreasonable, or
otherwise frivolous").
The district court acknowledged that it had no power to, and
should not, coerce a settlement; and it stressed that it was not
sanctioning Hughes and Brown for failing to achieve one. But, it
maintained that it did have the power to coerce compliance with the
"good faith effort to settle" and "settlement negotiations"
requirements of the Local Rule which, as stated, it interpreted as
requiring that, on the facts in this case, a monetary settlement
enough to know, that there was a significant
risk in this case.
19
For a classic example of the not infrequent complexities of
FTCA litigation, see our recent decision in Johnson v. Sawyer, 47
F.3d 716, 728 (5th Cir. 1995) (en banc) ("violation of a federal
statute or regulation does not give rise to FTCA liability unless
the relationship between the offending federal employee or agency
and the injured party is such that the former, if a private person
or entity, would owe a duty under state law to the latter in a
nonfederal context") (emphasis in original).
- 25 -
offer should have been made.20 Although we applaud the district
court's efforts to encourage and facilitate settlements, we
conclude, as also discussed infra, that it abused its discretion by
interpreting the rule to require, for this action, making a
settlement offer as part of a good-faith effort to settle.
Obviously, there is no meaningful difference between coercion
of an offer and coercion of a settlement: if a party is forced to
make a settlement offer because of the threat of sanctions, and the
offer is accepted, a settlement has been achieved through coercion.
Such a result cannot be tolerated. See National Ass'n of Gov't
20
The record supports overwhelmingly the assertion that the
district court's interpretation of Local Rule 9.1(a) as requiring,
on the facts in this case, that a settlement offer be made, and the
Government's refusal to make an offer, were the primary bases for
the sanctions. For example, at the show-cause hearing, the court
stated:
[I]f the government was acting in good faith,
they would have made some kind of offer to Mr.
Dawson at that first settlement conference in
order to get the ball rolling.
Even though a party to the negotiations
takes a very unreasonable position in
demanding more than he possibly could or
should receive, a good-faith effort to settle
means the other party will not then balk and
do nothing. It means the other party will at
least go forward and try to keep the ball
rolling, and the only way you can keep the
ball rolling is make some kind of offer, even
if it is only $500 or $1,000. And I think if
defense counsel would have been acting in good
faith at that point in time, they would have
made an offer of some kind to keep the ball
rolling, particularly in view of what they
then knew. They then knew the man was on the
playing field chasing a fly ball when he
tripped over a wire.
(Emphasis added.)
- 26 -
Employees, Inc. v. National Federation of Fed. Employees, 844 F.2d
216, 223 (5th Cir. 1988) ("[f]ailure to compromise a case ... even
pursuant to terms suggested by the court, does not constitute
grounds for imposing sanctions"); see also In re Ashcroft, 888 F.2d
546, 547 (8th Cir. 1989) ("[p]retrial-conference discussion of
settlement is designed to encourage and facilitate settlement ...
but it is not designed to impose settlement upon unwilling
litigants"); G. Heileman Brewing Co. v. Joseph Oat Corp., 871 F.2d
at 653 ("If this case represented a situation where ... [a party]
was sanctioned because [it] refused to make an offer to pay money
-- that is, refused to submit to settlement coercion -- we would be
faced with a ... situation we would not countenance"); Kothe v.
Smith, 771 F.2d 667, 669 (2d Cir. 1985) ("the law ... does not
sanction efforts by trial judges to effect settlements through
coercion"); Abney v. Patten, 696 F. Supp. 567, 568 (W.D. Okla.
1987) ("The horses may be led to water. Whether they drink is up
to them.").
2.
Early settlement of cases is an extremely laudable goal, which
federal judges have considerable power to encourage and facilitate,
see, e.g., FED. R. CIV. P. 16, and which is essential to controlling
the overcrowded dockets of our courts. And, we commend the
district court for its concern for protecting pro se plaintiffs'
(particularly pro se prisoners') rights. On the other hand, as the
district court acknowledged, parties may have valid and principled
reasons for not wishing to settle particular cases. These reasons
- 27 -
may not be based necessarily on the merits of a particular case, or
the party's possible exposure in it, but because of the effect that
a settlement might have on other pending or threatened litigation.
Here, two of the Government's numerous (and, it seems, very
valid) reasons for not making a monetary offer were because Dawson
was (before his release while his action was pending) a pro se
prisoner who had not shown much interest in prosecuting his claims,
and because of the concomitant (and most legitimate) concern that
settlement might encourage other prisoners to file frivolous
lawsuits in the hopes of recovering a "nuisance value" settlement.
It goes without saying that courts, among other entities, provide
recourse for pro se prisoners, just as they do for other litigants;
but, a plaintiff's status as a prisoner, pro se or otherwise, is a
legitimate factor for the opposing party to consider in determining
whether to make a settlement offer. In light of the increasing
flood of prisoner litigation that threatens to submerge our courts,
such a factor is extremely relevant, especially when the Government
is the defendant and the taxpayers will be footing the bill for any
settlement.21
21
This brings to mind one of the principles learned early and
painfully by our Nation (and it is hoped still taught early to
schoolchildren), and enunciated in stirring fashion by Robert
Goodloe Harper's toast at a banquet for John Marshall in 1798:
"Millions for defense, but not one cent for tribute". The toast
was attributed to Charles Cotesworth Pinckney, our minister in 1797
to the French Republic, who, when told that American commissioners
in Paris to protest French attacks on United States shipping would
be received only if they paid a $50,000 bribe and loaned a large
amount of money to France, replied, "Not a sixpence, sir". JOHN
BARTLETT, FAMILIAR QUOTATIONS 367 (Justin Kaplan, 16th ed. 1992).
Because of such bullying by the British, and especially the
- 28 -
Along that line, another factor bears mentioning --
administrative exhaustion required by the FTCA, 28 U.S.C. §
2675(a). As noted, when Dawson filed this action, his claim had
been reviewed and rejected by the Bureau of Prisons. It
investigated the claim, and concluded that the offending pole was
open and obvious, and that Dawson had assumed the risk of injury.
See 28 U.S.C. § 2672 (providing that the head of each federal
agency or his designee "may consider, ascertain, adjust, determine,
compromise, and settle any claim for money damages against the
United States for injury or loss of property or personal injury ...
caused by the negligent or wrongful act or omission of any employee
of the agency while acting within the scope of his office or
employment").
The exhaustion requirement serves "to ease court congestion
and avoid unnecessary litigation, while making it possible for the
Government to expedite the fair settlement of tort claims asserted
against the United States ... [and] of providing for more fair and
equitable treatment of private individuals and claimants when they
deal with the Government or are involved in litigation with their
Government". Adams v. United States, 615 F.2d 284, 288 (5th Cir.
French ("Quasi War"), Congress in 1797 authorized resumption of the
construction of six frigates, including the famous, and much
beloved, USS Constitution ("Old Ironsides"). (The ships'
construction had been authorized originally in order to fight the
Barbary pirates, who likewise sought to extort money from the
infant United States.) THOMAS P. HORGAN, OLD IRONSIDES 12, 14, 24
(1963). In light of the matter before us, it is somewhat ironic
that this proud ship, built at considerable expense as an
alternative to monetary appeasement, bears the name of the document
which trumpets fundamental fairness for all, even Assistant United
States Attorneys.
- 29 -
1980) (internal quotation marks and citations omitted). "An added
factor in federal prisoner cases is the congressional decision to
vest control of federal penal correctional institution policy,
including that affecting free world citizens, in the Bureau of
Prisons." Miller v. Stanmore, 636 F.2d 986, 991 n.5 (5th Cir.
1981).
Armed with this claim rejection, as well as other information,
Hughes and Brown complied with the court's orders to meet with
Dawson and discuss settlement. It goes without saying, that, as
noted, they appear to have had numerous legitimate reasons for not
offering the taxpayers' money to Dawson. Accordingly, the
alternative reason given for sanctions, that Hughes and Brown did
not attend the settlement conferences with an "open mind", is
clearly erroneous, as are other findings, quoted extensively in
this opinion, upon which the court made its ultimate finding of bad
faith.
In sum, Hughes and Brown should not have been sanctioned.
Likewise, findings that they acted improperly, or unprofessionally,
in the manner in which they handled this action are clearly
erroneous. To that end, we find most inappropriate the district
court's conclusions that they, in effect, tried to manipulate, or
take advantage of, Dawson at the settlement conferences or in
preparing the pretrial order. No more need be said; this most
regrettable chapter is closed.
- 30 -
III.
For the foregoing reasons, the findings and conclusions of bad
faith are REVERSED, and the order imposing sanctions on R. Wayne
Hughes and Claude D. Brown is VACATED.
REVERSED AND VACATED
- 31 -