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Dunlap v. Dagostino

United States District Court, E.D. Louisiana

July 23, 2019

JOHN DUNLAP, Plaintiff
v.
VINCENT DAGOSTINO, ET AL. Defendants

         SECTION: “E”

          ORDER

          SUSIE MORGAN UNITED STATES DISTRICT JUDGE

         Before the Court is a Motion to Review Sanctions Order[1] filed by Defendant State Farm Mutual Automobile Insurance Company (“State Farm”). The Court heard oral argument on the motion on May 15, 2019.[2] For the following reasons, the motion is DENIED.

         BACKGROUND

         This case arises out of a motor vehicle accident. In accordance with the Court's order, [3] the parties scheduled a settlement conference with Magistrate Judge North to be held on January 9, 2019.[4] After over an hour of negotiations, no resolution of Plaintiff's claims could be achieved.[5] Magistrate Judge North ordered the settlement conference be reconvened on February 11, 2019.[6] The order reconvening the settlement conference states, “[i]t is ordered that a representative of State Farm Mutual Automobile Insurance Company with full authority to settle up to the current demand shall be present at the settlement conference.”[7]

         On February 11, 2019, Judge North reconvened the settlement conference. The minute entry reflects, “[d]espite the Court's order that a representative of State Farm with full settlement authority up to the Plaintiff's most recent demand appear for the reconvened conference, no such representative attended, a matter that will be addressed by the Court at later date.”[8] Instead, State Farm sent Michelle Cohen, who represented to Magistrate Judge North she did not have full and actual authority to respond to the settlement demand.[9] Magistrate Judge North ordered State Farm to show cause why it should not be sanctioned under Rule 16(f) for failing to have a representative with ultimate settlement authority at the settlement conference.[10]

         Magistrate Judge North held a show-cause hearing on March 20, 2019[11] and issued an opinion on April 5, 2019.[12] Magistrate Judge North sanctioned State Farm under Rule 16(f) for failing to attend the settlement conference in good faith and for violating the Court's order requiring personal attendance by the ultimate state farm decisionmaker.[13]Magistrate Judge North ordered State Farm to pay Plaintiff and his counsel $4, 122.90 in attorneys' fees occasioned by its conduct and to pay the Clerk of Court $4, 824.99 for the unnecessary expenditure of three hours of the Court's time in addressing State Farm's misconduct.[14] Magistrate Judge North also ordered he will require personal attendance, rather than telephone attendance, by a State Farm ultimate decisionmaker at future settlement conferences before him.[15]

         State Farm now seeks review of Judge North's sanctions order ordering personal attendance, rather than telephone attendance, by a State Farm ultimate decisionmaker at future settlement conference held by him.[16] The parties have reached a settlement of all other issues in this matter, including the payment of attorneys' fees to Plaintiff's counsel and costs to the Clerk of Court.[17]

         LAW AND ANALYSIS

         A magistrate judge is afforded broad discretion in resolving non-dispositive motions.[18] The District Court reviews a Magistrate Judge's determination on a non-dispositive pretrial motion under the “clearly erroneous” standard.[19] A ruling is clearly erroneous where, “although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.”[20] When a court imposes sanctions based upon an incorrect legal standard or clearly erroneous factual findings, the court abuses its discretion.[21] “An abuse of discretion is a clear error of judgment, and not simply a different result which can arguably be obtained when applying the law to the facts of the case.”[22]

         Section (f) of Rule 16 provides:

(f) Sanctions.
(1) In General. On motion or on its own, the court may issue any just orders, including those authorized by Rule 37(b)(2)(A)(ii)-(vii), if a party or its attorney:
(A) fails to appear at a scheduling or other pretrial conference;
(B) is substantially unprepared to participate--or does not participate in good faith--in the conference; or
(C) fails to obey a scheduling or other pretrial order.[23]

         In deciding whether a sanction is merited, the Court need not find that the party acted willfully, intentionally, or in bad faith.[24] Rule 16(f)(1) does not require a showing of prejudice to justify sanctions.[25]

         I. Imposition of Sanctions

         State Farm argues: (1) it was prepared for the settlement conference and participated in good faith because the representative it sent, Michelle Cohen “was extensively prepared and familiar with the liability dispute and medical causation Issues”[26]; (2) it did not disobey a pre-trial order of the Court because “Ms. Cohen had authority to settle up the current demand and was present at the settlement conference as a representative of State Farm”[27]; and (3) the sanctions order is tantamount to punishing State Farm for failure to offer a certain amount.[28]

         Although sanctions may not be imposed for a party's mere failure to offer “serious money” in a settlement conference, sanctions may be imposed when a party otherwise wastes a court's dispute resolution resources by, for instance, concealing its true position that it never intended to settle the case.[29] In Guillory v. Domtar Indus., Inc., the Fifth Circuit held the court did not abuse its discretion in imposing sanctions on the defendant for failing to participate in a pretrial settlement conference in good faith.[30] The Fifth Circuit found “the record does not demonstrate that the district court sanctioned [defendant] for failing to make a serious offer, but rather it imposed the sanctions because [defendant] concealed its true position that it never intended to settle the case.”[31] The Fifth Circuit explained:

         The district court provided detailed reasons for the imposition of sanctions in its order. The court emphasized the resources the court and parties wasted orchestrating the futile settlement conference and identified why it concluded that [defendant] approached the conference in bad faith.[32]

         In this case, Magistrate Judge North provided the following facts regarding State Farm's participation in the second settlement conference and its noncompliance with Magistrate Judge North's order:

• The State Farm adjuster responsible for the claim and the person with settlement authority was [Ryan] Jay. (Rec. doc. 44 at p. 5).
• Jay chose not to attend the conference, instead sending Cohen, who was only “assigned” to the claim as a result of the ...

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