The National Pulse

Meddling in Settling

Pressure to Clear Caseloads Spurs Judges to Coerce Settlements, Critics Say

Posted Jun 1, 2005 6:49 PM CDT
By Molly McDonough

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After more than two years of intense mediation over childhood sex abuse claims against the Los Angeles Archdiocese, the cases settled in December for a record $100 million.

Nearly 90 individuals brought the suits against clergy and others affiliated with the church. The cases—known as Clergy Cases I, one of a series of lawsuits in California—were brought to settlement by a specially appointed judge.

To foster an agreement, the judge had held a two-day hearing to assess the potential settlement value of the cases and then issued an order discussing his determination. He also declared that the hearing had satisfied requirements for an actual trial, an apparent effort to hold the insurers responsible for any settlement.

Plaintiffs and defendants reported being relieved that the ordeal was over. But a California appellate court was not finished yet.

In an appeal by the church’s insurers, the California Court of Appeal in Los Angeles vacated the settlement judge’s written orders. Noting that it hadn’t been informed of the settlement, the court said the judge had “exceeded his authority by making factual findings and otherwise preparing a coercive order in violation of the fundamental principles governing mediation proceedings.” Travelers Casualty and Surety Co. v. Superior Court, 126 Cal. App. 4th 1131 (Feb. 15).

ADR EXPERTS ARGUE FOR CODE

Heavy-handed settlement techniques generally are considered no-no’s in mediation circles. But experts in alternative dispute resolution say plenty of judges coerce settlements or otherwise improperly meddle with the mediation process. And when judges overreach, litigants begin to question the legitimacy of mediation.

That’s why there is a push by ADR professionals to explain the principles of mediation—that ADR works best as a flexible, party-driven alternative to resolving disputes—and to incorporate that explanation in black-letter code regulating judicial ethics.

Former U.S. Magistrate Judge John W. Cooley of Evanston, Ill., is among those pushing for prohibitions against coercion to be added to the ABA Model Code of Judicial Conduct, which is under review. In February, Cooley and John Lande, who directs the LL.M. dispute resolution program at the University of Missouri-Colum­bia School of Law, traveled to the ABA Midyear Meeting in Salt Lake City. They presented their argument and a related resolution from the ABA Section of Dispute Reso­lu­tion to a joint commission examining the code.

“Most practitioners in court know there is a lot of arm-twisting by judges,” Cooley says. Yet, he adds, there has never been a clear prohibition against coercion in the code. “I’m not saying this is a widespread practice, but it’s wide-enough spread that we need to do something about it.”

Lande agrees, though he adds that he worries a poorly developed cure could be worse than the disease.

“To me the underlying problem is that the courts are feeling a tremendous caseload pressure,” Lande says.

In response, courts rely more often on alternatives to traditional trials, especially mediation.

Lande says using mediation to alleviate those pressures is understandable, but he cautions against losing sight of a litigant’s right to trial. If a mediation goes sour because one or more of the parties isn’t meaningfully participating, the best remedy is to terminate the mediation rather than coerce a settlement, Lande says.

“That’s better in my view than creating satellite litigation,” such as appeals in Clergy Cases I, “to create this whole new procedural dispute,” he says.

Satellite litigation already has taken off. Several trial courts have shown their frustration over what they consider bad-faith participation by one of the parties in settlement proceedings. The judge’s response often is to impose sanctions out of sheer frustration.

In Lockhart v. Patel, 115 F.R.D. 44 (E.D. Ky. 1987), for example, the court ordered defense counsel to bring some­­one with settlement authority from his insurer client’s home office to attend a settlement conference after a summary jury trial. When counsel appeared with an adjuster from a local office, the court responded by striking the defendant’s pleadings, entering a default judgment favoring the plaintiff, and ordering the trial to go forward on damages only. The case settled for $175,000, up from the insurer’s initial offer of $125,000.

Another case ADR experts often cite is In re Acceptance Insurance Co., 33 S.W.3d 443 (Tex. Ct. App. 2000). After mediation, the parties didn’t settle and took the matter to trial, which resulted in a plaintiffs verdict. The plaintiff then sought $250,000 in sanctions against the defendant’s insurer for failing to mediate in good faith. While hearing the post-trial dispute, the judge allowed the petitioners to cross-examine the insurance adjuster who attended the mediation. Not satisfied with the witness’s knowl­­edge of the case, the court ordered the sen­ior vice president of the insurance company to appear. The insurer stopped the proceedings only after obtaining a writ from the appellate court.

In his research, Lande found that appellate courts reversed eight of 13 times when findings of bad faith were appealed. Lande further found five cases in which a trial judge rejected bad-faith claims. Appellate courts upheld all those decisions.

SIX DEGREES OF COOPERATION

Differing rulings leave parties with uncertainty, Lande says, and that is one reason why he wants changes to the Model Code.

Spe­cifically, Lande and Cooley have asked the Joint Commission to Evaluate the Model Code of Judicial Conduct to consider adding six responsibilities for judges to the code. Among their proposals:

• Judges should encourage parties to settle, but they shouldn’t act in a coercive manner.

• A judge shouldn’t act as a mediator if he or she will also be judging the merits of a case. “If a judge caucuses with the parties, a lot of extraneous confidential information [is revealed] that can bias the judge,” Cooley says.

• Judges should let parties know what is expected of them during settlement discussions and should refrain from sanctioning parties for failing to participate meaningfully unless those expectations have been spelled out.

• Few facts of the mediation should be disclosed to the judge deciding the merits of a case. The judge should be told only whether the mediation occurred, whether a settlement was reached and who attended.

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