Dawson v. United States

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

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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

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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.

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(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

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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.

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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

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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

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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

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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.

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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].

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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

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(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

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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

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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:

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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

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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

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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.

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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 -