G. Heileman Brewing Co., Inc. v. Joseph Oat Corporation

MANION, Circuit Judge,

joined by COFFEY, EASTERBROOK and RIPPLE, Circuit Judges,

dissenting.

Federal Rule of Civil Procedure 16 states that district courts may order “the attorneys for the parties and any unrepresented parties” to appear at pretrial settlement conferences. Despite this seemingly clear language, the majority holds that district courts have “inherent power” to compel parties represented by counsel to appear in court to discuss settlement. Because Rule 16 leaves no room for any such use of inherent power, I respectfully dissent.

Inherent power is not a license for federal courts to do whatever seems necessary to move a case along. Inherent power is simply “another name for the power of courts to make common law when statutes and rules do not address a particular area.” Soo Line R. Co. v. Escanaba & Lake Superior R. Co., 840 F.2d 546, 551 (7th Cir.1988). Since inherent power’s purpose is to fill gaps left by statute or rule, it necessarily follows that where a statute or rule specifically addresses a particular area, it is inappropriate to invoke inherent power to exceed the bounds the statute or rule sets. Cf. Bank of Nova Scotia v. United States, — U.S. -, 108 S.Ct. 2369, 2373-74 , 101 L.Ed.2d 228 (1988) (a federal court may not invoke its supervisory — i.e. inherent — power over criminal proceedings to circumvent Fed.R.Crim.P. 52(a)’s harmless error inquiry).

We recently applied this principle in Strandell v. Jackson County, 838 F.2d 884 (7th Cir.1988). In Strandell , we recognized that district courts must exercise their inherent power “in harmony with the Federal Rules of Civil Procedure.” After carefully examining Rule 16 and its accompanying advisory committee note, we held in Strandell that a district court may not order an unwilling litigant to participate in a summary jury trial because Rule 16, which addresses the district courts’ power to insist on pretrial settlement proceedings, did not authorize district courts to conduct mandatory summary jury trials. See id. at 186-88. Implicit in this holding is that no inherent power exists to conduct mandatory summary jury trials; Rule 16 shut the door on such proceedings.

The issue here — whether a district court may order a represented party to appear at a settlement conference — is slightly different from the issue in Strandell . But the proper analysis is the same. Since Rule 16 specifically addresses the use of settlement conferences in the federal courts, we must determine whether Rule 16 limits a district court’s power over who the court may order to appear at those conferences.

As with any rule or statute, the proper starting point in interpreting Rule 16 is the rule’s language. We should not be content to rely on general statements about “liberal construction,” and Rule 16’s “broadly remedial” “spirit.” See majority opinion at 652-53. It is true that Rule 1 commands us to construe the federal rules “to secure the just, speedy, and inexpensive determination of every action;” but that command is not an excuse for us to ignore the words the drafters used to pursue that goal.

As originally enacted, Rule 16 provided that district courts could “direct the attorneys for the parties” to appear for pretrial conferences. In 1983, Rule 16 was amended to provide, among other things, that the possibility of settlement is an appropriate subject to consider at pretrial conferences. Fed.R.Civ.P. 16(c)(7); see also Fed.R.Civ.P. 16(a)(5) (“facilitating” settlement). But Rule 16(c) states only that “the partid- *667 pants at any conference under this rule” may consider settlement (emphasis added); Rule 16(c) does not say who those “participants” may be. Rule 16(a), on the other hand, provides that a district court may “direct the attorneys for the parties and any unrepresented parties ” to appear for a pretrial conference. Rule 16(a) thus defines who the “participants” at a pretrial conference are: attorneys and unrepresented parties.

As Judge Coffey notes, dissenting opinion at 660, other parts of Rule 16 echo Rule 16(a)’s reference to attorneys and unrepresented parties. Rule 16(b) requires courts to enter scheduling orders after consulting with “the attorneys for the parties and any unrepresented parties.... ” Rule 16(d) requires that “one of the attorneys who will conduct the trial for each of the parties and ... any unrepresented parties” must attend the final pretrial conference.

The language of Rule 16’s sanctions provision, Rule 16(f), reinforces Rule 16’s distinction between represented and unrepresented parties. The only language in Rule 16(f) specifically addressing appearance does not authorize sanctions if “a party fails to appear;” instead, sanctions are appropriate if “no appearance is made on behalf of a party_” (Emphasis added.) This choice of language is significant. In the normal course, an attorney appears “on behalf of” a represented client at a pretrial conference. An unrepresented party has nobody to appear on his behalf except himself.

Congress has provided that litigants may “conduct their own cases personally or by counsel_” 28 U.S.C. § 1654 (emphasis added). Rule 16’s distinction between represented and unrepresented parties is consistent with a litigant’s statutory right to representation by an attorney. It is also consistent with the attorney’s traditional role in litigation. Litigants hire attorneys to take advantage of the attorneys’ training and skill and, as Judge Posner notes, “to economize on their own investment of time in resolving disputes.” Dissenting opinion at 657, Part of an attorney’s expertise includes evaluating cases, advising litigants whether or not to settle, and conducting negotiations. I realize that attorneys may sometimes convey inadequate information to their clients regarding settlement. But an attorney has a strong self interest in realistically conveying to the client relevant information necessary for the client to make an informed settlement decision, and in accurately conveying the client’s settlement position to the court and opposing litigants. The attorney also has an ethical duty to convey that information. The threat of malpractice suits and disciplinary proceedings should be sufficient to make any attorney think twice before trying to mislead his client or the court. Attorneys play an important role in our adversary system, and we should not denigrate that role by presuming that attorneys will be incompetent to perform one of the most important functions for which their clients hire them. Nor should we presume that Rule 16’s drafters meant to encroach on a litigant’s right to conduct his case through counsel. Rule 16’s clear language shows that the rule’s drafters presumed otherwise.

The majority asserts that Rule 16 “does not give any direction to the district court upon the issue of a court’s authority to order litigants who are represented by counsel to appear for pretrial proceedings.” Majority opinion at 651. But given Rule 16’s clear language and consistent distinction between represented and unrepresented parties (a consistent distinction the majority ignores), that assertion is specious. The majority seems to be saying that district courts can order represented parties to appear at settlement conferences because Rule 16 does not explicitly say that district courts cannot order represented parties to appear. 1 But that ignores the *668 drafters' decision in 1983 to specifically add “unrepresented parties” to the people a district court can order to appear under Rule 16. It also ignores the drafters’ language in Rule 16(f) specifically addressing a failure to appear “on behalf of a party” at a pretrial conference. If the drafters had intended to allow district courts to order represented parties to appear, or to sanction parties for failing to appear (as opposed to failing to send someone to appear), the drafters could have easily said so.

The majority offers no reason why the drafters used the language they did in Rule 16 if they did not intend to limit the district courts’ authority to order represented parties to appear. No reason appears on Rule 16’s face or in the advisory committee note. Apparently, the majority would chalk up the drafters’ choice of language to inadvertence or sloppy draftsmanship. But a rule’s words are meant to convey a meaning to those who read the rule. This court should give the drafters credit for being able to communicate what they actually intended. Furthermore, the process for amending the federal rules belies any inadvertence or sloppy draftsmanship. As Professors Wright and Miller have noted,

[wjhen the Civil Rules are amended, the process is extremely careful. The Advisory Committee on Civil Rules includes lawyers, judges, and scholars with a national reputation for their expertness on matters of procedure, and it is assisted by a scholar of rank who acts as its Reporter. When it has agreed on a preliminary draft of amendments, thousands of copies of that draft are sent out to the profession. Many comments on the draft, and suggestions for improvement in it, then come back to the committee from bar association committees, individual lawyers and scholars, and in law review commentary. The draft is reevaluated and refined in the light of these comments. When the Advisory Committee has completed its work, the amendments still must be approved by the Standing Committee on Rules of Practice and Procedure, by the Judicial Conference of the United States, and by the Supreme Court, and Congress retains the power, though it never has exercised it, to disapprove the amendments. The process is calculated to ensure that any changes reflect the best thinking of the entire profession.

12 C. Wright & A. Miller, Federal Practice and Procedure § 3152, at 220 (1973). It is incredible to believe that after this careful process, amended Rule 16 would expressly authorize district courts to order only attorneys and unrepresented parties to appear if the drafters also intended to allow district courts to order represented parties to appear. This is especially so given Rule 16’s consistent distinction between represented and unrepresented parties, and that distinction’s congruence with the statutory right to representation by an attorney and the attorney’s traditional role in litigation.

The advisory committee note accompanying the 1983 amendment of Rule 16 reinforces the conclusion that Rule 16 leaves no room for any inherent power to order represented parties to attend pretrial set *669 tlement conferences. While the majority makes much of the drafters’ general intent to allow district courts “to make wider use of their powers and to manage actively their dockets,” the majority offers little in the way of specifics. The advisory committee note does not discuss settlement conferences in much detail. The note does state, however, that “[Although it is not the purpose of Rule 16(b)(7) to impose settlement negotiations on unwilling litigants it is believed that providing a neutral forum for discussing the subject might foster it.”

The majority brushes aside this admonition by drawing a distinction between being required to attend a settlement conference and being required to negotiate. This distinction is puzzling. I suppose that if a represented party is required to come to court to state his position — even if that position is simply, “I refuse to settle. See you at trial.” — that would not be requiring the represented party to “negotiate.” But if that is all the majority is requiring, then the majority has recognized nothing more than a district court’s inherent power to waste litigants' time doing what their attorneys could have done (and were hired to do). Rule 16’s drafters could hardly have meant to approve (or allow) such a pointless exercise.

The majority obviously does not envision that a settlement conference should be the pointless exercise sketched out above. The majority cites with approval the district court’s statement that “ ‘[t]he only requirement imposed by the magistrate was that [Oat’s] representative be present with full authority to settle, should terms for settlement be proposed that were acceptable to [Oat].' ” Majority opinion at 653. The majority also states that a district court may require represented parties “to come to court to consider the possibility of settlement.” But requiring that a party consider the possibility of settlement and that the party have authority to settle if another party proposes acceptable terms presupposes that besides stating his own position, the party must sit and listen to other parties’ (and, possibly, the court’s) proposals. How else could a representative with “authority to settle” act on terms he might find acceptable, except by listening to possible terms? It appears that the court is saying that a district court may order a represented party to appear in court both to talk and listen about settlement — in other words, to actually discuss settlement. I cannot see any meaningful distinction between this kind of activity and “negotiation;” after all, negotiation in large measure simply involves discussion. If a distinction does exist, it is so blurry as to be almost invisible, and certainly difficult, if not impossible, to enforce. The distinction is especially elusive in this case because, as Judge Easterbrook notes, dissenting opinion at 664, the magistrate’s order that Oat send a representative with “authority to settle” could only mean that Oat’s representative had to have the ability to settle by paying money — even if, as the majority claims, “authority to settle” did not mean that the representative had to be willing to use that ability. What is the point of insisting on such authority if not to require negotiation?

The majority errs by interpreting the advisory committee’s admonition against forced negotiations too narrowly. Rule 16 is dead set against any coercive settlement practices. The advisory committee note speaks only of facilitating — that is, providing a forum for the parties to voluntarily pursue — settlement. Cf. Strandell, 838 F.2d at 837 . Even if it is possible to draw a distinction between “discussing” and “negotiating” that is reasonably possible to enforce, the kind of coerced participation by represented parties in settlement conferences that the majority seems to approve is close enough to forced negotiation to fall within the advisory committee’s general admonition against forced settlement. Moreover, Rule 16 “was not intended to require that an unwilling litigant be sidetracked from the normal course of litigation.” Id. Rule 16’s language and structure — its consistent distinction between represented and unrepresented parties — leave no doubt that in the normal course of litigation, including settlement discussions, the rule’s drafters envisioned that courts would work with attorneys, not the attorneys’ clients. Given *670 Rule 16’s clear language, the advisory committee’s comments leave no room for construing that rule to allow a district court to order represented parties, under threat of contempt (see Fed.R.Civ.P. 16(f) and 37(b)(2)(D)), to appear in court to discuss settlement.

One may ask why the majority strains to get around Rule 16’s clear language and the advisory committee’s admonition against coercive settlement practices. Implicit in the majority’s opinion — and explicit in the dissent to the panel opinion — is the notion that to effectively manage their case loads, district courts need the power to order represented parties to appear at settlement conferences. See majority opinion at 650-51; G. Heileman Brewing Co. v. Joseph Oat Corp., 848 F.2d 1415, 1427 (7th Cir.1988) (dissenting opinion); see also Judge Posner’s dissenting opinion at 657. Even if this is so (and I do not think it is), it does not justify expansively interpreting the district courts’ inherent power to exceed the bounds Rule 16 sets. Moreover, as Judge Coffey and Judge Posner demonstrate, if any benefits do result from allowing district courts to order represented parties to attend settlement conferences, those benefits do not come without substantial costs. One of those costs is that expansively construing inherent power encourages judicial high-handedness. This case (in which Judge Posner has accurately labeled the magistrate’s actions as “arbitrary, unreasonable, willful, and indeed petulant,” dissenting opinion at 658) and the case involving the Secretary of Labor, cited by Judge Coffey, dissenting opinion at 661-62, aptly demonstrate that danger. Another cost is the expense and imposition on litigants that litigants try to avoid by hiring attorneys. A third cost is the denigration of the attorney’s role in litigation. Perhaps the greatest cost, as Judge Coffey explains in detail, dissenting opinion at 662, is the damage to the appearance of fairness and the federal court’s image as a neutral forum, factors that are essential to the court’s proper functioning. Say what we will about the difference between coercing settlement and coercing attendance, it is difficult to believe that a litigant who has been forced to appear against his will, and possibly to listen to the opposing party or a judicial officer berate his litigation position, is going to walk away from that experience feeling he will get a fair shake from the court at trial if he resists the pressure to capitulate.

Obdurate litigants who unreasonably refuse to settle may cause headaches for the courts and opposing litigants. But litigants have no duty to settle, or even negotiate, and Rule 16 makes clear that federal courts have no business trying to force litigants to negotiate. If a litigant’s position is legally or factually unsound, procedures such as judgment on the pleadings, Rule 12(b) dismissal, and summary judgment exist to dispose of the case at an early stage. District courts also have substantial power — of which they should take full advantage — to deter and punish frivolous litigation and undue delay. See 848 F.2d at 1421-22 (mentioning, among other things, the district courts’ scheduling power under Rule 16 and the courts’ sanctioning powers under Rule 16, Rule 11, and 28 U.S.C. § 1927 ). And district courts still have other methods — without forcing unwilling litigants to appear in court under threat of contempt — to facilitate settlements, including the time-honored method of pushing cases to early trials. See id; see also Strandell, 838 F.2d at 887 . Where these methods do not produce settlements, it is unlikely that coercion will. And where coercion does succeed in producing a settlement, it is unlikely that success will advance the cause of justice or the federal court’s image as a neutral forum.

In what seems to be an attempt to justify its result by implying that coercing represented parties to appear at settlement conferences has received widespread judicial approval, the majority asserts that “requiring represented parties to appear in person ... has been part and parcel of ... settlement conferences for years.” Majority opinion at 651 n. 4. The only case the majority cites for this statement is In re LaMarre, 494 F.2d 753 (6th Cir.1974). In LaMarre , counsel for plaintiffs and defendants indicated to the district court on the morning of trial that they had reached a *671 settlement. The defendant’s insurer’s claims manager, however, would not accept the settlement. The district court ordered the claims manager to appear in court to discuss the matter and, when the claims manager failed to appear, held him in criminal contempt. Id. at 754-55 . The court of appeals upheld the court's general authority to order the claims manager to appear. Id. at 756 .

LaMarre is distinguishable. Because of the conflict between the defendant, his counsel (hired by the insurance company), and the insurance company, it is arguable that the insurance company was not a represented party (assuming that it was a party at all); even though the insurer hires and pays the attorney, the attorney’s allegiance is to the defendant, not the insurer. If that’s so, even the amended Rule 16 would not prohibit ordering the insurer’s representative to appear in court because amended Rule 16 expressly authorizes district courts to order unrepresented parties to appear.

More importantly, LaMarre , despite its broad language, see id. at 756 , does not stand for any widespread judicial approval for ordering represented parties to appear at settlement conferences. LaMarre is the only appellate case (besides this case) that has even dealt with the issue. More importantly, the Sixth Circuit decided LaMarre long before the 1983 amendments to Rule 16. Since the Sixth Circuit could not consider Rule 16 as amended, LaMarre simply does not address whether Rule 16, as it now stands, limits the district court's power to order represented parties to appear at settlement conferences.

The answer to the question that La-Marre could not address is clear. Rule 16, as amended, authorizes district courts to order only attorneys and unrepresented parties to appear at pretrial conferences. The rule consistently distinguishes between attorneys and unrepresented parties on one hand, and represented parties on the other. That distinction is consistent with litigants’ statutory right to representation by counsel and with the attorney’s traditional role in litigation, including settlement. No reason exists why Rule 16’s drafters wrote the rule as they did if they did not mean what they said. Finally, the advisory committee note to the 1983 amendment of Rule 16 states that Rule 16 was not meant “to impose settlement negotiations on unwilling litigants,” and, more generally, that Rule 16 is dead set against any coercion in settlement. Taken together, all this can lead to only one conclusion: Rule 16 leaves no room for any inherent power in the district courts to order represented parties to appear at settlement conferences.

“Federal judges spend lots of time telling other officials to stay within constitutional and statutory bounds, however those bounds may chafe in particular circumstances.” Newman-Green, Inc. v. Alfonzo-Larrain R., 854 F.2d 916, 926 (7th Cir.1988). However much federal courts may desire the power to address unwilling parties directly in endeavoring to induce settlements, Rule 16 commands that the courts work through the parties’ attorneys if that is what the parties desire. Rather than straining to circumvent Rule 16’s clear command, we should demand that those of us in the federal judiciary practice what we preach so much to others, and work within the entirely reasonable limits that Rule 16 sets. Because the magistrate did not have the power to order Oat to send a corporate representative to the settlement conference, I would reverse the district court’s judgment. 2

. The majority, citing Link v. Wabash R. Co., 370 U.S. 626 , 82 S.Ct. 1386 , 81 L.Ed.2d 734 (1962), asserts that "the mere absence of language in the federal rules specifically authorizing or describing a particular judicial procedure should not, and does not, give rise to a negative implication of prohibition." Majority opinion at 652. That sweeping statement reads far too *668 much into Link’s narrow holding. Link held that a district court retained the inherent power to dismiss a case sua sponte for failure to prosecute in the face of Fed.R.Civ.P. 41(b), which merely authorized defendants to move for such dismissals. The Court in Link reasoned that given the longstanding — indeed, ancient — authority of trial courts to dismiss cases for want of prosecution, "it would require a much clearer expression of purpose than Rule 41(b) provides for us to assume that it was intended to abrogate" that power. 370 U.S. at 630-32 , 82 S.Ct. at 1388-90 .

Link did not hold that negative implication is always an inappropriate tool to use in interpreting the federal rules. Link only held that in the context of the particular rule and the particular power involved in that case, any negative implication was not enough, by itself, to convince the Court that the rule’s drafters meant to limit that power. While negative implication may not, by itself, completely answer what limits a particular rule places on a district court’s power, it does provide a starting point for that analysis. As demonstrated in the text, this case involves much more than the “mere absence” of a particular procedure in Rule 16. Link does not relieve us of the responsibility of analyzing the language the drafters used — and did not use — in Rule 16.

. The majority also holds that Oat has waived any objection to the magistrate’s order because Oat did not object before the settlement conference. See majority opinion at 654-55. For the reasons stated in the panel opinion, 848 F.2d at 1418 ,1 would hold that Oat has not waived its right to object to the magistrate’s order. I also agree with Judge Posner that even if the magistrate had the power to order Oat to send a corporate representative, other than its attorney, to the settlement conference, the magistrate abused his discretion in exercising that power. Even if a district court may order a corporate representative to appear, the court may not insist that the representative have "authority to settle.” See Fed.R.Civ.P. 16, advisory committee *672 note ("The reference to ‘authority’ in Rule 16(c) is not intended to insist upon the ability to settle the litigation”); see also Judge Easterbrook’s dissenting opinion at 664.