Published by The Pellegrin Firm August 8, 2019

On July 23, 2019, U.S. District Judge Susie Morgan in New Orleans affirmed a magistrate judge’s sanctions against State Farm Insurance for failure to follow court orders and failure to negotiate in good faith. The case arose out of a motor vehicle accident. Before trial, the parties scheduled a settlement conference with Magistrate Judge North. After an hour of negotiations, no resolution could be achieved, so Judge North ordered the conference to reconvene at a later date. He ordered the insurance company to send a representative to the conference with full authority to settle up to the current demand. The insurance company sent a representative who did not represent to the Magistrate Judge that she had full and actual authority to respond to the settlement demand. Magistrate Judge North sanctioned them 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 decisionmaker. The Judge ordered the company to pay for the plaintiff’s attorneys’ fees and to pay the Clerk of Court for the unnecessary expenditure of the court’s time in addressing their misconduct. Magistrate Judge North also ordered personal attendance, rather than telephone attendance, by an ultimate decisionmaker from the insurance company at future settlement conferences before him. The insurance company sought review of the order of having personal attendance at future settlement conferences.

State Farm sought review with the district judge. The insurance company argued that it was prepared and participated in good faith because the representative that they sent was extensively prepared and familiar with the case and had authority to settle up to the current demand. Although sanctions may not be imposed for a party’s mere failure to offer “serious money” in a settlement conference, sanctions may be imposed if a party wastes the court’s resources by concealing its true position that it never intended to settle the case. Despite the abilities of the representative sent to the conference, the counsel to the insurance company informed the Court that the decision not to negotiate further or to increase the offer had already been made elsewhere by a person not at the conference. The ultimate decision maker had chosen not to attend in direct violation of the court’s order.

The district judge held that Magistrate Judge North did not abuse his discretion in imposing sanctions on the insurance company. The court also found that the sanctions were not overly burdensome because the sanction only requires an ultimate decision maker for the company to attend all future settlement conferences with Magistrate Judge North. This does not include any and all settlement conferences in front of other judges and is therefore not “clearly disproportionate.” The insurance company’s motion to review the sanctions order was denied.