Tiedel v. Northwestern Michigan College, 87-2159
| Decision Date | 29 December 1988 |
| Docket Number | No. 87-2159,87-2159 |
| Citation | 865 F.2d 88 |
| Parties | , 12 Fed.R.Serv.3d 401 Michael B. TIEDEL, Plaintiff-Appellant, v. NORTHWESTERN MICHIGAN COLLEGE, a not-for-profit corporation, Defendant, Beech Aircraft Corporation, a corporation, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
A. Denison Weaver (argued), A. Denison Weaver, Ltd., Chicago, Ill., for appellant.
Richard G. Ward, Sullivan, Ward & Bone, Detroit, Mich., Michelle A. Thomas (argued), Southfield, Mich., for appellee.
Before MERRITT, MARTIN and MILBURN, Circuit Judges.
In this diversity action plaintiff-appellant Michael Tiedel appeals from the final judgment awarding the defendant $47,753.01 in actual attorneys' fees and other litigation costs, pursuant to Local Rule 42(j) and (k) of the United States District Court for the Western District of Michigan. This appeal presents the question of whether a district court may enforce its pretrial mediation plan by taxing the losing party with the prevailing party's actual attorneys' fees pursuant solely to the authority of a local district rule. For the reasons set out below we hold it may not, and reverse.
This product liability action arises from the crash of a private airplane on June 4, 1979. Plaintiff Tiedel was a student in a flying course at Northwestern Michigan College. As part of its flight program, the college owned various airplanes, including the Beech Sierra involved in this case. On the day of the crash, plaintiff Tiedel was flying with college instructor Michael Penrod. While Penrod was piloting the plane, he shut off the flow of gasoline to the engine to simulate an emergency. Gas flow to the engine was never reactivated, and the plane crashed. Penrod was killed and Tiedel suffered bodily injury.
Plaintiff filed this action on July 16, 1981, naming as defendants Northwestern Michigan College and Beech Aircraft Corporation. On December 30, 1981, plaintiff and the college entered into a consent judgment in favor of the plaintiff in the amount of $100,000.
On March 15, 1982, plaintiff filed an amended complaint naming Beech Aircraft as the sole defendant. He asserted the plane was equipped with a defective fuel selector switch and defectively designed and manufactured seat belts and shoulder harnesses. The case proceeded through discovery until July 17, 1984, when the district court entered an order sua sponte, submitting the matter to mediation pursuant to Local Rule 42. 1 Plaintiff did not object, and a mediation hearing was held on March 8, 1985. At the conclusion of the hour-long hearing (local rules limit each side's presentation to thirty minutes), the panel rendered a unanimous evaluation of "no cause" of action in favor of the defendant. The evaluation was accepted by the defendant but rejected by the plaintiff, who continued to insist upon a jury trial.
Trial commenced on April 1, 1986. On April 23, 1986, the jury returned a verdict for the defendant. Judgment for the defendant was entered on April 28, 1986. On May 22, 1986, Beech Aircraft submitted a bill of $110,993.11, and requested it be taxed against the plaintiff pursuant to Federal Rule of Civil Procedure 54(d), 28 U.S.C. Sec. 1920 and Local Rule 42. The bill included, among other things, deposition and travel expenses of $4,520.39; records and deposition fees of $903.24; expert witness fees of $26,076.90; trial exhibit costs of $5,205.16; and actual attorneys' fees of $35,439.70. On May 28, 1986, plaintiff filed a notice of appeal of the judgment with this court. That appeal was dismissed for want of prosecution on July 7, 1986.
The district court initially scheduled a hearing on the defendant's motion for costs on October 7, 1986. It was rescheduled for November 4, 1986, and held on that date, but in the absence of plaintiff's counsel, who failed to appear. Ten days later, plaintiff's counsel requested leave to file a response to defendant's motion which had been filed six months earlier. Plaintiff's counsel explained his failure to appear at the hearing by citing inadvertence and scheduling conflicts. The district court granted leave to respond despite defendant's objections.
The court conducted a rehearing on the matter on March 24, 1987, and granted the defendant's motion in full. Judgment was entered two days later in the amount of $110,993.11.
On April 4, 1987, plaintiff filed a motion to vacate or, in the alternative, to amend the judgment pursuant to Fed.R.Civ.P. 59(e). Plaintiff contended the court abused its discretion in ordering mediation under Local Rule 42 because the highly complex and technical nature of the case precluded effective presentation in a thirty-minute hearing. Plaintiff also contended that the local rule which permitted the taxing of an adverse party's actual costs was unconstitutional in that it penalized a litigant who failed to obtain a favorable judgment. Plaintiff further argued that the local rule was inconsistent with the Federal Rules of Civil Procedure and 28 U.S.C. Sec. 1920, and therefore in violation of the court's rule making power under 28 U.S.C. Sec. 2071.
Beech Aircraft countered that the plaintiff had failed to file a timely supporting brief for his motion and, in any case, the district court's pretrial mediation procedures were constitutional and proper. The defendant also argued that plaintiff's motion to alter or vacate the judgment was in a sense waived because it consisted of arguments that could have been presented in response to the court's order submitting the case to mediation, or at least to the defendant's original motion for costs. Indeed, at no time prior to the motion to vacate had plaintiff ever challenged the propriety of Local Rule 42, the order sending the case into mediation, or the actual amount of costs requested by the defendant, despite numerous opportunities to do so.
Nevertheless, the court conducted a hearing on plaintiff's motion on May 26, 1987. A few weeks later, the Supreme Court held in Crawford Fitting Co. v. J.T. Gibbons, 482 U.S. 437, 107 S.Ct. 2494, 96 L.Ed.2d 385 (1987), that a prevailing party's ability to recover expert witness fees in federal litigation was limited to the statutory limit of $30.00 a day. Plaintiff then contended that the expert witness fees sought by the defendant were excessive under Crawford Fitting Co.
On October 8, 1987, the court conducted a supplemental hearing on plaintiff's motion. Thereafter, on October 30, 1987, the court granted plaintiff's motion in part, striking the award of expert witness fees in excess of $30.00 per day, but affirming its award of costs and attorneys' fees to the defendant in the amount of $47,753.01. The court held that Local Rule 42 constituted a valid exercise of its inherent power to conduct its business in an economical and efficient manner, and the imposition of attorneys' fees was a means of encouraging parties to give serious consideration to mediation. It further found Local Rule 42 to be constitutional and consistent with the federal rules and statutes and Michigan law, 118 F.R.D. 54. Tiedel filed a notice of appeal on November 24, 1987.
The Supreme Court and all courts established by Congress have the power to prescribe rules for conducting their business. These rules must be "consistent with Acts of Congress and rules of practice and procedure prescribed by the Supreme Court." 28 U.S.C. Sec. 2071. Additionally, Fed.R.Civ.P. 83 empowers district courts to make and amend rules governing their practice, as long as the local rules are consistent with the federal scheme.
The draftsmen of Rule 83 expected local rule making "would be used only on rare occasions when the civil rules deliberately had left gaps to be filled in the light of recognized local needs[,] [such as the setting of motion days]." 12 C. Wright & A. Miller, Federal Practice & Procedure: Civil 2d Sec. 3152 (1979 and Supp.). Rule 83 was amended in 1985 in response to the urgings of many commentators that local rules were clogging the federal scheme and setting traps for the unwary. Fed.R.Civ.P. 83, Advisory Committee Notes on the 1985 Amendment. As a result, the district courts are required to provide for public notice and comment before making or amending local rules.
Pretrial mediation and other forms of alternative dispute resolution have been tried in a number of states and installed in the federal district courts as part of a United States Department of Justice experiment. E.g., Rhea v. Massey-Ferguson, Inc., 767 F.2d 266 (6th Cir.1985) (per curiam); Kimbrough v. Holiday Inn, 478 F.Supp. 566 (E.D.Pa.1979). The plan in this case was modeled after the plan used in the Eastern District of Michigan and approved by this court in Rhea, where a mediation panel recommended awarding the plaintiff $100,000 for his personal injuries. The defendant rejected the recommendation and the case went to trial. The plaintiff eventually received a verdict of $228,000. Because the plaintiff obtained a judgment of more than 90 per cent of the mediation panel's recommendation, the defendant was found liable under the local rules for the plaintiff's actual trial costs of $5,400. Rhea, 767 F.2d at 268.
The defendant contended on appeal that the mediation scheme violated its Seventh Amendment right to a jury trial and was inconsistent with the Federal Rules of Civil Procedure. We held that the mandatory mediation procedures did not violate a party's right to a jury trial, nor were they inconsistent with the federal rules in their encouragement of settlements. Rhea at 268-69. Although the holding in Rhea upholds the basic validity of the mediation in this case, it did not consider the validity of the penalty and enforcement provisions allowing for the taxation of actual attorneys' fees at issue in this appeal.
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