Nanouk v. The United States of America

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
EMILY NANOUK,
Plaintiff,
vs.
UNITED STATES OF AMERICA,
Defendant.
Case No. 3:15-cv-00221-RRB
ORDER RE
MOTION FOR SANCTIONS
Before the Court is Plaintiff’s Motion for Sanctions1 against Defendant “for
its failure to prepare and participate in good faith at the pretrial settlement conference.”2
Defendant responded in opposition,3 and Plaintiff filed a reply4. For the foregoing reasons,
the Motion is GRANTED.
I. 	BACKGROUND
The underlying matter involves a Complaint brought by Plaintiff against the
United States under the Federal Tort Claims Act (FTCA).5 Specifically, Plaintiff alleged
that her property had been contaminated by hazardous chemicals negligently released from
1 Docket 225.
2 Id. at 1.
3 Docket 229.
4 Docket 230.
5 See generally Docket 1.
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a nearby military facility.6 On December 12, 2018, the District Court granted Defendant’s
motion to dismiss for lack of subject matter jurisdiction after determining that Plaintiff’s
claims were barred by the FTCA’s discretionary function exception, a provision that
precludes jurisdiction when the plaintiff’s claims are based on certain discretionary acts of
government employees.7 Plaintiff appealed and, on September 4, 2020, the Ninth Circuit
vacated and remanded the matter to the District Court.8 	The Ninth Circuit held that the
discretionary function exception barred Plaintiff’s claims to the extent they were predicated
on two of the three acts Plaintiff challenged as negligent.9 	However, the Ninth Circuit
found that Defendant had failed to establish that the exception bars Plaintiff’s claims in
their entirety.10
On November 17, 2020, the parties filed a joint status report “request[ing]
the Court to order referral to a judicial settlement conference.”11 	On December 9, 2020,
this Court issued its settlement conference order, which, in part, requested that each party
submit 	a 	confidential 	settlement 	brief 	in 	anticipation 	of 	an 	in-person 	settlement
conference.12 Due to the COVID-19 pandemic, conducting the settlement conference in-
person became logistically challenging, as counsel for the Defendant were unable to attend.
In an attempt to avoid further delay, the parties and Court agreed to a hybrid approach,
6 Id. at 3–4.
7 Docket 194.
8 Nanouk v. United States, 974 F.3d 941 (9th Cir. 2020).
9 Id. at 942.
10 Id.
11 Docket 212 at 1–2.
12 Docket 219.
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where Plaintiff and Plaintiff’s counsel would meet with the Court in-person, and the Court
would meet with counsel for the Defendant virtually. 	On April 29, 2021, the settlement
conference was conducted.13 	The settlement conference concluded without a resolution.
Plaintiff filed the present motion for sanctions shortly thereafter, on June 15, 2021.
II. 	DISCUSSION
Federal Rule of Civil Procedure 16(f) provides that the court may issue an
order for sanctions “if a party or its attorney[] is substantially unprepared to participate—
or does not participate in good faith—in the [pretrial] conference.”14 	The District Court
has discretion to establish appropriate sanctions.15
Plaintiff argues that, as a foundational matter, “[r]equesting a settlement
conference with little intent to negotiate is bad faith.”16 	Citing to Guillory v. Domtar
Industries Inc.,17 Plaintiff contends that Defendant made “an offer that it knew was so low
it had no realistic potential of being accepted” and, in fact, “lowered the previous offer
after hearing Plaintiff’s counteroffer.”18
Defendant argues that this Court’s “decision to proceed with a settlement
conference after reviewing the [Defendant’s] brief [was] an implicit acknowledgment that
there was nothing about the United States’ position that inherently reflected bad faith, such
13 See Docket 223.
14 Fed. R. Civ. P. 16(f)(B).
15 United States v. Bright, 596 F.3d 683, 696 (9th Cir. 2010).
16 Docket 225 at 6.
17 95 F.3d 1320 (5th Cir. 1996).
18 Docket 225 at 7 (emphasis in original).
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that negotiations would have been futile.”19 Defendant also notes that any inference as to
bad faith based solely on the Court’s evaluation of what constitutes a “bonafide [sic] offer
of settlement” would be inappropriate given that parties often vary greatly as to their
respective evaluation of what might be a “fair” offer.20 Finally, Defendant contends that
this Court cannot sanction a party simply due to its settlement position.21
The 	Court 	finds 	that 	Defendant 	did 	not 	participate 	in 	the 	settlement
conference in good faith because, simply put, it refused to suggest any meaningful offers
or otherwise engage in good faith negotiations. 	Without divulging the substance of the
respective conversations that occurred during the settlement conference, this Court notes
that Defendant ultimately did not substantially alter its position or the monetary offer it
articulated in its confidential settlement briefing. 	While Plaintiff showed a desire to find
common ground, Defendant was unwilling to attempt negotiation. 	The refusal to engage
in any substantive settlement talks belies the Government’s assertion that it was open to
settlement and the Court, in its discretion, finds that this conduct warrants sanctions under
Rule 16(f).
As relevant here, Defendant’s argument opposing sanctions relies upon this
Court’s “Order Regarding Settlement Conference,” which provided, in part, that:
A settlement conference will be scheduled only if, on the basis
of the Confidential Settlement Briefs, it appears that there is a
reason to believe that, with the assistance of the Court, a
settlement of the case can be negotiated.22
19 Docket 229 at 14.
20 Id.
21 Id. at 15.
22 Docket 213-1 at 2.
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Put more bluntly, Defendant contends that it cannot possibly have acted in bad faith
because this Court served as the gatekeeper for the settlement conference, and the Court’s
decision “to proceed with a settlement conference after reviewing [Defendant’s] brief is an
implicit acknowledgement that there was nothing about [Defendant’s] position that
inherently reflected bad faith, such that negotiations would be futile.”23
However, to rely on such a superficial analysis would represent a complete
failure to appreciate the purpose, stratagems, and methodologies of a typical settlement
conference. There invariably is a disparity between what the adverse parties believe a fair
settlement entails.24 	Parties inevitably will assert confidence about their respective
positions and the relative value of the litigation, if only as a strategy to reach a more
favorable settlement. Because of this, Defendant’s brief did not indicate to the Court that
settlement was futile, especially given that Defendant requested a judicial settlement
conference. 	A settlement conference is contemplated only if both the parties indicate a
desire to engage in negotiations; this implies a willingness of both parties to endeavor in a
meaningful settlement conference in the hope to resolve the underlying litigation. In fact,
the Court implicitly notes this in its Order Regarding Settlement Conference, by stating
that it will conduct a settlement conference if “it appears that there is a reason to believe
that, with the assistance of the Court, a settlement of the case can be negotiated.”25
23 Docket 229 at 10.
24 Anecdotally, this Court cannot recall reviewing confidential settlement briefings where
such a disparity was not present.
25 Docket 213 at 2 (emphasis added).
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More 	importantly, 	the 	Court’s 	decision 	to 	proceed 	with 	a 	settlement
conference based on Defendant’s brief does not preclude, and ultimately is irrelevant to, a
finding of bad faith. 	The Court believed that a joint request for settlement conference
necessarily would entail a willingness to negotiate. However, Defendant’s conduct during
the ensuing settlement conference showed that the Government entered the conference with
no intent to negotiate and, ultimately, did not participate in good faith.
Here, Defendant indicated unequivocally to the Court that it was interested
in settlement negotiations. 	The respective confidential settlement briefing indicated that
there was a sizeable gap between what each party felt would be a fair resolution. However,
given the joint desire to engage in the settlement conference, this Court reasonably believed
that it was a worthwhile endeavor, and that each party would meaningfully engage in the
enterprise with an intent to find common ground. 	Without divulging the content of the
conversations that occurred during the settlement conference, this Court notes that
Plaintiffs did so, making a series of concessions and revisions to its perspective as to a fair
resolution, notwithstanding Plaintiff’s belief that she would prevail in the underlying
litigation.
Defendant did not. Defendant’s belief, essentially, was that it was certain to
prevail in the underlying litigation and, as such, was not willing to suggest a meaningful
offer. 	Although Defendant was not required to settle or make an offer that appeased
Plaintiffs, 	Defendant 	was 	expected 	to 	minimally 	engage 	in 	negotiations. 	While
maintaining the confidentiality of the parties’ discussions, the Court notes that after four
hours of attempted negotiation, the Government refused to consider anything other than its
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original offer. This does not reflect good faith participation in the conference: a good faith
attempt at settlement includes a willingness to negotiate.26 	If the Government was
uninterested in a substantive settlement discussion, it could have foregone a judicial
conference and simply communicated a written final offer to Plaintiff.
This Court does not take issue with Defendant’s own valuation of its case or
its ultimate position that it was likely to prevail, and this Order does not address whether
Defendant’s offer could be considered a “bonafide [sic] offer of settlement.” 	This Court
does take issue with the disingenuous strategy of requesting a settlement conference, with
the natural implication that it was interested in a meaningful settlement discourse, and then
refusing to engage in that discourse. 	The Government’s unwillingness to meaningfully
participate in the settlement conference wasted the Court’s time and energy, and, as
relevant here, it wasted Plaintiff’s time and energy.
III. 	CONCLUSION
Therefore, 	IT 	IS 	ORDERED 	that 	Plaintiff’s 	Motion 	for 	Sanctions 	at
Docket 225 is GRANTED. 	The Government is required to pay Plaintiff’s costs for the
settlement proceedings, totaling $11,401.00.27
DATED this 31st day of March, 2022, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge
26 See Guillory, 95 F.3d at 1335.
27 See Docket 225 at 10.
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