Koethe v. Smith
U.S. Court of Appeals, 2nd. 1985
Van Graafeiland, Circuit Judge
Nature: Appeal of sanctions imposed in a malpractice suit for failure to settle.
Rule of law: A court may not sanction a party for refusing to settle.
Facts: Koeth sued Smith for medical malpractice. Pre-trial, Judge Sweet urged them to settle between 20 and $30,000. Warned parties if they didn’t’ settle for around the sum, that he would impose sanctions against the “dilatory” party (the party causing the delay). Koethe’s atty had indicated to Sweet that he would settle for 20 but never offered less than 50, and no one ever told Smith that. Early into trial, they settled for $20, and the judge imposed sanctions on Smith. Sweet’s holding and reasoning was “determined to get the attention of the carrier” (insurance).
Issue: Can a court sanction a party for refusal to settle?
Holding: Nope, can’t. They were using Rule 16 (c9) of Fed R Civ P.
Reasoning: This subsection was added in ’83 “designed to encourage pretrial settlement discussion, it was not its purpose to ‘impose settlement negotiations on unwilling litigants.” They added some stuff about how there are reasons a party may choose to settle after trial started that are valid (performace of other side in front of jury, etc).