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United States of America v. United States District Court For the Northern Mariana Islands

September 12, 2012

UNITED STATES OF AMERICA, PETITIONER,
v.
UNITED STATES DISTRICT COURT FOR THE NORTHERN MARIANA ISLANDS,
RESPONDENT, JOHN K. BALDWIN, REAL PARTY IN INTEREST.



Appeal from the United States District Court for the Northern Mariana Islands Ramona V. Manglona, Chief District Judge, Presiding D.C. No. 1:09-cv-00033-ARM

The opinion of the court was delivered by: Clifton, Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted June 21, 2012-Pasadena, California

Before: Mary M. Schroeder, Edward Leavy, and Richard R. Clifton, Circuit Judges.

Opinion by Judge Clifton

OPINION

The government has filed a petition for a writ of mandamus, requesting that this court vacate four district court orders directing the government to be represented at an initial court settlement conference by a representative with full authority to settle a civil tax refund lawsuit. We hold that the district court has the authority to order parties, including the federal government, to participate in mandatory settlement conferences, but that the exercise of such authority is subject to review for abuse of discretion. Based on the facts of this case, we conclude that the district court abused its discretion in ordering a government representative with full settlement authority to appear at an initial settlement conference. Accordingly, we grant mandamus relief and direct the district court to vacate the disputed orders.

I. Background

The current dispute arises in the context of a multi-million dollar tax refund case pending in the District Court for the Northern Mariana Islands. Following disallowance by the Internal Revenue Service of certain deductions, real party in interest John K. Baldwin paid a federal income tax deficiency and then filed a lawsuit seeking to recover in excess of $5 million in taxes, penalties, and interest.

The district court has a local rule that provides that "[t]he court will routinely set a date for a settlement conference" in civil cases. D. N. Mar. I. Civ. R. 16.2CJ(e)(5). A subpart of that rule is explicit in mandating attendance at the conference by each party through a representative with "full authority" to settle the litigation: "Each party shall be required to attend the settlement conference, either personally or through a representative with full authority to participate in settlement negotiations and to effect a complete compromise of the case." D. N. Mar. I. Civ. R. 16.2CJ(e)(5)(a).*fn1

The district court issued an order on September 2, 2011, scheduling a settlement conference in Coeur d'Alene, Idaho, before Senior District Judge Alex Munson, serving as settlement judge.*fn2 This was to be the first settlement conference held by the court in this case.

Five days after the order was issued, the government moved for relief from the requirement to have a person with "full" settlement authority attend the settlement conference.

The government stated that, because of the size of Baldwin's claim, the lowest-ranking official authorized to settle this case was the officer in charge of the Tax Division of the Department of Justice, the Assistant Attorney General of the Tax Division ("Assistant Attorney General"),*fn3 and her authority is limited by the requirement that the Congressional Joint Committee on Taxation ("Joint Committee") reviews and has no adverse criticism to the proposed refund or settlement.*fn4 See 28 C.F.R. §§ 0.160-.0162; see also Rules and Regulations, 76 Fed. Reg. 15212-02 (Mar. 21, 2011). The government argued that the personal participation of the Assistant Attorney General should not be required and proposed instead that the settlement conference be personally attended by the trial attorneys with primary responsibility for the handling of the case, with the Section Chief of the Tax Division's Office of Review ("Section Chief") available for consultation by telephone during the settlement conference. The Section Chief is authorized to accept offers in compromise in cases against the United States in which the amount of the government's concession, exclusive of statutory interest, does not exceed $1.5 million. See Rules and Regulations, 76 Fed. Reg. 15212-02 (Mar. 21, 2011).

The district court denied the government's request for relief from the Local Rule in an order filed on September 9, 2011. The order, entered by Judge Munson, observed that the government "made some reasonable arguments in support of its position," but concluded that "in twenty-nine years of facilitating settlement negotiations, the undersigned has never brought about a settlement agreement without having present on each side a person with ...


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