Mediators are appointed as “special masters” in the U.S. District Courts. Such appointments are authorized by Fed. R. Civ. P. 53.
Examples of Mediators as Special Settlement Masters
Mediators appointed as special settlement masters are often given a broad range of authority to act proactively on the court’s behalf.
One example is In re Syngenta case, a multi-district case pending in the U.S. District Court for the District of Kansas, where a mediator is appointed as special settlement master (aka mediator) under Fed.R.Civ.P. 53. This settlement master (aka mediator) is given a broad grant of authority, under Rule 53, to:
–“Order the parties to meet face-to-face and engage in serious and meaningful negotiations”
–“Make recommendations to the court concerning any issues that may require resolution in order to facilitate settlement or to efficiently manage the litigation”
–“Communicate ex parte with the court at any time.”
Another example is the Argentina debt cases, in the Southern District of New York, in which the Court creates a mediator role, appoints a mediator, and dubs the mediator a “special master” under Rule 53. This mediator/settlement master functions with a high level of autonomy and in a proactive manner.
Special masters under Rule 53 are “judicial adjuncts,” which means they are appointed to assume some of the functions of a judge.
The special master’s “Handbook” (created by the Academy of Court Appointed Masters) explains the role of a “settlement master” (i.e., a mediator) as follows:
–Historical Development: “The use of settlement masters to reach global settlements in large-scale tort litigation dates back at least to the Dalkon Shield litigation and Agent Orange litigation beginning in the late 1980s.”
–Authority: “Courts have come to realize that the appointment of a neutral third-party who is granted quasi-judicial authority to act as a buffer between the court and the parties can provide a useful approach to reaching a settlement.”
–Complex and Multi-Party Cases: “This [usefulness] is especially true in complex litigation involving numerous parties, or when the dispute has matured and individual settlements become repetitive and time-consuming.”
Special Masters and Bankruptcy
It’s interesting to note that the Federal Bankruptcy Rules expressly reject the office of “special master.” Fed. R. Bankr. P. 9031 is titled, “Masters Not Authorized,” and specifies: “Rule 53 F.R.Civ.P. does not apply in cases under the [Bankruptcy] Code.”
Nevertheless, at least 70% of all bankruptcy courts have local rules authorizing the appointment of mediators. And bankruptcy courts have a recent history of investing mediators with a proactive role and function, similar to that of the settlement masters appointed in the In re Syngenta case and the Argentina debt cases.
–The prime example of such proactivity in bankruptcy is, of course, the City of Detroit case and the broad authority granted to and exercised by the mediators in that case.
It will be interesting to watch, as time progresses, whether the proactive mediator authority granted and exercised in the In re Syngenta case, the Argentina debt cases and City of Detroit bankruptcy case, will become the norm in bankruptcy proceedings.
–My sense is that proactive mediation (like that of a settlement master under Fed.R.Civ.P. 53) is on-its-way to becoming standard practice for large bankruptcy cases — and for smaller cases as well.