By: Donald L Swanson
“Mediating judges have largely slipped through the cracks of widespread academic discussion. . . . Yet, some practices create the perception or the reality of judicial overreach in ways that elude standard judicial accountability measures.”
- Prov. Melissa B. Jacoby, “Other Judge’s Cases,” at 68 (January 22, 2022) (emphasis added).
A new opinion illustrating “the perception” of such judicial overreach is PIA McAdams v. Robinson, Case No. 21-1087 (4th Cir., decided Feb. 10, 2022).
What follows is an attempt at summarizing the case.
Litigation in U.S. District Court
On November 21, 2014, Plaintiff files a class action lawsuit in federal court, claiming Nationstar Mortgage LLC violated federal and state laws. The lawsuit is Robinson v. Nationstar, Case No. 8:14-cv-03667, District of Maryland.
On April 28, 2017, a Maryland District Judge refers the case to a Magistrate Judge for “Settlement or other ADR conference” (Doc. 70).
On March 6, 2020, the District Judge orders parties to “conduct” a mediation session by March 31, 2020 (Doc. 245).
On June 25, 2020, the parties file a notice of mediated settlement (Doc. 266).
The proposed settlement creates a relief fund of $3,000,000, to be distributed in the following order, in exchange for a complete release of claims against Nationstar:
- to pay administrative expenses up to $300,000;
- to pay attorneys’ fees up to $1.3 million;
- to pay a service award to the class representative;
- to pay class claims; and
- any remainder going to a nonprofit that advocates for consumers.
–Appointment of Judicial Mediator as Deciding Judge
The Doc. 266 notice also contains a joint motion to name the same Magistrate Judge who had mediated the settlement as the Deciding-Judge in the case.
That means the Mediator Judge will also be deciding all “motions relating to”:
- approval of the proposed settlement; and
- distributions from the settlement fund.
The next day, the District Judge issues an Order referring “all proceedings” in the case to the Magistrate Judge “by consent of the parties” (Doc. 267).
–Objection and Rulings by the Mediator/Deciding Judge
On August 19, 2020, the Magistrate Judge (i) grants a motion for preliminary approval of the settlement, and (ii) schedules a fairness hearing before final approval (Doc. 274).
A class member objects (Doc. 276) to the proposed settlement. This class member, (i) is not a named party in the class action lawsuit, and (ii) had sued Nationstar in a separate class action.
The Objector asserts that the settlement is unfair, unreasonable, and inadequate, (ii) has an unconstitutionally overbroad release, (iii) provides an excessive and improper attorneys’ fee award, and (iv) etc.
On December 11, 2020, the Mediator/Deciding Judge overrules the objection and approves the class action settlement (Doc. 291), finding (i) the settlement terms are fair, reasonable, and adequate, (ii) the fees award is reasonable, (iii) the release terms are “not too broad,” and (iv) the parties’ negotiations achieved a “no collusion” settlement “at arm’s length in the midst of contentious litigation.”
The objecting party appeals to the Fourth Circuit Court of Appeals.
Appeal—Magistrate Judge in Dual Roles
The Fourth Circuit affirms.
But the Fourth Circuit’s opinion does not address the Objector’s concerns about these dual roles of the Magistrate Judge in the same case:
- Mediator role—in helping the parties named in the lawsuit achieve a mediated settlement; and
- Deciding Judge role—in approving the mediated settlement, (i) by agreement of the named parties, but (ii) over objection of a class member who does not agree.
Here are the Fourth Circuit opinion’s only comments about the Magistrate Judge’s dual role:
- “The magistrate judge (who had mediated the settlement), granted a motion for preliminary approval of the settlement and scheduled a fairness hearing before final approval” (at 4);
- “Since Nationstar and [the named Plaintiff] consented to having the magistrate judge preside over the fairness hearing, [Objector’s] jurisdictional claim fails” (at 11);
- The Objector “complains that this case ‘presents a potentially serious conflict of interest’ because the magistrate judge both mediated and approved the settlement” (fn. 5, at 11);
- But Objector “doesn’t support that assertion” or “preserve the issue for appeal,” and “didn’t move for the judge’s recusal or otherwise object”—“a judge’s recusal decision . . . can be waived” (id.); and
- “Because [Objector] takes a mere ‘passing shot’ at the issue, we don’t consider it.”
I know, I know: presiding judges engage parties in settlement discussions and approve settlements between the parties — all the time (e.g., under Fed.R.Civ.P. 16 and Fed.R.Bankr.P. 7016). That’s especially true in jury trial cases where presiding judges will not rule on the merits.
But McAdams v. Robinson is different: the Mediator Judge engages the named parties in mediation efforts and then imposes the mediated settlement, as Deciding-Judge, upon class action members who did not participate and upon one who actively objects.
Moreover, deciding-judges in class action lawsuits are commonly labeled as “fiduciaries” and “guardians” for absent class members (see, M. Jacoby, What Should Judges Do In Chapter 11, at 586). Judge Richard Posner, for example, describes the fiduciary role like this:
- “We and other courts have gone so far as to term the district judge in the settlement phase of a class action suit a fiduciary of the class, who is subject therefore to the high duty of care that the law requires of fiduciaries.” (Id.)
Judges in bankruptcy cases often have a similar fiduciary-type role: they deal with negotiated (and mediated) settlements and then decide whether to impose such settlements on other interested persons.
Mixing the judicial mediator and decider roles in bankruptcy is problematic, in the same way as in class action lawsuits.
It looks bad: the McAdams v. Robinson process and results.
Our federal courts need to take the concerns expressed by Prof. Jacoby seriously—and do more than simply, (i) declare that what looks bad really isn’t, and (ii) sweep what looks bad under the rug.
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