Sanctions For Failing To Attend Mediation — Vacated And Remanded (Miller v. Midland)

By: Donald L Swanson

“We cannot glean whether the District Court’s outrage at Plaintiff’s attorneys stemmed from a belief that the attorneys acted in bad faith, or that they acted negligently.”

–From Miller v. Midland Credit Management, Inc., Case No. 20-13390 (11th Cir., issued September 17, 2021) (Not for Publication).

In Miller v. Midland, Plaintiff’s two attorneys appeal from an order sanctioning them for their client’s failure to appear at a mediation.

Facts

In 2019, Plaintiff files a class action complaint against Creditor for Fair Debt Collection Practices Act violations.  The U.S. District Court refers the case to mediation—with a deadline for completion.

The deadline expires without mediation occurring, so the District Court requires a status report from the parties, which they provide.

Additionally, the mediator files a report explaining that Plaintiff’s attorneys appeared for the mediation—but that Plaintiff did not.

Next day, Creditor requests a sanctions order against Plaintiff for her failure to appear.

In response, Plaintiffs attorneys say, (i) they do not know why Plaintiff failed to attend the mediation, (ii) Plaintiff had assured them of her plan to attend, and (iii) they have been unable to reach Plaintiff.

Then, the District Court orders Plaintiff to show cause why she failed to appear at the mediation, requiring Plaintiff’s attorneys to “address whether they have regained contact with their client,” noting that “representation requires communication.”

The Court explains further that, while its order “may seem harsh in isolation,” there are many other examples of Plaintiff’s “lack of diligence” in prosecuting the case.

Then, Plaintiff responds, noting that counsel had regained contact with her, explaining that she did not attend the mediation because she got off work three hours late — and that she did not have phone access to inform her attorneys of the unexpected problem.

Then, the District Court imposes sanctions against Plaintiff—and her attorneys—like this:  “I conclude that Plaintiff and her attorneys shall be sanctioned for Plaintiff’s failure to appear.”  The sanctions order also requires:

• the parties to “meet and confer” about “the monetary amount of sanctions”; and
• if no resolution is reached, Defendant is to file an affidavit “setting forth the attorney’s fees . . . and any costs resulting from the mediation.”

The District Court explains further:

• [H]ad I not entered the Order to Show Cause . . . there is no indication that [Plaintiff] or her counsel would have made known to the Court the circumstances surrounding her failure to appear;
• Counsel should have made a prompt and reasonable investigation into [Plaintiff’s] failure to appear and immediately informed the Court of the reasoning for the same—Counsel did not do so; and
• This led to my entry of the Order to Show Cause and it was only then that Counsel investigated and discovered the circumstances surrounding [Plaintiff’s] failure to appear.

The parties settle the lawsuit. Then, Plaintiff’s attorneys request the court to reconsider its sanctions order, detailing counsel’s efforts to reach Plaintiff. 

The District Court denies the reconsider motion, and this appeal by the attorneys (but not by the Plaintiff) follows.

Vacate and Remand

–Standards

“A court may impose sanctions for litigation misconduct under its inherent power,” which is “vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.”

However, such power “must be exercised with restraint and discretion” and in compliance with “the mandates of due process.”

Here, due process requires that the attorneys be given, (i) “fair notice” that their conduct “may warrant sanctions and the reasons why,” and (ii) “an opportunity to respond, orally or in writing, to the invocation of such sanctions and to justify their actions.”

–Application of Standards

The District Court did not provide the attorneys with fair notice that it was considering imposing sanctions against them for their client’s actions.  For example:

• The mediation referral warned of sanctions against parties or counsel who do not comply—but Plaintiff’s attorneys attended the mediation;
• Creditor asked the court to sanction Plaintiff for her failure to appear—it did not mention Plaintiff’s attorneys as the target of sanctions;
• The show cause order directs only Plaintiff to show cause for failure to attend—it orders counsel to address only “whether they have regained contact with their client,” noting that, (i) “Representation requires communication,” and (ii) “Plaintiff’s counsel cannot continue to represent Plaintiff if she has abandoned their representation and more generally this lawsuit”;
• Nothing in such order supports Creditor’s argument that Plaintiff’s attorneys are on notice of possible sanctions against them; and
• Plaintiff’s response to the show-cause order, (i) has her lawyer saying that he “regained contact with his client,” (ii) focuses on why Plaintiff did not attend the mediation, and (iii) asks the District Court to decline sanctions on Plaintiff.

–Ruling

Sanctions against Plaintiff’s counsel are unfounded, says the Eleventh Circuit Court of Appeals:

• Plaintiff’s counsel were not given a meaningful opportunity to respond to the possibility of sanctions against themselves;
• Moreover, a finding of bad faith is required before sanctions can be imposed—the District Court made no such filing and did not mention bad faith or cite the bad-faith standard; and
• It is “worth noting” that Plaintiff’s attorneys promptly informed the District Court of Plaintiff’s failure to attend the mediation, explaining that they did not know why she failed to appear and that they had been unable to reach her despite several attempts.

Accordingly, the District Court’s sanctions order is “Vacated and Remanded.”

Conclusion

Sanctions are always a tricky business. 

The Eleventh Circuit’s reference to the District Court’s “outrage at Plaintiff’s attorneys” is an interesting take on what happened.  Perhaps it’s suggesting that a calmer judicial demeanor might have been helpful?

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