E-Alert Case Updates

United States District Court for District of Maryland Enters Sanctions against Party for Failing to Attend Court Ordered Settlement Conference

MHD-Rockland, Inc. v. Aerospace Distributors, Inc.
Civil No. 13-2442, ___ F. Supp. 2d ___ (D. Md. April 20, 2015)
by Wayne C. Heavener, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdd.uscourts.gov/Opinions/Opinions/MHD%20Rockland%2020%20April%2015.pdf

In MHD-Rockland, Inc. v. Aerospace Distributors, Inc., the United States District Court for the District of Maryland determined that dismissing a party’s case for declining to attend a Court ordered settlement conference was too harsh of a sanction when that party had not previously engaged in such “similarly unacceptable” behavior. The Court did, however, determine that the party’s conduct was subject to sanctions under Federal Rule of Civil Procedure 16. Therefore, the Court held that the party was required to pay its opponent’s attorneys’ fees for preparing for the conference.

MHD-Rockland, Inc. (“Rockland”) sued Aerospace Prevision, Inc. (“API”) in Maryland state court on a breach of contract claim. The case was removed to the United States District Court for the District of Maryland, and a bench trial was scheduled for April 27 through 29, 2015. The Court issued an Order referring the case to a Magistrate Judge for a settlement conference on January 21, 2015. Three (3) days before the settlement conference, Rockland’s general counsel sent an email to the Court purporting to cancel the conference based on Rockland’s appraisal that settlement was unlikely. Rockland’s general counsel also indicated that Rockland was no longer represented by the local counsel of record, and that it intended to retain a new local attorney. Due to the fact that Rockland could not proceed without an attorney barred in the District of Maryland, the Court canceled the settlement conference. On February 20, 2015, thirty-one (31) days after Rockland’s previous local counsel filed a motion to withdraw, new local counsel for Rockland filed a notice of appearance.

APR moved to dismiss Rockland’s claims, and to recover attorneys’ fees for preparing for the settlement conference, under Local Rule 101.2b and Federal Rule of Civil Procedure 16. Local Rule 101.2b permits the Court to dismiss a plaintiff’s claims for failing to enter the appearance of new counsel within thirty (30) days of the filing of a motion to withdraw. Federal Rule of Civil Procedure 16 permits a party to move for sanctions — including dismissal and the awarding of attorneys’ fees — based on an opponent’s failure to attend a Court ordered conference. Fed. R. Civ. P. 16(f)(1).

The Court held that dismissal was too harsh of a sanction in this case, but that Rockland would have to pay API’s attorneys’ fees in connection with preparing for the scheduling conference. The Court declined to dismiss Rockland’s case based on Local Rule 101.2b because the local rule’s function was to prevent a failure to prosecute a claim, and, in this matter, Rockland had not failed to prosecute. Even though Rockland had failed to comply with the text of the local rule, it still participated in litigating the case. Further, the Court found that API did not suffer any prejudice in Rockland’s one (1) day delay. The Court likewise declined to dismiss Rockland’s case under Federal Rule of Civil Procedure 16 because this was the first instance in which Rockland engaged in such “unacceptable behavior.” The Court did find, however, that some form of sanctions was appropriate. The Court noted that Rule 16 permitted the imposition of fees and costs upon a party for failure to attend a Court-ordered conference. The Court, therefore, held that Rockland would have to pay API’s attorneys’ fees connected with preparing for the settlement conference.