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Koehn v. Tobias

United States Court of Appeals, Seventh Circuit

August 4, 2017

Peter Koehn, Plain tiff-Appellee,
Lauri Tobias and Margaret Segerston, Defendants-Appellants.

          Argued June 1, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 3:12-cv-50321 - Philip G. Reinhard, Judge.

          Before Bauer, Posner, and Hamilton, Circuit Judges.


         Plaintiff-appellee Peter Koehn filed suit under 42 U.S.C. § 1983, alleging that Defendants-appellants Lauri Tobias and Margaret Segerston (Defendants), his former employers, unlawfully retaliated against him for exercising his First Amendment rights. After a series of failed settlement negotiations, the case proceeded to trial, where a jury found in favor of Defendants. After the trial, upon Koehn's motion, the district court ordered Defendants to pay fees and costs associated with Koehn's attorney's preparation for a settlement conference that proved to be unnecessary and futile. This appeal followed.

         I. BACKGROUND

         Koehn filed his original pro se complaint on September 6, 2012. In June 2015, the case was referred to a magistrate judge for purposes of facilitating settlement discussions. The magistrate judge held a settlement conference on June 15, 2015, and appointed counsel for Koehn for the limited purpose of assisting in the settlement negotiations; the parties did not reach a settlement. Shortly after that settlement conference, Koehn obtained new counsel who continued to represent him for the remainder of the case, including the trial.

         The trial was set for June 6, 2016, and on May 13, 2016, the district court held a telephonic status hearing, during which it inquired about the history and current status of any settlement negotiations. Defense counsel first explained that he was relatively new to the case and was not personally involved in the June 2015 settlement conference. He then stated that, based on conversations with counsel who had previously been handling the case for Defendants, he believed that Defendants' insurer had proposed a settlement in the range of $150, 000, and that Koehn was seeking substantially more than that.

         At this point in the hearing, Koehn's counsel stated that she had never heard the $150, 000 figure and that, given that information, a settlement conference might be productive. Defense counsel agreed with that sentiment, and the court scheduled a settlement conference for May 20, 2016.

         At that settlement conference, however, Defendants did not make an offer in the range of $150, 000. Instead, they offered less than half of that amount, which was in the range of what Koehn had rejected during the June 2015 settlement conference. Koehn rejected the offer again, so the case did not settle. When the conference ended, the court entered an order, which stated: "At the conclusion of the jury trial, counsel for the Plaintiff may submit a request for attorney's fees and costs associated with the unnecessary settlement conference held based upon defense counsel's representations."

         Pursuant to that order, Koehn filed a motion for fees and costs after he lost at trial, requesting $3, 744 in fees and $552.85 in costs associated specifically with the preparation for and attendance at the May 20, 2016, settlement conference. The district court granted Koehn's motion, holding that Federal Rule of Civil Procedure 16 allows for the imposition of sanctions where a party's failure to timely and candidly communicate a change in settlement posture results in the holding of an unnecessary settlement conference. It found that, while Defendants were free to change their settlement position between the status hearing and the settlement conference, their failure to notify the court or Koehn of that change made the settlement conference a futile exercise. Therefore, pursuant to Rule 16(f)(2), the court ordered Defendants to pay the requested fees and costs. They timely appealed.


         Defendants submit two arguments on appeal, which are somewhat intertwined. First, they argue that the court did not apply the appropriate legal standard to impose sanctions under Rule 16(f). Second, they argue that the facts of this case simply do not support the imposition of sanctions under any of Rule 16(f)'s standards.

         Rule 16(f)(1) provides: "On motion or on its own, the court may issue any just orders ... if a party or its attorney: (A) fails to appear at a scheduling or other pretrial conference; (B) is substantially unprepared to participate-or does not participate in good faith-in the conference; or (C) fails to obey a scheduling or other pretrial order." Fed.R.Civ.P. 16(f)(1). If a party does not comply, the court must order it to pay the reasonable fees and expenses incurred as a result of the noncompliance. Fed.R.Civ.P. 16(f)(2). We review a district court's decision to impose sanctions ...

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