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Thursday, April 6, 2017

Special Masters: Recent Developments

This reports on a selection of recent cases of significance to courts and those who serve courts as special masters.

I have had the honor to serve a number of federal courts as special master, court monitor, technical advisor, and one of a three-person committee of court monitors.

Courts appoint judicial adjuncts in almost all areas of the law and for a variety of purposes. Often they are appointed in federal court as Special Masters under Rule 53. Sometimes they are called Court Monitors. Other terms are Technical Advisors, Compliance Officers and the like.  I have published elsewhere on the use of such adjuncts. The terminology differs; all have in common an obligation to assist the court and facilitate resolution of case-specific issues with fairness to the parties.

1.     What relationships between a law firm and a special master are inconsistent with the law firm’s participation in a case?

A law firm, Rao Law Group, sought to enter its appearance for plaintiff to substitute for another firm in the midst of a complex commercial dispute. A special master was already involved to the tune of a half million dollars in invoices.  Defendant objected due to prior relationships between the special master and Rao. Rao had recommended the special master for appointment; Rao and the special master had co-authored articles with one another and had done business together. The federal district court dened Rao Law Group’s request to enter the case. The Court found that, if Rao was in the case, conflict standards for special masters would have prevented the special master from taking the original appointment.

C.D.S. Inc. v. Zetler, 2017 U.S. Dist. LEXIS 43159 (S.D.N.Y. Mar. 23, 2017)

2.     Is there a difference between a “special master” and a “court monitor”?

In a school desegregation case, filed in 1965, the court continues its oversight with the assistance of an appointed “Court Compliance Officer” who is tasked with “monitoring the integration efforts of the Tangipahoa Parish School System.” One ground for an appeal from an order on a change in the CCO’s compensation was that the district court had referred to the CCO as a “special master.” The Fifth Circuit held that the court’s inherent power to appoint judicial adjuncts is not meaningfully different from the power to appoint adjuncts under Rule 53 as special masters.

The fact that the district court referred to Massey as a special master is a distinction without a difference. Although the CCO position was created pursuant to the court's inherent authority in fashioning equitable remedies, see Ex parte Peterson, 253 U.S. 300, 312, 40 S. Ct. 543, 64 L. Ed. 919 (1920), the Board points to no authority to support its argument that the court's inherent power differs in any meaningful way from its authority pursuant to Rule 53 to appoint special masters, see Ruiz v. Estelle, 679 F.2d 1115, 1161 n.240 (5th Cir. 1982) ("Beyond the provisions of [Rule 53] for appointing and making references to Masters, a Federal District Court has the inherent power to supply itself with this instrument for the administration of justice when deemed by it essential." (quoting Schwimmer v. United States, 232 F.2d 855, 865 (8th Cir. 1956)) (internal quotation marks and citations omitted)), amended in part, vacated in part, 688 F.2d 266 (5th  [*202]  Cir. 1982). Therefore, the district court's characterization of Massey as a special master was not an abuse of discretion.

Moore v. Tangipahoa Parish School Bd., 843 F.3d 198, 201-202 (5th Cir. 2016)

3.     How much “ex parte” is too much?

Rule 53 requires a special master appointment order to address "the circumstances, if any, in which the master may communicate ex parte with the court or a party." Fed. R. Civ. P. 53(b)(2)(B). The Advisory Committee notes to the 2003 amendments recognize that ex parte communications present "troubling questions." Fed. R. Civ. P. 53, Advisory Committee Notes (2003 Amendments). In ruling on a motion for attorney’s fees, the court here considered whether its ex parte communications with the special master – which were permitted under the appointment order – would warrant disqualification under the standards for judicial disqualification.  There was no inappropriate communication, the court concluded.

In this case, Judge Schwab's order appointing Mr. Stroyd expressly stated that "the Special Master may communicate with the Court ex parte on all matters as to which the Special Master has been empowered to act." (Order dated 9/6/13, ECF No. 120.) All of the communications between Mr. Stroyd and the undersigned pertained directly to matters within the scope of Mr. Stroyd's appointment. This Court has not obtained any extrajudicial information concerning the parties or this litigation that would warrant disqualification of the undersigned pursuant to §455. Moreover, the Court's review is plenary as to both the factual and the legal determinations set forth in the Special Master's Report and Recommendation. Consequently, the Court finds no merit to Plaintiff's objection insofar as it is premised on communications that may have occurred between Mr. Stroyd and this Court.

Arneault v. O'Toole, 2016 U.S. Dist. LEXIS 166408, *14 (W.D. Pa. Dec. 2, 2016)

4.     Can a district court consider additional information in ruling on an appeal from a special master’s decision?

This was a case arising from the July and August 2006 rocket attacks launched by Hezbollah into northern Israel. Plaintiffs, were victims and sued Iran and North Korea under the state-sponsored terrorism exception to the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1602 et seq. ("FSIA"). Codified at 28 U.S.C. § 1605A, the exception provides "a federal right of action against foreign states" that sponsor terrorist acts. Haim v. Islamic Republic of Iran, 784 F.Supp.2d 1, 4 (D.D.C. 2011).. A special master heard the evidence and made findings which were appealed to the federal district court.

Plaintiffs did challenge the Special Master's findings of facts or the master’s application of the law. Instead, they asked that additional information be considered - information that not only was available prior to the issuance of the Special Master's reports, but was not provided in response to numerous requests by the Special Master for clarification. The plaintiffs wanted a different outcome. The court held that new information cannot be submitted for the district court’s review of a special master decision.

Findings of fact and conclusions of law are reviewed de novo. Fed. R. Civ. P. 53(f)(3)(4). Significantly, de novo review "does not necessarily mean a review that includes the submission of new evidence, particularly when, as in the instant case, evidentiary proceedings previously occurred before the Special Master," Commissariat a l'Energie Atomique v. Samsung Electronics Co., 245 F.R.D. 177, 179 (D. Del. 2007), and the record is "sufficiently developed" to permit the Court to "merely conduct [*29]  a de novo review" of the challenged decisions and make "its own independent determination." Lubyv. Teamsters Health, Welfare and Pension Trust Funds, 944 F.2d 1176, 1185 (3d Cir. 1991)).

The plain language of Rule 53(f) coupled with the "sufficiently developed" record before the Special Master compels the conclusion that the Court, faced with objections to the Special Master reports, is under no obligation to consider new evidence. The Court is guided by the fact that the rules governing review of a Special Master's determinations are analogous to those which guide federal district courts sitting in an appellate capacity of rulings by magistrates and bankruptcy courts. In those situations, courts need not consider new evidence.

Kaplan v. Hezbollah, 2016 U.S. Dist. LEXIS 137938, *28-29 (D.D.C. Sept. 29, 2016)

5.   Special Master Appointment Order in J.F. v. Abbott Labs, April 5, 2017, 2017 U.S.Dist. LEXIS 52098.

The order in this case is significant in several respects: a) its detailed list of special master roles, b) its anticipatory identification of the “what ifs” of possible roles which the master might later play in the case, c) its allowance of the master communicating directly with a party (and thus not through the party’s attorney) in mediation or negotiation, and d) its address of possible future changes in the order’s ex parte communication provisions. (this is the first available text from the court, via Lexis, and without Lexis’ editorial review; before quoting from this elsewhere, consult the original docket or a reliable research tool).

J.F. v. Abbott Labs.

United States District Court for the Southern District of Illinois
April 5, 2017, Decided
Case No. 14-CV-847-NJR-SCW Case No. 15-CV-702-NJR-SCW



J.F., a minor by BEATRICE SIFUENTES individually as next friend of J.F., et al., and E.R.Q., a minor by CHRISTINA RAQUEL individually as next friend of E.R.Q., Plaintiffs, vs. ABBOTT LABORATORIES, INC., Defendant.
ROSENSTENGEL, District Judge:
On March 27, 2017, the Court entered a Notice and Order regarding the potential appointment of a Special Master. (Doc. 585). The Order directed the parties to "file any objections to the Court's intent to appoint the Honorable Daniel J. Stack [Ret.] as Special Master… on or before April 3, 2017." (Doc. 585, p. 2). The deadline to object has passed. Plaintiffs did not file an objection; Defendant filed an affirmative consent to the appointment of the Honorable Daniel J. Stack as Special Master (Ret.). (Doc. 594).
I. Appointment of the Special Master
With no objection to the Court's proposal to appoint The Honorable Daniel J. Stack (Ret.) as Special Master, the Court enters this Order of Appointment in the cases of Raquel, Sifuentes, Pyszkowski (E.P.) and Pyszkowski (C.P.). Judge Stack's contact information is as follows:
The Honorable Daniel J. Stack
711 N. 11th St.
St. Louis, Missouri 63101 618-792-8604
This appointment is made pursuant to Federal Rule of Civil Procedure 53 and the inherent authority of the Court.1 As Rule 53 requires, the Court sets out below the duties and terms of the Special Master and reasons for appointment and directs [*2]  the Master to "proceed with all reasonable diligence." FED. R. CIV. P. 53(b)(2).
The following discussion sets forth the details of the appointment as required by Rule 53:
     Special Master's Duties  
Rule 53(a)(1)(A) states the Court may appoint a Special Master to "perform duties consented to by the parties." In addition, Rule 53(a)(1)(C) states the Court may appoint a Special Master to "address pretrial and posttrial matters that cannot be effectively and timely addressed by an available district judge or magistrate judge of the district." The Court has reviewed legal authority addressing the duties of a Special Master that are
1 "Beyond the provisions of [Fed. R. Civ. P. 53] for appointing and making references to Masters, a federal district court has 'the inherent power to supply itself with this instrument for the administration of justice when deemed by it essential.'" Schwimmer v. United States, 232 F.2d 855, 865 (8th Cir. 1956) (quoting In re:Peterson, 253 U.S. 300, 311 (1920)); see Ruiz v. Estelle, 679 F.2d 1115, 1161 n. 240 (5th Cir. 1982), cert. denied, 460 U.S. 1042 (1983) (same); Reed v. Cleveland Bd. of Educ., 607 F.2d 737, 746 (6th Cir. 1979) (the authority to appoint "expert advisors or consultants" derives from either Rule 53 or the Court's inherent power). permitted under the Federal Rules of Civil Procedure and Article III of the Constitution.2
Consistent with this legal authority and the currently-anticipated needs of the Court, and considering that the parties do not object, the Court holds that the Special Master shall [*3]  have the authority to perform the following duties.3
     Initial Duties  
The Special Master's initial duties shall be as follows:
x Evaluate the parties' objections to deposition designations and make recommendations and reports to the Court on these objections.
Given the fast approaching trial and often unexpected last minute filings, the Court reserves the right to expand the Special Master's duties as follows:
x Evaluate any motions in limine and provide the Court with formal and informal recommended rulings on those motions.
x Evaluate any other motions the parties may file, and provide the Court with formal and informal recommended rulings on those motions.
x Provide periodic status reports to the Court.
x Make formal or informal recommendations and reports to the parties, and make recommendations and reports to the Court, regarding any matter pertinent to the above- listed duties.
x Communicate and meet with the parties and attorneys as needs may arise in order to permit the full and efficient performance of these duties.
x Employ staff as may be necessary to assist the Special Master in performing his duties. The Special Master shall incur only such fees and expenses as may be reasonably [*4]  necessary to fulfill his duties.
2 See generally FED. R. CIV. P. 53, advisory committee's notes, 2003 amendment (discussing the range of duties and authority of a Special Master); Appointing Special Masters and Other Judicial Adjuncts: A Handbookfor Judges (5th ed. 2013).
3 This list is meant to be illustrative, not comprehensive. The Court may amend this Order to add additional duties. With regard to the "Initial Duties" listed here, the Court will meet with the Special Master to determine: (1) which motions the Court will rule upon itself without first receiving a formal, written recommended ruling, and (2) which motions it will ask the Special Master to provide a formal, written recommended ruling should the need arise.
                     Other Duties  
The Court also may call upon the Special Master to undertake any of the following additional duties
x Assist with preparation for attorney conferences (including formulating agendas), court scheduling, and case management.
x Assist with legal analysis of the parties' motions or other submissions, whether made before, during, or after trials, and make recommended findings of fact and conclusions of law.
x Assist with responses to media inquiries.
x Direct, [*5]  supervise, monitor, and report upon implementation and compliance with the Court's Orders, and make findings and recommendations on remedial action if required.
x Interpret any agreements reached by the parties.
x Propose structures and strategies for attorneys fee issues and fee settlement negotiations, review fee applications, and evaluate parties' individual claims for fees, as may become necessary.
x Administer, allocate, and distribute funds and other relief, as may become necessary.
x Adjudicate eligibility and entitlement to funds and other relief, as may become necessary.
x Monitor compliance with structural injunctions, as may become necessary.
     Communications with the Parties and the Court  
Rule 53(b)(2)(B) directs the Court to set forth "the circumstances, if any, in which the [Special Master] may communicate ex parte with the court or a party." The Special Master may communicate ex parte with the Court at the Special Master's discretion, without providing notice to the parties, regarding logistics, the nature of his activities, management of the litigation, and other appropriate procedural matters, as well as to assist the Court with legal analysis of the parties' submissions. The Special [*6]  Master may communicate ex parte with any party or his attorney, as the Special Master deems appropriate, for the purpose of ensuring the efficient administration and management and oversight of this case, and for the purpose of mediating or negotiating a resolution of any dispute related to this case. The Special Master shall not communicate to the Court any substantive matter the Special Master learned during an ex parte communication between the Special Master and any party.4
     Special Master's Record  
Rule 53(b)(2)(C) states that the Court must define "the nature of the materials to be preserved and filed as a record of the [Special Master's] activities." The Special Master shall maintain normal billing records of his time spent on this matter, with reasonably detailed descriptions of his activities and matters worked upon. If the Court asks the Special Master to submit a formal report or recommendation regarding any matter, the Special Master shall submit such report or recommendation in writing, for filing on the case docket. The Special Master need not preserve for the record any documents created by the Special Master that are docketed in this or any other court, nor any documents received [*7]  by the Special Master from counsel or parties in this case.
4 The Court may later limit the Special Master's ex parte communications with the Court with respect to certain functions, if the role of the Special Master changes. See, e.g., In re: Propulsid Products Liab. Litig., 2002 WL 32156066 (E.D. La. Aug. 28, 2002) (after the Special Master was given additional mediation duties, the scope of his ex parte communications with the parties and the Court, as well as his record-keeping obligations, changed); Rule 53(b)(4) (noting that an order of appointment may be amended). On the other hand, such imposition of different limits on ex parte communications does not necessarily require amendment of this Order.
                   Review of the Special Master's Rulings  
Rule 53(b)(2)(D) directs the Court to state "the time limits, method of filing the record, other procedures, and standards for reviewing the [Special Master's] orders, findings, and recommendations." The Special Master shall either: (1) reduce any formal order, finding, report, ruling, or recommendation to writing and file it electronically on the case docket via Electronic Case Filing ("ECF"), or (2) issue any formal order, finding, report, ruling, or recommendation on the record before a court reporter. Given the expedited schedule [*8]  in this case and pursuant to the Court's authority under Rule 53(f)(2), any party may file an objection to an order, finding, report, ruling, or recommendation by the Special Master within 7 calendar days of the date it was filed; failure to meet this deadline results in permanent waiver of any objection to the Special Master's orders, findings, reports, rulings, or recommendations. 5 Absent timely objection, the orders, findings, reports, rulings, and recommendations of the Special Master shall be deemed approved, accepted, and ordered by the Court, unless the Court explicitly provides otherwise.
If the Special Master issues an informal ruling or order that is not on the record either orally, via email, or through other writing, and a party wishes to object to that ruling or order, the party shall ask the Special Master to formalize the ruling or order by filing it on the docket or appearing before a court reporter. Such request shall be made within three days of issuance of the informal order or ruling, else the opportunity to object shall be waived. The procedures and deadlines outlined in this section shall then apply.
5 Rule 53(f)(2) provides that parties may file objections "no later than 21 days after a copy of the [Special Master's order, report, or recommendations] is served, unless the court sets [*9]  a different time."(Emphasis added). Motions for extensions of time to file objections will not normally be granted unless good cause is shown. The Special Master may, however, provide in his order, finding, report, or recommendation that the period for filing objections to that particular document is some period longer than 7 calendar days, if a longer period appears warranted
As provided in Rule 53(f)(4,5), the Court shall decide de novo all objections to conclusions of law made or recommended by the Special Master; the Court shall set aside a ruling by the Special Master on a procedural matter only for an abuse of discretion. The Court shall retain sole authority to issue final rulings on matters formally submitted for adjudication, unless otherwise agreed by the parties, and subject to waiver of objection to written orders or recommendations as noted above.
Rule 53(b)(2)(E) states that the Court must set forth "the basis, terms, and procedure for fixing the [Special Master's] compensation;" see also Rule 53(g) (addressing compensation).
The Special Master will be paid $400 per hour for working time, plus [*10]  reimbursement for reasonable travel and other expenses incurred by the Special Master. The fees and expenses of the Special Master are to be divided evenly between the parties. The Special Master may employ other persons to provide clerical and secretarial assistance; such persons shall be under the supervision and control of the Special Master, who shall take appropriate action to ensure that such persons preserve the confidentiality of matters submitted to the Special Masters for review."
F. Other Matters
Rule 53(b)(3)(A) notes that the Court may enter an Order of appointment "only after the [Special Master] files an affidavit disclosing whether there is any ground for disqualification under 28 U.S.C. § 455." See also Fed. R. Civ. P 53(a)(2) (discussing grounds for disqualification). The required affidavit has been submitted, disclosing no grounds for disqualification. (Doc. 586).
The parties and their counsel, including their successors in office, agents, and employees, shall fully cooperate with the Special Master, and any staff or consultant employed by the Special Master, and observe faithfully the requirements of any orders of the Court and rulings by the Special Master. The Parties shall timely comply [*11]  with rulings of the Special Master issued pursuant to this Order. Pursuant to Rule 53(c)(2), the Special Master may, if appropriate, "impose on a party any noncontempt sanction provided by Rule 37 or 45, and may recommend a contempt sanction against a party and sanctions against a nonparty." As an agent and officer of the Court, the Special Master (and those working at his direction) shall enjoy the same protections from being compelled to give testimony and from liability for damages as those enjoyed by other federal judicial adjuncts performing similar functions.6
     Access to Information  
The parties will make readily available to the Special Master any and all individuals, information, documents, materials, programs, files, databases, services, facilities and premises under their control, which the Special Master requires to perform his duties. The parties will make readily available to the Special Master any and all facilities, files, databases, computer programs and documents necessary to fulfill the Special Master's functions under this Order.
6 See, e.g., Atkinson-Baker & Assocs., Inc. v. Kolts, 7 F.3d 1452, 1454-55 (9th Cir. 1993) (applying the doctrine of absolute quasi-judicial immunity to a Special Master).
The Special Master may require reports from any party in a format [*12]  specified by the Special Master as reasonably required to enable the Special Master to perform all assigned duties.
DATED: April 5, 2017
United States District Judge

End of Document