National Steel City, LLC v. Outokumpu Stainless USA, LLC
Filing
48
ORDER entered denying 46 Plaintiff's Motion for modification of the Rule 16(b) scheduling order regarding early mediation. Should plaintiff refuse to engage in early mediation prior to January 15, 2014, in the manner contemplated by the par ties during their Rule 26(f) meeting on August 28, 2013 and the Courts Rule 16(b) scheduling order, all counsel and their clients are ORDERED to appear before the Court on January 29, 2014, at 10:00 a.m., in Courtroom 3A, United States Courthouse, Mobile, Alabama for a hearing in this matter. Signed by Magistrate Judge William E. Cassady on 1/8/2014. (mca)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
NATIONAL STEEL CITY, LLC,
Plaintiff,
vs.
:
:
:
CA 13-0272-KD-C
OUTOKUMPU STAINLESS USA, LLC, :
formerly known as THYSSENKRUPP
STAINLESS USA, LLC,
:
Defendant.
ORDER
This cause is before the Court on plaintiff’s motion for modification of the Rule
16(b) scheduling order regarding early mediation (Doc. 46) and the defendant’s motion
to compel/response in opposition to plaintiff’s motion to amend scheduling order, or in
the alternative, motion to dismiss or stay pending mediation (Doc. 47). Upon
consideration of the contents of these pleadings, and all other pertinent pleadings in this
file, this order is entered pursuant to 28 U.S.C. § 636(b)(1)(A) and Local Rule 72.2(a) &
(c)(1), and, for the reasons discussed below, the plaintiff’s motion is DENIED.
FACTUAL BACKGROUND
National Steel City filed this breach of contract and violation of the Alabama
Prompt Pay Act action in this Court on May 22, 2013. (Doc. 1; see also Doc. 6 (amended
complaint filed June 3, 2013 adds no other claims).) Outokumpu Stainless USA
answered the amended complaint on June 24, 2013, and therein also asserted two
counterclaims against the plaintiff. (See Doc. 10.) Significantly, Outokumpu
counterclaimed that National Steel had itself breached the underlying contract and
asserted as damages for plaintiff’s failure to complete the work by the milestone dates
required by the contract liquidated damages in an amount equal to 8% of the total
contract value, as well as the costs defendant had to pay other contractors as a result of
plaintiff’s alleged delays. (See id. at ¶¶ 7-15 & 26-33.)1
The parties filed their Rule 26(f) report on September 12, 2013. (Doc. 27.) That
report reflects that counsel for parties conducted a planning meeting on August 28, 2013
(id. at 1), during which, according to the representations of one of the attorneys for
plaintiff, a discussion was had regarding the identification of experienced mediators in
complex construction cases. These representations by counsel for plaintiff were made
during the Rule 16(b) scheduling conference conducted by the undersigned on
September 25, 2013 (see Doc. 30) and this attorney further stated that within two to three
weeks following the conference he believed that the parties could agree upon a
mediator and calendar early mediation for December of 2013 or January of 2014.2 Based
upon the foregoing, the Court instructed the parties during the conference to follow-up
with one another within thirty (30) days and set up mediation as soon as practicable in
order to save money. Moreover, the undersigned advised the parties that should any
questions arise in this regard, a conference call could be conducted. Finally, the
undersigned memorialized the parties’ expressed desire to conduct early mediation (see
Doc. 27, ¶ 11 (“Settlement may be enhanced by use of mediation, which the parties have
agreed to arrange and conduct, following a limited initial exchange of documents, not
1
Plaintiff answered defendant’s counterclaim on July 15, 2013. (Doc. 26.)
2
As expressed during the scheduling conference, the defendant desired early
mediation; however, plaintiff gave no indication that it in any way opposed early mediation of
this complex case. Moreover, counsel for plaintiff was very forthcoming in agreeing with the
Court that a mediator experienced with complex construction cases would be preferable with
respect to early mediation, after counsel for the defendant suggested that it would agree to
sitting down with the undersigned to discuss early settlement of this action.
2
later than January 15, 2014.”)), by inserting in the September 27, 2013 Rule 16(b)
scheduling order,3 the following Paragraph 19.a.: “Early Mediation. The parties have
specifically agreed to arrange and conduct a mediation conference in this matter not
later than January 15, 2014, following an initial limited exchange of documents. The
parties are encouraged to agree upon mediation by a neutral skilled in complex
construction cases. The parties may venture outside this Court’s panel of neutrals
provided that the selected neutral agrees to comply with the ADR rules of this Court
and files such acknowledgement.” (Doc. 34, at 6.)
Of course, the foregoing paragraph is obviously not the sum and substance of the
Court’s Rule 16(b) scheduling order, as this order otherwise provides that the parties
are to complete all “fact discovery . . . on or before January 12, 2015.” (Doc. 34, at ¶ 2.)
Moreover, the order recognizes that each party can serve upon any other party a total of
30 interrogatories, 30 requests for admission, and 40 requests for production of
documents, with responses due within 30 days of service. (See id. at ¶ 10.) The face of
the docket sheet reflects that plaintiff filed notice of having served defendant
Outokumpu with its first set of requests for production of documents on December 18,
2013. (Doc. 45.) The defendant’s responses to plaintiff’s propounded written
discovery—if that discovery was properly propounded by plaintiff—are due on
January 20, 2014, some five days after the early mediation deadline set forth in the Rule
16(b) scheduling order.
And while the parties have apparently had “issues” regarding the early
mediation provision in the Rule 16(b) scheduling order for some time now (see Doc. 47,
3
As noted in the scheduling order, the parties “exchanged the initial disclosures
required by Fed.R.Civ.P. 26(a)(1) on September 25, 2013.” (Doc. 34, ¶ 3, citing Docs. 31-32.)
3
Exhibits B-D & G), the Court was not put on notice of those issues until plaintiff filed its
motion for modification of the Rule 16(b) scheduling order regarding early mediation
on January 2, 2014 (Doc. 46). Therein, plaintiff now requests that the undersigned
modify paragraph 19.a. of the Rule 16(b) scheduling order “to state that the parties will
conduct a mediation conference in this matter not later than May 31, 2014, with no
limitation on discovery of the parties prior to such mediation conference.” (Doc. 46, at
3.) This motion further reads, in relevant part, as follows:
2.
Prior to the filing of Plaintiff’s Amended Complaint, NSC
had only been informed by Defendant . . . of alleged offset, credits, and
other deductive backcharges being asserted by OTK against NSC totaling
less than $300,000.
3.
OTK filed its Answer and Counterclaim [] in this matter on
June 24, 2013. The counterclaim asserted by OTK in such pleading was for
an unspecified amount.
4.
OTK did not provide NSC with any information regarding
the amount of OTK’s counterclaim during the meeting of counsel that
occurred on August 28, 2013.
5.
OTK served its Initial Disclosures [] on NSC via U.S. Mail on
September 25, 2013, which were received after the parties participated in
the September 25, 2013 Rule 16(b) scheduling conference. OTK’s Initial
Disclosures allege that OTK’s damages are, at a minimum, $10,298,406.00
and constitute the first notice given to NSC of a multi-million dollar
counterclaim by OTK against NSC. OTK’s Initial Disclosures do not
provide any computation of its claimed damages.
6.
Subsequent to the service of its Initial Disclosures, on
October 31, 2013 OTK provided NSC with a one-page summary of the
calculation of the OTK counterclaim damages in a revised amount of
$7,184,935.00.
7.
OTK filed its Amended Initial Disclosures [] on November
13, 2013. OTK’s Amended Initial Disclosures claim that OTK’s alleged
damages are, at a minimum, the revised amount of $7,184,935.00. OTK’s
Amended Initial Disclosures do not provide any computation of its
revised claimed damages.
8.
Due to the lack of information regarding OTK’s alleged
damages comprising OTK’s counterclaim, NSC needs to conduct
discovery regarding such counterclaim prior to attending mediation if
4
such mediation is to have any reasonable likelihood of resolving this
matter by agreement of the parties. Paragraph 19.a. of the Court’s
Scheduling Order states that early mediation will occur “following an
initial limited exchange of documents.” Neither Paragraph 2, Discovery
Completion Date, nor Paragraph 10, Discovery Limits, of the Court’s
Scheduling Order contains any qualifications or limitations on conducting
discovery prior to the occurrence of an early mediation conference.
Because Paragraph 19.a. of the Scheduling Order might appear to
preclude NSC from conducting regular discovery prior to January 15,
2014, NSC seeks an order from the Court providing clarification that there
is no limitation on regular discovery prior to the occurrence of a
mediation conference in this matter.
9.
This case is currently set for trial in July 2015. NSC does not
believe it can be adequately prepared to participate in a productive or
meaningful manner in a mediation of this matter by January 15, 2014, or
without the benefit of reasonable discovery prior to mediation.
(Id. at 1-3.) On January 6, 2014, Outokumpu filed a motion to compel/response in
opposition to plaintiff’s motion to amend scheduling order, or in the alternative, motion
to dismiss or stay pending mediation. (Doc. 47.) There is no need for the undersigned to
set out the defendant’s response in detail herein, although reference has already been
made to some of the attached exhibits and further reference may be made to this
pleading as necessary in the legal analysis portion of this order.
DISCUSSION
“Rule 16 of the Federal Rules of Civil Procedure authorizes the court to enter
pretrial scheduling orders, which set dates for the completion of discovery, the hearing
of dispositive motions, trial, and other matters.” Matrix Motor Co., Inc. v. Toyota Jidosha
Kabushiki Kaisha, 218 F.R.D. 667, 671 (C.D. Cal. 2003). The broad discretion set forth in
Rule 16 “is necessary to preserve the integrity and purpose of the pretrial scheduling
order and to allow the trial judge qualitative and quantitative management over a
judicial proceeding from an early stage in order to reduce costs and delays.” Gavenda v.
Orleans County, 1996 WL 377091, *1 (W.D.N.Y. June 19, 1996) (footnotes omitted); see
Zivkovic v. Southern California Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002) (“The district
5
court is given broad discretion in supervising the pretrial phase of litigation, and its
decisions regarding the preclusive effect of a pretrial order . . . will not be disturbed
unless they evidence a clear abuse of discretion.” (citation and internal quotation marks
omitted)).
A Rule 16(b) scheduling order “may be modified only for good cause and with
the judge’s consent.” Fed.R.Civ.P. 16(b)(4). “This good cause standard precludes
modification unless the schedule cannot ‘be met despite the diligence of the party
seeking the extension.’” Sosa v. Airprint Systems, Inc., 133 F.3d 1417, 1418 (11th Cir. 1998)
(citations omitted); see also S & W Enterprises, L.L.C. v. SouthTrust Bank of Alabama, NA,
315 F.3d 533, 535 (5th Cir. 2003) (“The good cause standard requires the ‘party seeking
relief to show that the deadlines cannot reasonably be met despite the diligence of the
party needing the extension.’”).4 Thus, “[i]f the court finds that the party lacked due
diligence, then the inquiry into good cause is ended.” United States ex rel. Walker v. R & F
Properties of Lake County, Inc., 2008 WL 976786, at *2 (M.D. Fla. Apr. 9, 2008); see also Axis
Surplus Ins. Co. v. Innisfree Hotels, Inc., 2006 WL 2882373, at *4 n.9 (S.D. Ala. Oct. 6, 2006)
(District Court affirming this Court’s order denying a party’s “formal request for a
discovery extension [because of] an insufficient showing of due diligence and
extraordinary circumstances”).
Plaintiff’s motion for modification of the Rule 16(b) scheduling order regarding
early mediation is completely devoid of evidence or argument demonstrating its
diligence in complying with the early mediation provision or in seeking to amend the
4
“A ‘scheduling conference order is not a frivolous piece of paper, idly entered,
which can be cavalierly disregarded without peril.’” Lehman Brothers Holdings, Inc. v. Golden
Empire Mortgage, Inc., 2010 WL 2679907, *2 (E.D. Cal. Jul. 2, 2010), quoting Johnson v. Mammoth
Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992).
6
scheduling order once it became apparent it could not comply with the order regarding
early mediation. (See Doc. 46.) Indeed, the motion—filed some thirteen (13) days before
the deadline to conclude early mediation (Doc. 34, ¶ 19.a. (“The parties have specifically
agreed to arrange for and conduct a mediation conference in this matter not later than
January 15, 2014, following an initial limited exchange of documents.”))—contains
nothing other than evidence establishing plaintiff’s lack of due diligence regarding the
early mediation provision of the Rule 16(b) scheduling order. Despite early mediation
being a prime topic of conversation during the September 25, 2013 Rule 16(b)
scheduling conference and plaintiff’s receipt (on September 25, 2013) of the defendant’s
initial disclosures alleging damages totaling $10,298,406.00,5 plaintiff took no action to
either facilitate early mediation or seek modification of the early mediation provision of
the scheduling order until filing the instant motion on the eve of expiration of the
pertinent deadline. Plaintiff failed to act despite the Court simply “tracking” the
language contained in the parties’ Rule 26(f) report (see Doc. 27, at ¶ 11 (“Settlement
may be enhanced by use of mediation, which the parties have agreed to arrange and
conduct, following a limited initial exchange of documents, not later than January 15,
2014.”)) when the Rule 16(b) scheduling order was entered on September 27, 2013 (Doc.
34, ¶ 19.a. (“The parties have specifically agreed to arrange and conduct a mediation
5
Plaintiff contends that its receipt of the defendant’s initial disclosures on
September 25, 2013 constituted the “first notice given to [it] of a multi-million dollar
counterclaim by OTK against NSC.” (Doc. 46, ¶ 5.) The undersigned finds this statement
somewhat curious given Outokumpu’s June 24, 2013 counterclaim for liquidated damages in an
amount equal to 8% of the total contract value, as well as the costs defendant had to pay other
contractors as a result of plaintiff’s alleged delays (see Doc. 10), and plaintiff’s clear statement in
the Rule 26(f) report that at some point prior to the lawsuit being filed the contract sum had
increased to “$22,106,039” (Doc. 27, at 2). Thus, it would appear to the undersigned that plaintiff
knew at least three months prior to receipt of initial disclosures that defendant’s counterclaim
was of the multi-million dollar variety given that 8% of $22,106,039.00 is over 1.7 million dollars
and plaintiff was aware before filing suit that Outokumpu was alleging “offset, credits, and
other deductive backcharges” totaling approximately $300,000 (Doc. 46, at ¶ 2).
7
conference in this matter not later than January 15, 2014, following an initial limited
exchange of documents.”)6) and the undersigned making himself available to the parties
regarding any problems arising over early mediation. Moreover, any “lack of
information
regarding
OTK’s
alleged
damages
comprising
OTK’s
counterclaim[]”would have been as apparent to plaintiff when the Rule 16(b)
scheduling order was entered on September 27, 2013, as it was when National Steel City
filed its motion for modification on January 2, 2014 (see Doc. 46, at 2-3). Accordingly,
plaintiff’s lack of due diligence ends the good cause inquiry and dictates the DENIAL
of plaintiff’s motion for modification of the Rule 16(b) scheduling order regarding early
mediation (Doc. 46).7
Should plaintiff refuse to engage in early mediation prior to January 15, 2014, in
the manner contemplated by the parties during their Rule 26(f) meeting on August 28,
2013 and the Court’s Rule 16(b) scheduling order, see Nick v. Morgan’s Foods, Inc., 99
F.Supp.2d 1056, 1061 (E.D. Mo. 2000) (“When a party agrees to participate in a
mediation process in good faith, the Court is entitled to rely on that representation.
Implicit in the concept of good faith participation is the assurance that the parties will
participate in ADR in accordance with the Court’s order.”), order aff’d, 270 F.3d 590 (8th
6
In using this language, the undersigned meant simply to incorporate the parties’
agreement reached in their August 28, 2013 meeting, without inquiring into the specifics of such
agreement. In other words, whatever documents the parties agreed to exchange during that
meeting prior to the early mediation are the documents that need be produced and if it was the
parties’ further agreement that no written discovery would be propounded prior to that early
mediation, the undersigned expected when the Rule 16(b) scheduling order was entered, and
still expects, that the parties would abide by the specifics of their August 28, 2013 agreement.
7
The undersigned cannot fully appreciate why plaintiff is reticent to attend an
early mediation at which it lacks information regarding defendant’s “alleged damages
comprising [its] counterclaim[]” (Doc. 46, at ¶ 8), since the mediator would likewise be without
this information and be in a position to summarily reject any such claim for damages.
8
Cir. 2001),8 all counsel and their clients are ORDERED to appear before the Court on
January 29, 2014, at 10:00 a.m., in Courtroom 3A, United States Courthouse, Mobile,
Alabama for a hearing in this matter, at which time the undersigned will consider all
matters raised in the defendant’s motion to compel/response in opposition to plaintiff’s
motion to amend scheduling order, or in the alternative, motion to dismiss or stay
pending mediation (see Doc. 47). In lieu of such mandatory appearance, the parties can
reach an alternative agreement regarding early mediation and advise the undersigned
that a hearing is not necessary in light of such agreement; however, the parties are
advised that any such agreement must also include discussion and resolution of the
issue related to the written discovery propounded by plaintiff on December 18, 2013 (see
Doc. 47, Exhibit E).9
DONE and ORDERED this the 8th day of January, 2014.
s/WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE
8
However, “[g]ood faith participation in ADR does not require settlement. In fact,
an ADR conference conducted in good faith can be helpful even if settlement is not reached.” Id.
9
If such written discovery was properly propounded by plaintiff, the defendant’s
responses to that discovery are due on January 20, 2014, some five days after the early
mediation deadline of January 15, 2014. Thus, any agreement by the parties regarding a
“rescheduled” early mediation need also contemplate that the written discovery propounded
by plaintiff need not be answered prior to the “rescheduled” early mediation date.
9
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