Prudential Insurance Company of America v. Hawker Beechcraft Global Customer Support

Filing 36

ORDER granting 31 Motion for Sanctions. Signed by Magistrate Judge James P. O'Hara on 2/14/2017. (srj)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
PRUDENTIAL INSURANCE COMPANY
OF AMERICA,
Plaintiff,
v.

Case No. 16-2380-DDC

HAWKER BEECHCRAFT GLOBAL CUSTOMER
SUPPORT, LLC,
Defendant.
ORDER
This is a negligent-bailment case. The plaintiff, Prudential Insurance Company of
America (“Prudential”), alleges its aircraft incurred more than half a million dollars in
damages during a hail storm while in the possession and control of the defendant,
Hawker Beechcraft Global Customer Support, LLC (“HBS”). Following an unsuccessful
court-ordered mediation on January 9, 2017, HBS has filed a motion for sanctions, based
on Prudential’s failure to send a party representative to attend the mediation in person
(ECF No. 31). Specifically, HBS seeks to recover its attorneys’ fees and out-of-pocket
expenses directly associated with preparing for and participating in the mediation. For
the reasons set forth below, and with no pleasure in imposing sanctions twice in this case
within just a couple of months, the motion is granted.
The court, in its amended scheduling order entered December 13, 2016, directed
the mediation to be held on January 9, 2017 in Wichita, with the parties’ agreed-upon

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mediator, Kurt Harper, Esq..1 For context, as previously explained in detail in a separate
order (ECF No. 25), the amended scheduling order was necessary mainly because
Prudential, the very well-financed company that initiated this litigation, ignored
(supposedly by “oversight”) the deadlines in the court’s original scheduling order (ECF
No. 12) with regard to making a settlement demand, and also with regard to disclosing an
expert witness (which everyone agrees is needed in order for Prudential to prove up its
damages claims).
HBS’s counsel attended the mediation, in person, accompanied by an HBS
representative and also a representative of HBS’s insurer (both in person). Attorneys
from the firm of Fields & Brown, LLC physically attended on behalf of Prudential. HBS
contends, and Prudential does not dispute, that Prudential failed to send a party
representative to the mediation. There’s nothing in the record suggesting that Prudential
ever extended HBS the simple courtesy of providing advance notice that a company
representative with authority wouldn’t be attending in person, nor that the mediator preapproved anything along those lines.
Prudential claims that two representatives, each of whom had full settlement
authority, “attended” the mediation by telephone. Prudential asserts its Vice President
and Corporate Counsel, Michael Fierro, was “present throughout the day via telephone to
participate fully in all conversations,” and that a business representative, James Mason,

1

ECF No. 24.
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“would provide additional input on any inquiry” as necessary.2 The case didn’t settle at
mediation and, according to HBS, very little progress was made.
D. Kan. Rule 16.3(c)(2) provides, in relevant part:
Attendance by a party or its representative with settlement authority at the
mediation is mandatory, unless the court orders otherwise. The purpose of
this requirement is to have the party or representative who can settle the
case present at the mediation.… The parties’ attorney(s) responsible for
resolution of the case must also be present.

In Turner v. Young, 205 F.R.D. 592, 595 (D. Kan. 2002), the undersigned
magistrate judge interpreted a prior version of this local rule and clarified “‘[a]ttendance’
means to be appear in person and participate directly, not to stand by or participate by
telephone.” The opinion issued in Turner was submitted for publication “with the intent
of ensuring that attorneys and litigants are aware that the undersigned expects party
representatives with full, meaningful settlement authority to personally appear and
directly participate in settlement conferences with a district judge or magistrate judge, as
well as mediation sessions facilitated by a private mediator.”3

The undersigned

cautioned “failure to abide by these guidelines will be regarded as exhibiting a lack of
good faith, and could warrant sanctions under Fed. R. Civ. P. 16(f).”4

2

ECF No. 35 at 2.

3

Turner, 205 F.R.D. at 596.

4

Id. at 595. Among other post-Turner modifications to Local Rule 16.3,
subsection (c)(4) was added, providing that “[u]nless all parties agree, only the court may
excuse the presence of a person with settlement authority from attending the mediation in
person.” Subsection (c)(5) specifically contemplates sanctions pursuant to Fed. R. Civ.
P. 16(f).
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Prudential argues that “[g]iven the structure of the mediation as determined by the
mediator (no face to face communication between the parties during the mediation),
presence by telephone and physical presence in this case is a distinction without
substance.”5 The court flatly disagrees.
To be sure, participation by telephone of a party representative who has
knowledge of the facts of the case and who has full, meaningful settlement authority is
preferable to the physical presence of a party representative who doesn’t really know the
facts of the case or who lacks complete authority to settle the case. But that misses the
point.

Whatever the structure of the mediation in this instance, Prudential

presumptuously and unilaterally left the mediator without the option of bringing the
parties together face-to-face.

This option may have become increasingly attractive

throughout the six-hour mediation, with each party asserting the other’s failure to
negotiate in good faith.
Consistent with D. Kan. Rule 16.3, and Turner, the court finds sanctions are
warranted and must now determine the appropriate amount.

As earlier indicated,

unfortunately this isn’t the first instance in this litigation in which sanctions have been
imposed against Prudential for failure to comply with the court’s orders.6 In connection
with the instant motion, HBS has submitted a statement of its attorney’s fees and

5

ECF No. 35 at 4.

6

See ECF No. 25.
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expenses associated with preparing for and participating in the mediation.7 Notably, in its
opposition brief, Prudential doesn’t take issue with the total amount of fees and expenses
sought, the timekeepers’ rates, or any specific entry.

The court has conducted an

independent review of the fees and expenses claimed -- while they’re arguably on the
high side, given the detail and complexity of the damages claimed by Prudential, the
court finds the fees and expenses are reasonable. Aside from a clear violation of the
court’s local rules, it would seem fundamentally unfair to make HBS “eat” those
considerable expenses when it properly prepared for and participated in the mediation,
while Prudential clearly did not. Accordingly, Prudential is directed to pay sanctions to
HBS in the amount of $13,910.98 by February 28, 2017.
IT IS SO ORDERED.
Dated February 14, 2017, at Kansas City, Kansas.
s/ James P. O’Hara
James P. O’Hara
U.S. Magistrate Judge

7

ECF No. 34.
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