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Lethiot v. JB Hunt Shipping

United States District Court, W.D. Kentucky, Louisville Division

July 17, 2017

SHAD LETHIOT, Plaintiff,
v.
JB HUNT SHIPPING, a/k/a J.B. Hunt Transport, Inc. Defendant.

          MEMORANDUM OPINION AND ORDER

          Colin Lindsay, Magistrate Judge

         This case was scheduled for a settlement conference on March 9, 2017 at 10:00 a.m. That morning, rather than go forward with a settlement conference, the Court convened a hearing regarding possible violations of its settlement conference order (DN 66 (“Settlement Conference Order”)). Based on the information conveyed at the hearing, the Court cancelled the settlement conference.[1] In a post-hearing order, the Court stated that “any party may file a motion for sanctions” for violation of the Settlement Conference Order. (DN 79 at 1.)

         Plaintiff Shad Lethiot (“Lethiot”) filed a motion for sanctions (DN 80) against Defendant JB Hunt Shipping, a/k/a J.B. Hunt Transport, Inc. (“JB Hunt”) and Intervening Plaintiff Family Dollar Stores, Inc. (“Family Dollar”). JB Hunt filed a response (DN 82), and Lethiot replied (DN 86). Family Dollar also filed a response (DN 87), and Lethiot filed a motion to strike the response as untimely (DN 88). For the following reasons, the Court will grant in part and deny in part the motion for sanctions and deny the motion to strike.

         BACKGROUND

         At the time of the incident underlying this action, Lethiot was employed by Family Dollar as a store manager. (DN 1-1 at 2.) On October 1, 2012, in the course of unloading store merchandise from a truck owned by JB Hunt, Lethiot slipped and fell, sustaining serious injuries. (Id. at 2-3.) Lethiot alleges that the ground was wet with rain, that a bottle of liquid soap fell to the ground and spilled, causing a slick surface to form, that a piece of cardboard landed on top of that slick surface, and that he slipped on the cardboard. (Id. at 3.)

         1. The Settlement Conference Order

         On November 29, 2016, the Court entered the Settlement Conference Order, scheduling a settlement conference for March 9, 2017. The first page of the Settlement Conference Order directs counsel to review the entire order and notifies parties that failure to comply with the order may lead to the imposition of sanctions. It provides as follows:

COUNSEL SHALL REVIEW THE ENTIRETY OF THIS COURT ORDER. COUNSEL SHALL FURTHER SEND A COPY OF THE ORDER AND DISCUSS THE ORDER IN DETAIL WITH HIS OR HER CLIENT(S), AS WELL AS ANY PERSONS REQUIRED TO ATTEND THE SETTLEMENT CONFERENCE (DISCUSSED IN PART II, BELOW). ANYONE WHO FAILS TO COMPLY WITH ANY PROVISION OF THIS COURT ORDER MAY BE SUBJECT TO THE FULL RANGE OF SANCTIONS AUTHORIZED BY LAW.

(DN 66 at 1.)

         Section II of the Settlement Conference Order sets forth the individuals whose presence is required at the settlement conference.

         The following individuals shall be present in person at the settlement conference.

1. Lead counsel. Counsel who will actually try the case shall attend in person.

         2. Each natural person party. Each natural person shall attend in person, regardless of his or her settlement position and/or whether he or she is covered by an applicable insurance policy or otherwise indemnified.

3. Each entity party. Each entity party (e.g., corporation, LLC, government, etc.) shall attend in person through an authorized party representative regardless of its settlement position and/or whether it is covered by an applicable insurance policy or otherwise indemnified.

         The party representative must have full settlement authority. The party representative must be fully authorized to approve a settlement and must have the authority to change the party's valuation of the case and the party's settlement posture during the course of the settlement conference. A party violates this Order by, among other things, sending to the settlement conference a representative who has a “cap” or limit to his or her authority, or who requires consultation with or permission from anyone not present in person at the settlement conference to make or respond to an offer or demand. See Lockhart v. Patel, 115 F.R.D. 44 (E.D. Ky. 1987). A representative who must “call the home office” for permission to accept an offer does not have full settlement authority within the meaning of this Order.

4. Insurance carrier representative, if applicable. An authorized representative of any insurance carrier which may be liable for all or part of a possible judgment shall attend in person. See Fed. R. Civ. P. 26(a)(1)(iv).

         The insurance carrier representative must have full settlement authority. The insurance carrier representative must be fully authorized to approve a settlement and must have the authority to change the insurer's valuation of the case and the carrier's settlement posture during the course of the settlement conference. A party and/or insurance carrier violates this Order by sending to the settlement conference an insurance carrier representative who has a “cap” or limit to his or her authority, or who requires consultation with or permission from anyone not present in person at the settlement conference to make or respond to an offer or demand. See Lockhart v. Patel, 115 F.R.D. 44 (E.D. Ky. 1987). A representative who must “call the home office” for permission to accept an offer does not have full settlement authority within the meaning of this Order.

(Id. at 2.)

         Section IV of the Settlement Conference Order provides a mechanism for parties to request a variance from the order's requirements. It provides as follows:

3. Variance from this Order. If any party believes that special circumstances justify a variance from any aspect of this Order, counsel for that party must contact the Magistrate Judge's Chambers no later than fourteen (14) days before the date of the scheduled settlement conference to request such a variance. The Magistrate Judge will only grant a variance upon a showing of specific facts constituting exceptional circumstances. No such variance will be effective until it has been approved by the Court.

(Id. at 4.)

         2. The Hearing

         On March 9, 2017, Lethiot and his counsel, S. Coy Travis (“Travis”) appeared in person for the settlement conference. Counsel Thomas Donkin (“Donkin”) appeared for Family Dollar. A party representative for JB Hunt, Erin Campbell (“Campbell”), appeared with counsel Michael Hammond (“Hammond”). Attorney Robert Florio (“Florio”), who is Lethiot's former counsel in this matter and asserts that he holds an attorney's lien, also appeared. Shortly after these individuals arrived, the Court convened a hearing due to its concerns regarding potential violations of the Settlement Conference Order. The hearing was conducted on the record and an official transcript was produced (DN 84).

         During the hearing, the following information relevant to the motion for sanctions was elucidated on the record:

         • Information Regarding Lethiot:

• Lethiot and his current counsel, Travis, do not believe that there are any Medicaid liens in existence that relate to this action. Florio, Lethiot's former counsel, stated on the record that he requested a conditional lien letter from Medicaid, but he never received one. Travis stated that he has not received a conditional lien letter from Medicaid, and he did not find one in the case file that he inherited from Florio. (Id. at 8-14.)

         • Lethiot drove to the courthouse in Louisville, Kentucky from his home near Carbondale, Illinois, a drive of approximately four-and-a-half hours. Lethiot had to stop multiple times during the drive because of pain which he ascribes to the injuries he sustained in the fall described above. He drove to Louisville the night before the settlement conference, stayed in a hotel, and had a hotel room booked for the night of the settlement conference. (Id. at 52-53.)

         • Information Regarding JB Hunt:

• Hammond, JB Hunt's counsel, confirmed on the record that he read the entirety of the Settlement Conference Order, forwarded the Order to his client, Campbell, and asked her to review it. He did not recall whether he and Campbell discussed the Order. Campbell stated that she did discuss the Order with Hammond. (Id. at 14-15.)
• Hammond stated that JB Hunt has an insurance policy that might apply to this case, but he believed that the self-insured retention (“SIR”) amount exceeds the amount for which JB Hunt believes it would settle this case (or pay in damages). Therefore, Hammond believed that “the insurance would not apply” for purposes of settling the case. (Id. at 15.)
• Hammond stated that he did not recall whether JB Hunt, in the course of making initial disclosures or in discovery, disclosed or produced the insurance policy, including the declarations page and any SIR, to Lethiot's counsel. He stated that JB Hunt would supplement its disclosures or responses if required. (Id. at 33-34.)
• Later in the hearing, Travis informed the Court that in JB Hunt's March 6, 2015 responses to Lethiot's discovery requests, JB Hunt stated that it is self-insured; it did not mention that it was self-insured only to a certain amount and insured by a third party above that amount.[2] (Id. at 31-32.)
• Hammond acknowledged that JB Hunt needed to supplement its response to the insurance-related interrogatory. He stated that late in the previous week or on the date of the settlement conference, he received additional document production from both Lethiot and Family Dollar. He stated that until he reviewed the documents produced that day, he could not say whether the information contained therein would lead him to change his valuation of the case. (Id. at 34, 41-42.)
• Hammond agreed that based on the language of Rule 26(a)(1), JB Hunt's relevancy objection to producing insurance-related information was “utterly baseless.” (Id. at 35-36 (quoting Fed.R.Civ.P. 26(a)(1)(iv) (“A party must, without awaiting a discovery request, provide to the other parties [ . . . ] any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.”).)[3]
• Hammond and Campbell each stated that Campbell had “full settlement authority” within the meaning of the Settlement Conference Order (DN 66 at 2). Campbell stated that there was no settlement figure above which she could not settle the case without getting approval from someone else. (DN 84 at 18.)
• Hammond agreed that there is an insurance carrier for JB Hunt that falls within the Settlement Conference Order language describing insurance carriers that must attend the settlement conference. (DN 84 at 18-19; DN 66 at 2-3 (“An authorized representative of any insurance company which may be liable for all or part of a possible judgment shall attend in person.”)) No insurance carrier representative appeared for the settlement conference. (DN 84 at 19.)
• As of the date of the settlement conference, neither Lethiot nor Family Dollar knew the amount at which JB Hunt's SIR would be exhausted and the insurance carrier would become involved. (Id. at 39-40.)
• JB Hunt did not contact chambers to request a variance from the Settlement Conference Order. The Court did not grant a variance from the Order. (Id. at 19-20.)
• Hammond acknowledged the Settlement Conference Order language that provides, “Anyone who fails to comply with any provision of this court order may be subject to the full range of sanctions authorized by law.” (Id. at 21.)

         • Information Regarding Family Dollar:

• Donkin, Family Dollar's counsel, confirmed on the record that he read the entirety of the Settlement Conference Order, forwarded the Order to his client, specifically newly-appointed risk manager Ryan Johnson (“Johnson”) and Johnson's assistant. He stated that he and Johnson discussed the Order during a telephone conference the week before the settlement conference. (DN 84 at 21.)
• Donkin stated that he is aware of the Settlement Conference Order language that provides, “Anyone who fails to comply with any provision of this court order may be subject to the full range of sanctions authorized by law.” (Id. at 22.)
• Donkin stated that there is an insurance carrier involved in this case as it relates to Family Dollar. He stated that the third-party administrator is Sedgwick CMS, and that he did not know who the insurance carrier is. (Id. at 22.) Donkin acknowledged that no insurance carrier representative was present for the settlement conference. (Id. at 26.)
• Donkin stated that Family Dollar is the decision-maker as to whether to settle its claim and for what amount. (Id. at 22-23.)
• Donkin acknowledged that he did not have the authority to change his client's valuation of the case and his client's settlement posture during the course of the settlement conference. (Id. at 27 (discussing DN 66 at 2).) There was a dollar figure above or below which Donkin was not authorized to settle the case without ...

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