Mediation: Second Circuit Vacates Default Judgment Issued for a Party's Failure (Web)

In Negron v. Woodhull Hospital, No. 05-4147-CV, 2006 WL 759806 (2d Cir. March 24, 2006)(available at http://www.ca2.uscourts.gov), former Woodhull Hospital employee Oscar Negron brought suit against the Brooklyn, N.Y., hospital claiming discrimination in violation to Title VII of the Civil Rights Act of 1964.

A New York federal district court granted Negron a default judgment. The court awarded both sanctions and attorney's fees "upon finding that the Hospital had violated a court order to participate in good faith in mediation by failing to bring a 'principal' to a mediation conference as the mediator had instructed."

In an unpublished summary order, the Second U.S. Circuit Court of Appeals indicated that issuing a default judgment as a sanction is a remedy to be used only in the most extreme situations in response to egregious conduct, and reversed the default.

The Second Circuit order states that a default judgment may be appropriate where "(1) the party has demonstrated willfulness, bad faith or fault, (2) less drastic sanctions will not work, and (3) the party has been warned of the risk of dismissal for failure to comply with court orders." (Citation omitted.)

Although the court acknowledged that the district court reasonably found that Woodhull Hospital disobeyed the mediator’s instructions by failing to bring a principal with settlement authority, the appellate panel determined that the district court’s remedy was too harsh.

The district court substantiated its decision by citing the hospital's “history of non-compliance.” The lower court had received information from the case’s magistrate judge, according to the Second Circuit order, that the hospital appeared at the mediation “with no intention of negotiating to settle” the case.

The appeals court explained that "[b]ecause the Hospital's failure to bring a principal to the session inconvenienced the plaintiff and plaintiff's counsel, the district court properly required that the Hospital pay the expenses incurred in preparing for the mediation."

Although the district court's finding that Woodhull Hospital violated the court order was reasonable, the appeals panel concluded that the “further imposition of a default judgment, however, was not appropriate under the circumstances.”

–Julie Shaw, CPR Intern