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Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 22, 2004 Decided March 26, 2004

No. 03-7026

KATHERINE T. WALLACE,

APPELLANT

v.

SKADDEN, ARPS, SLATE,

MEAGHER & FLOM, LLP, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 98cv01946)

Katherine T. Wallace, pro se, argued the cause.

Neal D. Mollen argued the cause for the appellees. Barbara Berish Brown and Richard L. Brusca were on brief.

Ernest L. Barcella, Jr. entered an appearance.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

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Before: HENDERSON, RANDOLPH and ROGERS, Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: The appellant,

Katherine T. Wallace, appeals the lower court’s: (1) refusal to

recuse itself in her case; (2) decision to award costs and

attorneys’ fees against her pursuant to 28 U.S.C. § 1927; and

(3) adoption of the report by a magistrate judge acting as a

special master recommending fees and costs of $25,000. We

find no error with regard to the first two rulings but conclude

that the district court erred regarding the third when it

ignored the procedural requirements of Fed. R. Civ. P. 53.

We therefore vacate that decision and remand for further

proceedings in accordance with this opinion.

I. BACKGROUND

In 1995, Wallace was fired from her job as an associate in

the Washington, D.C. office of the law firm of Skadden, Arps,

Slate, Meagher & Flom, LLP (Skadden). She responded by

suing the firm and some of its lawyers in Superior Court for

defamation and wrongful discharge. As part of discovery in

that suit, Wallace subpoenaed several former Skadden employees as witnesses. Skadden offered to provide legal representation for those former employees, some of whom accepted. The Superior Court ultimately granted summary

judgment to Skadden. Skadden’s provision of legal representation to its former employees led Wallace to sue Skadden,

the witnesses and their lawyers and law firms participating in

the Superior Court case (the appellees here) in federal court

in August 1998 under the Racketeer Influenced and Corrupt

Organizations Act (RICO). 18 U.S.C. § 1964(c). Wallace

broadly alleged that the appellees conspired to control and

withhold testimony in her Superior Court case – citing bribery, obstruction of justice and witness tampering as the

underlying predicate acts – and sought $120 million in damages.

In September 1998, the appellees moved to dismiss the

complaint pursuant to Fed. R. Civ. P. 12(b)(6). As part of

that motion, they also moved for an award of attorneys’ fees

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and costs pursuant to 28 U.S.C. § 1927 because Wallace’s

claims were ‘‘baseless’’ and made in ‘‘bad faith.’’ Joint Appendix (JA) 85-88.1

 In response, Wallace countered that her

claims were legally and factually supported. Regarding the

request for attorneys’ fees, however, Wallace merely suggested – in the introduction and the conclusion of her brief – that

the appellees’ ‘‘motion for costs and fees’’ also be denied

‘‘[b]ecause TTT there is a genuine issue of material fact as to

whether’’ the appellees had violated RICO. JA 92-93. Almost one year later, in September 1999, the district court

dismissed Wallace’s case pursuant to Fed. R. Civ. P. 12(b)(6).

It found inter alia that Wallace’s RICO claims were based

solely on ‘‘bare and conclusory’’ allegations. JA 140-43. It

further granted the appellees’ motion for costs and fees under

28 U.S.C. § 1927, observing that Wallace had offered ‘‘no

direct opposition’’ to the motion and thus there was ‘‘an

uncontroverted record suggesting that Dr. Wallace had engaged in this litigation out of bad faith.’’ JA 143-44.

Following that order, the district court set a schedule to

determine the amount of costs and fees but Wallace appealed

the district court’s order. Wallace subsequently voluntarily

dismissed the portion of her appeal related to the district

court’s decision to sanction her under 28 U.S.C. § 1927 and

instead pursued only her appeal of the dismissal of her RICO

claims. In support of her appeal, Wallace cited an ex parte

communication between the district judge’s law clerk and

counsel for Skadden, claiming that the contact contributed to

an ‘‘appearance of bias and misconduct’’ on the part of the

district court and required the district judge’s recusal. See

Appellees’ Br. at B31-B33. In May 2000, we affirmed the

district court without opinion, finding Wallace’s RICO allega1 28 U.S.C. § 1927 provides:

Any attorney or other person admitted to conduct cases in

any court of the United States or any Territory thereof

who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to

satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.

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tions factually insufficient and ‘‘no impropriety’’ or ‘‘evidence

of judicial bias’’ resulting from Skadden’s counsel’s ex parte

contact with the district judge’s law clerk. JA 149A.

Again before the district court, the appellees sought a

determination of the amount of their fee award. For her

part, Wallace disputed the court’s original decision to sanction

her under 28 U.S.C. § 1927 and in January 2001 again moved

to disqualify the district judge based on the prior ex parte

communication. The district court denied her motion, noted

that the issue whether to sanction her had been decided two

years earlier and referred the determination of the appropriate amount to a magistrate judge for a report and recommendation. JA 258-59; see 28 U.S.C. § 636(b)(1); Fed. R. Civ. P.

72. A few weeks later, the court modified – with the parties’

subsequent consent – the original referral, appointing the

magistrate judge to act as a special master. See 28 U.S.C.

§ 636(b)(2); Fed. R. Civ. P. 53.

The magistrate judge initially referred the case for mediation but that proved unsuccessful. It then conducted, in July

2001, an evidentiary hearing during which several appellees

and their counsel as well as Wallace testified. On January

21, 2003, the magistrate judge, acting as a special master,

issued an eighteen-page report which concluded by ‘‘suggest[ing] that Dr. Wallace be ordered to pay $25,000.’’ JA

278. The report was filed with the district court the following

day. Neither side filed objections to the report or made any

motion with regard to it.

On February 11, 2003, the district court sua sponte adopted

the special master’s report. JA 279. The court noted that

Wallace had filed no written objection to the report. Invoking Local Civil Rule 72.3(b), the court adopted the magistrate

judge’s recommendation and ordered Wallace ‘‘to pay $25,000

as a deterrent to future filing of frivolous legal actions.’’ JA

279-80.

II. DISCUSSION

Wallace’s first claim – that the district judge should have

recused herself – need not occupy us long. To the extent that

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Wallace seeks review of the district judge’s decision not to

recuse on the basis of an ‘‘appearance of impropriety,’’ Appellant’s Br. at 30 (emphasis in original), she asserted as much

on her first appeal. See Appellees’ Br. at B29 (including

Wallace’s original appellate brief which alleged ‘‘actual or

apparent impropriety’’). We concluded then that there was

‘‘no impropriety’’ or ‘‘evidence of judicial bias’’ on the district

judge’s part with regard to the ex parte communication

between her law clerk and Skadden’s counsel. JA 149A. We

cannot consider this claim anew. United States v. Alaw, 327

F.3d 1217, 1220 (D.C. Cir. 2003) (law of case doctrine bars

review of claims decided in earlier appeal).

Wallace’s second claim is equally unavailing. We review

the district court’s decision to sanction a party pursuant to 28

U.S.C. § 1927 for abuse of discretion. LaPrade v. Kidder

Peabody & Co., 146 F.3d 899, 904 (D.C. Cir. 1998). Wallace

argues that we should reverse the district court’s sanction

because her RICO claims ‘‘were colorable and brought in

good faith’’ and because ‘‘the district court failed to make

findings sufficient [to] meet the requirements of due process.’’

Appellant’s Br. at 11. But Wallace failed to oppose the

appellees’ original sanctions motion in district court. In an

earlier case, we declined to consider a claim that a district

court abused its discretion, or did not adequately support its

decision with findings of fact, in imposing sanctions pursuant

to Fed. R. Civ. P. 11 because the appellant failed to oppose

the motion in district court. See Geller v. Randi, 40 F.3d

1300, 1303-04 (D.C. Cir. 1994). Here Skadden’s section 1927

motion – made in conjunction with its motion to dismiss –

specifically sought costs and attorneys’ fees based not only on

the baselessness of Wallace’s RICO claims but also on her

‘‘bad faith’’ in pursuing them – including, among other things,

the fact that Wallace sent copies of her complaint to local

judges, the media, other lawyers and the Independent Counsel investigating President Clinton. See JA 85-87. Wallace

responded to that motion by focusing exclusively on the

sufficiency of her RICO claims pursuant to Rule 12(b)(6); she

only cursorily referenced the section 1927 motion in the

introduction and the conclusion of her brief and completely

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failed to respond to the bad faith allegations. In granting the

section 1927 motion, the district court stated that Wallace’s

RICO claims ‘‘utterly lack[ed] merit’’ and that the ‘‘uncontroverted record suggest[ed] that Dr. Wallace has engaged in

this litigation out of bad faith.’’ JA 144 (emphasis added).

We find no reason to allow Wallace to challenge the district

court’s decision for the first time on appeal.2

We do find error, however, in the district court’s adoption

of the report of the magistrate judge acting as a special

master. Although the initial referral to the magistrate judge

was pursuant to 28 U.S.C. § 636(b)(1), Wallace v. Skadden,

No. 98CV-1946 (Feb. 10, 2001); see Fed. R. Civ. P. 72; the

district court, with the parties’ consent, modified that referral

and specified the magistrate judge as a special master pursuant to Fed. R. Civ. P. 53. See Wallace v. Skadden, No. 98CV1946 (March 16, 2001) (noting ‘‘the Court’s intention that the

previous referral to [the magistrate judge] be converted into

an appointment of [the magistrate judge] as a special master,

pursuant to 28 U.S.C. § 636(b)(2), Fed. R. Civ. P. 53, and

[Local Civil Rule] 72.1(b)(5)’’); Wallace v. Skadden, No.

98CV-1946 (Apr. 4, 2001) (noting parties’ consent to ‘‘having

this matter referred to [the magistrate judge] as Special

2 Were we to review the merits of her claims, we would find no

abuse of discretion. In Wallace’s original appeal we summarily

affirmed the district court’s dismissal of her RICO claims, see JA

149A, and – irrespective of Wallace’s alleged good faith in bringing

them – the district court found bad faith. See Lipsig v. Nat’l

Student Mktg. Corp., 663 F.2d 178, 182 (D.C. Cir. 1980) (per

curiam) (affirming imposition of attorneys’ fees based on appellant’s

bad faith in prosecuting suit); see also Lone Ranger Television,

Inc. v. Program Radio Corp., 740 F.2d 718, 726-27 (9th Cir. 1984)

(relying on Lipsig for proposition that ‘‘[s]ome merit in counsels’

actions, however, does not preclude an award under 28 U.S.C.

§ 1927’’). Furthermore, we have rejected as ‘‘empty formalism’’

any requirement that the district court invoke ‘‘magic words’’ to

impose sanctions pursuant to 28 U.S.C. § 1927 and have declined to

require findings if the record makes clear that the sanctioned

party’s actions were both unreasonable and vexatious. LaPrade,

146 F.3d at 905-06.

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Master pursuant to Fed. R. Civ. P. 53’’).3

Rule 53 includes specific procedural requirements that the

district court ignored here.4

 The version of Rule 53 in effect

at the time of the district court’s order provided that:

Application to the court for action upon the report

[of a special master] and upon objections thereto

shall be by motion and upon notice as prescribed in

[Federal] Rule [of Civil Procedure] 6(d). The court

after hearing may adopt the report or may modify it

or may reject it in whole or in part or may receive

further evidence or may recommit it with instructions.

Former Fed. R. Civ. P. 53(e)(2) (amended 2003). Thus while

the rule appeared to require the filing of a motion, the parties

were at least entitled to notice before the district court could

adopt a special master’s report. Id.; see 9A Charles Alan

Wright & Arthur Miller, Federal Practice & Procedure

§ 2612, at 692 (1995) (‘‘Application to the district court for

action upon the [special master’s] report TTT is by motion and

upon notice as prescribed in Rule 6(d).’’). But cf. Fed. R. Civ.

P. 53(g) advisory committee’s note to 2003 amendments (‘‘If

no party asks the court to act on a master’s report, the court

is free to adopt the master’s action or to disregard it at any

relevant point in the proceedings.’’). The district court was

also required to hold a hearing on the report. Former Fed.

R. Civ. P. 53(e)(2) (amended 2003); see 9A Wright & Miller,

Federal Practice & Procedure § 2612, at 692 (‘‘The court

3 A district court may, with the parties’ consent, ‘‘designate a

magistrate judge to serve as a special master’’ pursuant to 28

U.S.C. § 636(b)(2). Fed. R. Civ. P. 53 makes clear that a magistrate judge acting as a special master is ‘‘subject to this rule TTT

when,’’ as here, see supra, ‘‘the order referring a matter to the

magistrate judge expressly provides that the reference is made

under this rule.’’ Former Fed. R. Civ. P. 53(f) (amended 2003);

Fed. R. Civ. P. 53(i).

4 Fed. R. Civ. P. 53 was substantially rewritten in 2003 but the

revised version did not become effective until December 1, 2003,

long after the district court’s February 2003 decision. See Fed. R.

Civ. P. 53 & advisory committee’s note to 2003 amendments.

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must hold a hearing on the motion[.]’’); see also Kieffer v.

Sears, Roebuck & Co., 873 F.2d 954, 956 & n.3 (6th Cir. 1989)

(‘‘plain language of rule TTT clearly states the court may

adopt the report after hearing’’); cf. Fed. R. Civ. P. 53

advisory committee’s notes to 2003 amendments (‘‘The requirement that the court must afford an opportunity to be

heard can be satisfied by taking written submissions when

the court acts on the report without taking live testimony.’’).

Instead, the district court here invoked sua sponte Local

Civil Rule 72.3(b) and the parties’ failure to file any written

objections to the special master’s report in adopting the

recommended $25,000 sanction. JA 279.5

 This was yet another mistake. Local Civil Rule 72.3(b) applies only to matters a district court refers to a magistrate judge for hearing

and recommendation under Local Civil Rule 72.3(a). D.D.C.

Loc. Civ. Rule 72.3(b) (‘‘Any party may file written objections

to the magistrate judge’s proposed findings and recommendations issued under paragraph (a)’’ (emphasis added)).6

 It

5 Local Rule 72.3(b) provides:

Any party may file written objections to the magistrate

judge’s proposed findings and recommendations issued

under [Local Rule 72.3](a) within ten days after being

served with a copy thereof. The objections shall specifically identify the portions of the proposed findings and

recommendations to which objection is made and the basis

for the objection.

Failure to file timely objections may waive appellate review of a District Court order adopting the magistrate

judge’s report. All magistrate judge’s reports shall contain a notice substantially as follows:

Failure to file timely objections to the findings and

recommendations set forth in this report may waive

your right of appeal from an order of the District Court

adopting such findings and recommendations. See

Thomas v. Arn, 474 U.S. 140 (1985).

D.D.C. Loc. Civ. R. 72.3(b); see also 28 U.S.C. § 636(b)(1) (10 day

filing deadline and de novo review by district court based only on

objections); Fed. R. Civ. P. 72 (same).

6 Local Civil Rule 72.3(a) sets out inter alia those matters a

district court may refer to a magistrate judge for report and

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does not, by its own terms, apply to the report of a special

master (or that of a magistrate judge acting as a special

master). The district court appears to have recognized the

distinction when it sought the parties’ consent to modify its

referral in that it noted that it was authorized to appoint the

magistrate judge as a special master pursuant to Local Civil

Rule 72.1(b)(5) and that a magistrate judge acting as a special

master is governed by 28 U.S.C. § 636(b)(2) and Fed. R. Civ.

P. 53. Wallace v. Skadden, No. 98CV-1946 (March 16, 2001)

(requesting parties’ consent to ‘‘appointment of [the magistrate judge] as a special master, pursuant to 28 U.S.C.

§ 636(b)(2); Fed. R. Civ. P. 53, and [Local Civil Rule]

72.1(b)(5)’’); see D.D.C. Loc. Civ. Rule 72.1(b)(5) (district

court can appoint magistrate judge to ‘‘[s]erve as a special

master in civil actions pursuant to Rule 53, Federal Rules of

Civil Procedure’’ (emphasis added)). The parties’ consent

likewise declared: ‘‘the parties TTT hereby jointly consent to

having this matter referred to [the magistrate judge] as

Special Master pursuant to Fed. R. Civ. P. 53.’’ Wallace v.

Skadden, No. 98CV-1946 (Apr. 4, 2001) (emphasis added).

Unlike the procedure governing referral to a magistrate

judge for report and recommendation pursuant to 28 U.S.C.

§ 636(b)(1), Fed. R. Civ. P. 72 and Local Civil Rule 72.3(a) –

that is, not as a special master – there was – and still is – no

explicit waiver language regarding a party’s failure to timely

object to the report of a magistrate judge acting as a special

master pursuant to 28 U.S.C. § 636(b)(2), Fed. R. Civ. P. 53,

and Local Civil Rule 72.1(b)(5). See also 9A Wright & Miller,

Federal Practice & Procedure § 2612, at 692 (noting under

‘‘present practice’’ ‘‘the report of a master’’ is not ‘‘regarded

as confirmed if the parties fail[ ] to file [objections] within the

time allowed by the rule’’). Instead, Fed. R. Civ. P. 53

provided simply that ‘‘[w]ithin 10 days after being served with

notice of the filing of the report any party may serve written

objections thereto upon the other parties.’’ Former Fed. R.

Civ. P. 53(e)(2) (amended 2003).7

 Nor was Wallace put on

recommendation under 28 U.S.C. § 636(b)(1)(B) and Fed. R. Civ. P.

72. See D.D.C. Loc. Civ. Rule 72.3(a).

7 Indeed, the recent revisions to Rule 53 increased the time to

respond to 20 days and the advisory committee’s notes explain that

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notice, as is the practice under Local Civil Rule 72.3(b), that

her failure to object to the report of the magistrate judge qua

special master could ‘‘waive appellate review of a District

Court order adopting the magistrate judge’s report.’’ D.D.C.

Loc. Civ. Rule 72.3(b) (‘‘All magistrate judge’s reports shall

contain a notice substantially as follows: Failure to file timely

objections to the findings and recommendations set forth in

this report may waive your right of appeal from an order of

the District Court adopting such findings and recommendations.’’) By treating the magistrate judge qua special master’s report as a run-of-the-mill referral for a report and

recommendation under 28 U.S.C. § 636(b)(1), Fed. R. Civ. P.

72, and Local Rule 72.3(b), the district court erred as a

matter of law. See Kona Enters., Inc. v. Estate of Bishop,

229 F.3d 877, 883 (9th Cir. 2000) (reviewing de novo district

court’s adoption of special master’s report).

The parties pass over these mistakes and instead argue the

merits of the $25,000 sanction.8

 Under Fed. R. Civ. P. 53,

the ‘‘time limits for objecting TTT are not jurisdictional’’ and that

‘‘the court may excuse the failure to seek timely review’’ and ‘‘[e]ven

if no objection is made TTT review [the master’s report] for clear

error TTT [or] de novo.’’ Fed. R. Civ. P. 53(g)(2) & advisory

committee’s notes to 2003 Amendments.

8 To the extent the appellees rely on Fed. R. Civ. P. 72, and our

case law interpreting it, to argue that we lack jurisdiction to

consider Wallace’s claims regarding the amount of the sanction, see

Appellees’ Br. at 17-18, Charter Oil Co. v. Am. Employers’ Ins. Co.,

69 F.3d 1160, 1172 & n. 4 (D.C. Cir. 1995), they repeat the district

court’s error. We need not decide whether a party’s failure to

object to the report of a magistrate judge qua special master under

former Fed. R. Civ. P. 53 constitutes a waiver of its right to pursue

those claims on appeal because the appellees failed to raise the

claim. See Pendleton v. Rumsfeld, 628 F.2d 102, 105-09 (D.C. Cir.

1980) (questioning impact of parties’ failure to object to special

master’s findings below but reviewing claims on appeal); id. at 109

n.2 (Wald, J., dissenting) (district court can correct errors regardless of objections to master’s findings); compare Provident Bank v.

Manor Steel Corp., 882 F.2d 258, 261 (7th Cir. 1989) (‘‘[W]hen a

matter has been referred to a magistrate, acting as a special master

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however, it was the district court’s duty – after motion, notice

and hearing – to review the special master’s legal conclusions

de novo, United States v. Lothridge, 324 F.3d 599, 601 (8th

Cir. 2003); Cook v. Niedert, 142 F.3d 1004, 1010 (7th Cir.

1998); Gottlieb v. Barry, 43 F.3d 474, 486 (10th Cir. 1994);

and to review the special master’s findings of fact for clear

error. Former Fed. R. Civ. P. 53(e)(2) (amended 2003) (‘‘the

court shall accept the master’s findings of fact unless clearly

erroneous’’); Lothridge, 324 F.3d at 601; Cook, 142 F.3d at

1010; Gottlieb, 43 F.3d at 486; see also Livas, 607 F.2d at 119

(‘‘The district court has the obligation to determine that the

findings of the master are not clearly erroneous.’’).

For the foregoing reasons, we remand the case to the

district court for proceedings consistent with this opinion.

So ordered.

pursuant to 28 U.S.C. § 636(b)(2) and Fed. R. Civ. P. 53, a party

waives his right to appeal if he has not preserved the issues for

appeal by first presenting them to the district court as objections to

the magistrate’s report.’’) and Smith v. Frank, 923 F.2d 139, 141 n.1

(9th Cir. 1991) (‘‘Failure to object to special master’s findings and

conclusions is treated identically to failure to object to magistrate’s

findings and conclusions.’’), with Livas v. Teledyne Movible Offshore, Inc., 607 F.2d 118, 119 (5th Cir. 1979) (per curiam) (appellant’s failure to object to findings of magistrate judge acting as

special master ‘‘does not TTT bar him from raising the independent

obligation of the court to determine that the master’s findings are

not clearly erroneous’’).

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