Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-02582/USCOURTS-casd-3_15-cv-02582-5/pdf.json

Nature of Suit Code: 340
Nature of Suit: Marine Personal Injury
Cause of Action: 46:30104 Marine Personal Injury - Jones Act

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15CV2582-CAB(BLM) 

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

WILLIAM J. CANNON, 

Plaintiff,

v. 

AUSTAL USA LLC AND UNITED STATES OF 

AMERICA 

Defendants.

 Case No.: 15CV2582-CAB(BLM) 

ORDER DENYING THIRD PARTY 

DEFENDANT AUSTAL’S MOTION TO 

WITHDRAW SHOW CAUSE ORDER 

AND IMPOSING SANCTIONS 

[ECF NO. 106] 

On August 29, 2017, the Court convened a Mandatory Settlement Conference (“MSC”). 

ECF No. 97. Lead counsel for Third Party Defendant Austal USA LLC, Mr. Douglas Brown, and 

Defendant Austal failed to appear. Id. In addition, neither the attorney, Mr. Rudy Lopez, nor 

the claims specialist, Ms. Maricela Martinez, who did appear on behalf of Third Party Defendant 

Austal had the required “full settlement authority.” ECF No. 100. 

On August 31, 2017, the Court issued an “ORDER TO SHOW CAUSE WHY SANCTIONS 

SHOULD NOT BE IMPOSED” for Austal’s failure to follow this Court’s order. Id. In the Order, 

the Court set a hearing in front of the Honorable Barbara L. Major for September 28, 2017 at 

9:30 a.m. and required counsel for Austal, Mr. Douglas Brown, and Austal to each file a 

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declaration regarding their failure to appear and the imposition of sanctions on or before 

September 12, 2017. Id. at 2. The Court gave Plaintiff and Defendant USA the opportunity to 

file a response on or before September 19, 2017. Id. 

In accordance with the Court’s Order, Mr. Douglas Brown, and Austal each filed a 

declaration on September 12, 2017. ECF No. 103. Included with their declarations was a 

“MOTION TO WITHDRAW SHOW CAUSE ORDER.” Id. In the motion, Austal requests that the 

Court withdraw its Order [ECF No. 100] and not impose sanctions on Austal or Mr. Brown. Id. 

at 6. On August 13, 2017, Defendant USA filed a response to the motion asking that it be 

stricken or redacted as the motion included specific settlement demands made during the 

confidential settlement conference, but taking no position as to the underlying Order to Show 

Cause (“OSC”). ECF No. 104. That same day, Austal withdrew its motion and refiled it without 

the confidential settlement discussion. ECF Nos. 105-106. Plaintiff did not file a response to 

the OSC. See Docket. On September 22, 2017, the Court vacated the OSC hearing scheduled 

for September 28, 2017. ECF No. 115. 

In his declaration Mr. Brown states that Mr. Lopez is lead counsel for this matter and 

counsel for the American Longshore Mutual Assn., Ltd. (“ALMA”) which provides insurance 

coverage for Plaintiff’s claims in the instant matter. ECF No. 106-2, Declaration of Douglas L. 

Brown in Support of Motion to Withdraw Cause Order at 2. Mr. Brown declares that Ms. Martinez 

is a claims specialist for American Equity Underwriters, Inc. (“AEU”) who had authority to settle 

this case on behalf of ALMA “which had the exclusive authority to settle claims.” Id. Mr. Brown’s 

statements are supported by the Declaration from Mr. Donald E. Keeler, Vice President of Austal 

USA, LLC. ECF No. 106-3, Declaration of Donald E. Keeler in Support of Motion to Withdraw 

Cause Order. 

In light of the statements made under oath by Messrs. Brown and Keeler, the Court 

accepts counsels’ position that they misunderstood the requirement that a corporate 

representative be present at the MSC. The Court also accepts Mr. Brown’s sworn statement that 

Mr. Lopez is lead counsel, or at least that he was on the day of the MSC. However, the Court 

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finds that sanctions are appropriate here since, even if Mr. Lopez was “trial counsel,” he was 

not legally and factually prepared to discuss settlement of the case. Both Mr. Lopez and Ms. 

Martinez were unable to discuss factual issues relevant to liability and damages and both had 

limited and fixed settlement authority (sum certain). Mr. Lopez had to phone another attorney 

during the conference to obtain additional factual information and to seek permission to explore 

greater settlement amounts. This is clearly in violation of the Court’s April 15, 2016, Order 

Setting Pretrial Deadlines which states 

Full Settlement Authority Required: In addition to counsel who will try the 

case, a party or party representative with full settlement authority1 must be 

present for the conference. In the case of a corporate entity, an authorized 

representative of the corporation who is not retained outside counsel must be 

present and must have discretionary authority to commit the company to pay 

an amount up to the amount of Plaintiff's prayer (excluding punitive damages 

prayers). The purpose of this requirement is to have representatives present 

who can settle the case during the course of the conference without consulting 

a superior. Counsel for a government entity may be excused from this 

requirement so long as the government attorney who attends the Mandatory 

Settlement Conference (1) has primary responsibility for handling the case, and 

(2) may negotiate settlement offers which the attorney is willing to recommend 

to the government official having ultimate settlement authority. 

ECF No. 46 at 5-6 (emphasis in original). 

Accordingly, after considering Austal’s motion, the declarations, all relevant facts, and 

Plaintiff’s failure to file a request for sanctions, the Court sanctions Austal in the amount of 

$300.00 to be paid on or before October 23, 2017 to the Miscellaneous Fines, Penalties and 

                                                                

1 "Full settlement authority" means that the individuals at the settlement conference must be 

authorized to explore settlement options fully and to agree at that time to any settlement terms 

acceptable to the parties. Heileman Brewing Co. v. Joseph Oat Corp., 871 F.2d 648, 653 (7th 

Cir. 1989). The person needs to have "unfettered discretion and authority" to change the 

settlement position of a party. Pitman v. Brinker Int'l, Inc., 216 F.R.D. 481, 485-86 (D. Ariz. 

2003). The purpose of requiring a person with unlimited settlement authority to attend the 

conference contemplates that the person's view of the case may be altered during the face to 

face conference. Id. at 486. A limited or a sum certain of authority is not adequate. See Nick 

v. Morgan's Foods, Inc., 270 F.3d 590, 595-97 (8th Cir. 2001). 

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Forfeitures, Not Otherwise Classified, fund of the United States Treasury [see CivLR 83.1(b)]. 

Austal is ordered to file a declaration verifying said payment no later than October 27, 2017. 

IT IS SO ORDERED. 

Dated: 10/3/2017 

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