McKay v. Ashland Oil, Inc.

120 F.R.D. 43, 1988 U.S. Dist. LEXIS 2881, 1988 WL 31807
CourtDistrict Court, E.D. Kentucky
DecidedApril 8, 1988
DocketCiv. A. No. 84-149
StatusPublished
Cited by6 cases

This text of 120 F.R.D. 43 (McKay v. Ashland Oil, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McKay v. Ashland Oil, Inc., 120 F.R.D. 43, 1988 U.S. Dist. LEXIS 2881, 1988 WL 31807 (E.D. Ky. 1988).

Opinion

OPINION

BERTELSMAN, District Judge.

This court is called upon to decide whether mandatory summary jury trials are a valid pretrial settlement procedure.1 2A summary jury trial was set in this case [44]*44over the objection of the plaintiffs. A motion for reconsideration of that setting was filed by plaintiffs promptly after the decision of the United States Court of Appeals for the Seventh Circuit in Strandell v. Jackson County, 838 F.2d 884 (7th Cir. 1988).

In Strandell, the Seventh Circuit held that a district court could not require the parties to participate in a mandatory summary jury trial. The court held that it could find no authority for making such a procedure mandatory either in the inherent power of the court or in the Federal Rules of Civil Procedure. As will be discussed below, this court is in a somewhat stronger position than the trial court in Strandell because of our local rule authorizing compulsory summary jury trials. Nevertheless, the court finds itself in respectful disagreement with the Seventh Circuit on the inherent power and Federal Rules issues, as will also be discussed.

BACKGROUND

This case is at heart a wrongful discharge case, but to call it that is to deprecate its complexity which is truly labyrinthine. Briefly, plaintiffs McKay and Williams are former officers of defendant Ashland Oil Corporation. They allege that for several years Ashland conducted the procurement phase of its operations in part by illegally bribing officials of Middle Eastern countries. Such bribes are prohibited by the Foreign Corrupt Practices Act. 15 U.S.C. § 78dd-l. Plaintiffs charge that these bribes were paid in a surreptitious manner disguised as investments. For instance, one of the contentions is that Ash-land made an investment in a chrome mine that was not really an investment but a disguised bribe to the proprietor of the mine, who was allegedly a foreign official. Plaintiffs further charge that when they refused to participate in these illegal activities and refused to cooperate in the coverup that necessarily resulted, they were discharged from their employment.2 The case is set for a six-week trial if the summary jury trial and other efforts of the court do not result in settlement. The summary jury trial will be limited to five days.

EFFECT OF LOCAL RULE

This case stands on a somewhat different footing than Strandell, supra, because of Local Rule (LR) 23 of the Joint Local Rules for the United States District Courts of the Eastern and Western Districts of Kentucky, which reads:

RULE 23

ALTERNATE METHOD OF DISPUTE RESOLUTION

A judge may, in his discretion, set any civil case for summary jury trial or other alternative method of dispute resolution.3 This local rule was adopted, of course, pursuant to the authority of F.R.Civ.P. 83, which provides:

Rule 83. Rules by District Courts
Each district court by action of a majority of the judges thereof may from time to time, after giving appropriate public notice and an opportunity to comment, make and amend rules governing its practice not inconsistent with these rules. A local rule so adopted shall take effect upon the date specified by the district court and shall remain in effect unless amended by the district court or abrogated by the judicial council of the circuit in which the district is located. Copies of rules and amendments so made by any district court shall upon their promulgation be furnished to the judicial council and the Administrative Office of the United States Courts and be made [45]*45available to the public. In all cases not provided for by rule, the district judges and magistrates may regulate their practice in any manner not inconsistent with these rules or those of the district in which they act. (emphasis added).

There can be no doubt that LR 23, supra, is valid under F.R.Civ.P. 83, since far greater intrusions into the autonomy of trial lawyers and parties have been upheld under the aegis of Rule 83. Further, the United States Supreme Court has recently commented that district courts have the power to enact local rules necessary for the courts to conduct their business. Frazier v. Heebe, — U.S. -, 107 S.Ct. 2607, 2611, 96 L.Ed.2d 557 (1987).

Directly in point is the Sixth Circuit decision in Rhea v. Massey-Ferguson, Inc., 767 F.2d 266 (6th Cir.1985). There the court upheld Local Rule 32 of the Eastern District of Michigan authorizing the district judge to refer certain cases to mandatory mediation. Further, the Michigan rule provided for the imposition of extra costs or the failure to recover normal costs if a party did riot better the evaluation of the mediators by ten percent.

In Rhea, the trial court had imposed $5,400 in extra costs on the defendant under the local rule. The appellate court first held that the defendant’s right to trial by jury under the Seventh Amendment was not violated by the mandatory mediation procedure since the case ultimately did go before a trial jury which rendered the final binding verdict. 767 F.2d at 268-69.

Turning to objections made under the Federal Rules of Civil Procedure, the appellate court stated:

“Massey-Ferguson also characterizes Local Rule 32 as violating numerous Federal Rules of Civil Procedure. Federal Rule of Civil Procedure 83 authorizes district courts to ‘regulate their practice in any manner not inconsistent with these rules.’ The challenged local rule is not inconsistent with Rule 38(b) merely because it interposes an additional step between the jury demand and trial. Nor does the Local Rule require two demands for a jury trial in violation of Rule 39(a). Nor is Local Rule 32 inconsistent with Rules 53 or 72-75, governing referral to masters or magistrates. The mediation panel merely issues a settlement evaluation that has no force unless accepted by the parties. In sum, no flaw requiring this Court to intervene in the district court’s practice under Local Rule 32 has been raised in the present suit.” 767 F.2d at 269.

As the Sixth Circuit also pointed out, many cases have upheld routine referral of cases to mandatory nonbinding arbitration. See, e.g., Davison v. Sinai Hospital of Baltimore, Inc., 462 F.Supp. 778 (D.Md.1978), aff'd, 617 F.2d 361 (4th Cir. 1980). See also, New England Merchants Nat’l Bank v. Hughes, 556 F.Supp. 712 (E.D.Pa.1983); Kimbrough v. Holiday Inn, 478 F.Supp. 566 (E.D.Pa.1979). A summary jury trial is essentially nonbinding arbitration with an advisory jury instead of arbitrators.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Matter of Sargeant Farms, Inc.
224 B.R. 842 (M.D. Florida, 1998)
In Re Nlo, Inc.
5 F.3d 154 (Sixth Circuit, 1993)
Caldwell v. Ohio Power Co.
710 F. Supp. 194 (N.D. Ohio, 1989)
Federal Reserve Bank v. Carey-Canada, Inc.
123 F.R.D. 603 (D. Minnesota, 1988)
Home Owners Funding Corp. of America v. Century Bk.
695 F. Supp. 1343 (D. Massachusetts, 1988)

Cite This Page — Counsel Stack

Bluebook (online)
120 F.R.D. 43, 1988 U.S. Dist. LEXIS 2881, 1988 WL 31807, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckay-v-ashland-oil-inc-kyed-1988.