Appeal from the United States District Court for the Southern District of Illinois, Northern Division RI-Civ-74-7 - Robert D. Morgan, Judge.
Castle, Senior Circuit Judge, Cummings and Pell, Circuit Judges.
J. F. Edwards Construction Company, an Iowa corporation, was the general contractor for two highway lighting projects in Wisconsin and one highway lighting project in Illinois. Edwards agreed to erect high-mast lighting towers with lowering devices and to perform other lighting work on the projects. Edwards ordered all materials for the projects from Westinghouse Electric Supply Company. In turn, Westinghouse, a Delaware corporation, entered into an agreement with Anderson Safeway Guard Rail Corporation under which Anderson, a Michigan corporation, agreed to supply the towers and lowering devices.
A series of problems developed between Edwards and the two states concerning the timely completion of the projects and the quality of the labor and materials, causing the states to withhold substantial payment on their contracts with Edwards.
In February 1974, Edwards sued Anderson for damages in the Circuit Court of Henry County, Illinois. A month later this suit was removed by Anderson to the court below on diversity grounds. In May 1974, Edwards amended its complaint by adding Westinghouse as an additional defendant. In May 1975, Edwards again amended its complaint by adding additional counts.
In March 1974, Anderson sued Westinghouse in the Eastern District of Michigan seeking $118,234.72 for materials Anderson had furnished to Westinghouse. The two federal actions were consolidated on May 8, 1975, at a pre-trial conference. At this conference, pursuant to the district court's Standing Order on Pre-Trial Conferences (Appendix infra), the parties were directed to file a stipulation of facts by July 1, 1975, and a pre-trial order by August 1, 1975, each to be signed by the respective parties. Trial was tentatively scheduled for November 10, 1975. On June 26, Edwards' counsel submitted a draft of a proposed stipulation of facts to counsel for the other parties. The draft was approved with minor changes by Westinghouse but proved unacceptable to Anderson. On July 17, Edwards again asked Anderson to stipulate but received no response. When the August 1 deadline arrived, Edwards' counsel tendered to the court a pre-trial order and stipulation of facts signed by him and Westinghouse counsel. On August 20, Anderson's local counsel, Martin H. Katz, wrote a letter to the court indicating that the stipulation had not been agreed to by August 1 because discovery was not yet complete. On August 25, the district court forwarded the proposed pre-trial order and stipulation to Anderson's counsel, stating that the final pre-trial order and stipulation of facts should be on file by October 1, 1975.
On September 26, Anderson's principal counsel submitted to opposing counsel its objections to seven of more than eighty items in the Edwards-Westinghouse stipulation of facts and enclosed Anderson's proposed stipulation of facts and pre-trial order.
At a meeting on October 3, 1975, attorneys for the parties signed Anderson's proposed pre-trial order and submitted it to the court on or about October 9.*fn1 At the same time, inasmuch as the parties were in disagreement as to a proper stipulation of facts, Edwards and Westinghouse submitted their signed stipulation of facts and Anderson submitted its signed stipulation of facts. On October 23, the trial was rescheduled to February 9, 1976, because of the district court's congested criminal calendar.
At a December 15, 1975, hearing on Anderson's motion for summary judgment against Westinghouse, the district court returned the proposed October 9 pre-trial order, stating that it was defective inasmuch as specific objections to Anderson's exhibits were not listed. The court stated that the parties should prepare an acceptable pre-trial order and stipulation of facts.
At another pre-trial conference on December 22, the court requested the parties to stipulate the true and provable facts in accordance with its standing pre-trial order. On the same date, counsel for the parties conferred about a set of stipulated facts and allegedly agreed upon same. This stipulation of facts was drawn up by using paragraphs from both the final Edwards-Westinghouse draft and the Anderson draft. Anderson was thus willing to enter into a 69-paragraph stipulation of facts before Edwards, three weeks later, sent in its deletions thereto.
On January 13, Edwards' counsel forwarded to Anderson copies of what was supposed to be the final stipulation of facts, but Anderson's counsel informed the trial court by letter of January 27 that Anderson refused to sign it on the ground that Edwards' counsel had "eliminated a number of facts previously agreed upon." On January 27, a pre-trial order was filed by Edwards and Westinghouse and executed by the trial judge without the signature of Anderson's counsel. Simultaneously, they filed a stipulation of facts without his signature.
On January 29, Anderson's counsel wrote the trial judge amplifying Anderson's reasons for refusing to sign the stipulation. Anderson's counsel maintained that Edwards' counsel had deleted 19 specified matters from the stipulation of facts supposedly agreed upon December 22, thus causing Anderson's counsel to refuse to execute the stipulation of facts. However, he stated that he would be amenable " once again to resolve these matters in a reasonable, prudent, and professional manner."
On January 28, Edwards and Westinghouse filed a motion requesting the district court to enter an order striking Anderson's pleadings and for other relief. The same day Anderson's local counsel, Martin H. Katz, filed a motion for leave to withdraw, which was granted.*fn2 This action caused Anderson to file affidavits of bias and prejudice against Judge Morgan on February 2. He ruled them insufficient one week later.
On February 9, 1976, Judge Morgan also took the following actions:
1. All Anderson's pleadings were stricken.
2. Judgment was entered for Edwards on Anderson's counter-claim.
3. Anderson's complaint against Westinghouse was dismissed.
4. Judgment was entered against Anderson on Edwards' complaint "subject to jury verdict on the dollar amount of damages proven in ex parte proceedings."
5. Westinghouse's cross-complaint against Anderson was dismissed as moot.
Anderson's oral motion to pursue an immediate interlocutory appeal under 28 U.S.C. § 1292(b) was denied. On the next day, the district court permitted a jury to render an ex parte verdict against Anderson in the sum of $89,018.66 after hearing the testimony of John F. Edwards, Sr., the chairman of the board of Edwards. Anderson's motion to vacate judgments, for a new trial and other relief was denied on February 24 and its notice of appeal was filed on March 11. We reverse except with respect to the recusal order.
In supporting the district judge's draconian orders against Anderson, Edwards and Westinghouse rely primarily on Rule 16 of the Federal Rules of Civil Procedure, Rule 10 of the Rules of the United States District Court for the Southern District of Illinois (Local Rule 10), and the trial court's Standing Order on Pre-Trial Conferences in Northern Division Civil Cases (Standing Order). Rule 16 permits a trial court to direct attorneys for the parties to appear before it for a pre-trial conference to consider five prescribed matters and "[such] other matters as may aid in the disposition of the action." Under this catch-all clause and paragraph 3 of Rule 16,*fn3 Judge Morgan was clearly within his rights in asking counsel for the three parties to try to stipulate all possible facts. By all means, such stipulations should be encouraged. Yet, on the other hand, nothing in Rule 16 empowers a court to compel the parties to stipulate facts. Similarly, Local Rule 10 does not make it mandatory to stipulate facts.*fn4
The district court's Standing Order is reproduced in the Appendix to this opinion. Two sections of the Standing Order deal with stipulations of facts in the context of a pre-trial conference. Section III (A)(2), in pertinent part, directs counsel to confer in advance of the pre-trial conference for the purpose of entering into a written stipulation or statement of all uncontested facts. Counsel for the parties complied with this provision by attempting to arrive at a mutually acceptable stipulation. Anderson's counsel submitted its stipulation of facts to Westinghouse and Edwards, whose counsel refused to agree thereto. Earlier, Edwards had submitted a stipulation of facts to which Westinghouse agreed but Anderson did not. It is most unfortunate that counsel for the three ...