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Apart from positive law, district courts have substantial inherent power to manage and control their calendars. The rules of civil procedure do not completely describe and limit the power of district courts. This inherent power takes many forms. Fed. R. Civ. P. 83(b) provides that judges may regulate practice in any manner consistent with federal law and applicable rules. By way of illustration, a district court may use its inherent power to compel represented clients to attend pretrial settlement conferences, even though such a practice is not specifically authorized in the Rules of Civil Procedure.
In January 1996, Thames-*** Superaqueduct Partners (Thames-***) entered into a master agreement with the Puerto Rico Aqueduct and Sewer Authority (PRASA) to construct, operate, and maintain the North Coast Superaqueduct Project (the Project). Thames-*** granted subcontracts for various portions of the work, including a subcontract for construction management to *** Corp. of Puerto Rico (***-PR), a subcontract for the operation and maintenance of the Project to Thames Water International, Ltd. (Thames Water), and a subcontract for the fabrication of pipe to Atlantic Pipe Corp. (APC). After the Project had been built, a segment of the pipeline burst. Thames-*** incurred significant costs in repairing the damage. Not surprisingly, it sought to recover those costs from other parties. In response, one of PRASA's insurers filed a declaratory judgment action in a local court to determine whether Thames-***'s claims were covered under its policy. The litigation ballooned, soon involving a number of parties and a myriad of issues above and beyond insurance coverage. The district court, faced with a mass of cross and counter claims between the parties to the construction, appointed a law school professor to mediate the complex controversy. Atlantic Pipe Corp., one of the contractors in the project objected, and sought mandamus from the court of appeals. Atlantic Pipe Corp. challenged the court's authority to compel it to participate in, and share the costs of, non-binding mediation conducted by a private mediator.
In complex litigation following the failure of a large public works construction project due to burst pipeline, could subcontractor-fabricator Atlantic Pipe Corp. be compelled to participate in, and share the costs of, non-binding mediation conducted by a private mediator?
According to the United States Court of Appeals, the district court could have ordered mandatory mediation pursuant to either an explicit statutory provision or local rules adopted under the Alternative Dispute Resolution Act of 1998 (ADR Act), 28 U.S.C. §§ 651-658. In the absence of such authority, the Court nonetheless could order mandatory mediation through the use of its inherent judicial powers. However, to be valid, the case had to be appropriate for mediation and must provide adequate safeguards, such as limits on the fees that the mediator could charge and a timetable for the mediation. In the case at bar, the mediation order, as entered, lacked procedural safeguards, and the district court had not adopted implementing local rules complying with the statutory mandate for such mediation. As such, the order of the district court was vacated and the case remanded.