COMMITTEE ON CODES OF CONDUCT
ADVISORY OPINION NO. 95

Judges Acting in a Settlement Capacity.

Concerns have recently been articulated about the practice of judges acting in a settlement capacity in a case. The following questions have been submitted to the Committee on Codes of Conduct for consideration:
(1) may a judge presiding over a trial properly participate directly in settlement discussions with the parties?

(2) would it make any difference if the trial is to be before a jury rather than the judge?

(3) would the existence of an established local rule permitting the practice have any bearing on the propriety of the judge's action?


Code Provisions

The Code of Conduct for United States Judges contains two provisions bearing on the subject of judges' involvement in settlement discussions. First, Canon 3A(4) advises that judges should not engage in ex parte communications on the merits. As an exception to this general advice, the canon further provides that a "judge may, with consent of the parties, confer separately with the parties and their counsel in an effort to mediate or settle pending matters." Second, Canon 3C(1) sets out the standard for impartiality that judges must meet in the performance of their judicial duties, including participation in settlement discussions. Canon 3C(1) provides that "[a] judge shall disqualify himself or herself in a proceeding in which the judge's impartiality might reasonably be questioned."

Nothing in the Code expressly addresses the practice of judges discussing settlement with all parties simultaneously or presiding over joint settlement conferences. Since the drafters of the Code believed it was necessary to expressly permit ex parte settlement discussions between judges and parties with their consent, it is reasonable to infer that joint settlement discussions do not contravene the Code. We read the Code of Conduct to acknowledge that judges may engage in a range of permissible settlement activities, and that recusal follows from those activities only where a judge's impartiality might reasonably be questioned because of what occurred during the course of those discussions.

Federal and Local Rules on Settlement

Discussion of the possibility of settlement is a common practice at pretrial and status conferences and is expressly sanctioned in general terms by the Federal Rules of Civil Procedure. Rule 16(a)(5) allows judges to convene pretrial conferences for the purposes of "facilitating the settlement of the case" and Rule 16(c)(9) indicates that settlement is a proper subject for "consideration" and "appropriate action" at pretrial conferences. The clear implication in Rule 16 is that judges will be involved in facilitating settlement. Rule 16 does not prevent a judge who engaged in settlement discussions from presiding over a trial.

Many district courts have local rules comparable to Rule 16 of the Federal Rules; that is, rules that generally permit settlement activities but do not specifically address the extent or manner of judges' participation in settlement discussions. Other local rules contain more specific provisions, including: (1) local rules indicating judges have some direct role to play in settlement discussions but not restricting the judge from subsequently handling the trial of the case or serving as the finder of fact (see E.D. Pa. Rule 16.1(d)(3); D.N.H. Rule 16.3); and (2) local rules restricting judges who participate in settlement discussions from handling a subsequent trial of the case, including one that prohibits this (see S.D. Ill. Rule 11(d)), one that prohibits discussion of settlement amounts in nonjury cases absent consent of the parties (see N.D. Tex. Rule 16.3(b)), and one that permits the parties to consent to trial by the settlement judge (see S.D. Cal. Rule 16.3(c)).

Ethical Standards

A trial judge's participation in settlement efforts is not inherently improper under the Code of Conduct for United States Judges. As with any aspect of a judge's conduct of a case, particular actions by a judge may raise ethical concerns in some cases, but there is no per se impropriety in a judge's participation in settlement discussions or in a judge's conduct of a trial following participation in settlement talks. The existence of local rules explicitly permitting judges to preside over settlement discussions lends support to the propriety of a judge's actions in this respect. On the other hand, the existence of local rules prohibiting judges from handling successive settlement and trial responsibilities forecloses judges in some jurisdictions from exercising certain combinations of settlement and trial responsibilities (or from doing so without consent). Whether ethical concerns arise in a particular proceeding, in the absence of a local rule prohibiting the judge's participation, is a fact specific determination that depends on the nature of the judge's actions and whether the judge's impartiality might reasonably be questioned. Judges should evaluate their actions under the standards discussed herein.

Ethical concerns are less likely to arise when a judge handles settlement negotiations and then presides over a jury trial, or when the parties consent to the judge's handling of successive settlement and trial phases. Concerns are more likely to arise in nonjury trials, when a judge may be involved in settlement discussions, probe the parties' assessments of the value of the case, review the parties' settlement offers (and perhaps suggest to them specific settlement amounts), and then, when settlement talks fail, try the case and award damages. In the latter circumstances, it may be reasonable to question whether the trial judge can be an objective trier of fact, or whether the case should instead be tried by another judge unfamiliar with settlement discussions.

The Code's ethical standards are not violated every time a judge in a nonjury case learns of inadmissible information as a result of settlement discussions and then tries the case. Judges (and juries as well) periodically receive information that is not admissible and exclude it from their deliberations before rendering judgment. It is not inherently unreasonable to credit their ability to be impartial in these circumstances. Nor does it necessarily offend Canon 3C(1) for a trial judge to comment on the strengths and weaknesses of the parties' case before trial. On the other hand, comments a judge makes in the course of settlement discussions may create an appearance of bias. Similarly, a trial judge's awareness of information obtained during settlement discussions that is otherwise unlikely to be made known to the judge during the trial may undermine the judge's objectivity as a fact finder and give rise to questions about impartiality. When a judge's impartiality might reasonably be questioned, Canon 3C(1) advises that the judge "shall disqualify." See also 28 U.S.C. § 455(a). One useful test for these purposes is "whether the conduct would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the judge's ability to carry out judicial responsibilities with integrity, impartiality, and competence is impaired." See Code of Conduct for United States Judges, Commentary to Canon 2A.

Settlement practices must be examined on a case-by-case basis to determine their ethical propriety. Factored into this calculus should be a consideration of whether the case will be tried by judge or jury, whether the parties themselves or only counsel will be involved in the discussion, and whether the parties have consented to the discussions or to a subsequent trial by the settlement judge. Judges must be mindful of the effect settlement discussions can have not only on their own objectivity and impartiality but also on the appearance of their objectivity and impartiality. Despite a judge's best efforts there may be instances where information obtained during settlement discussions could influence a judge's decision-making during trial. Parties who have confronted deficiencies in their cases, or who have negotiated candidly as to the value of their claims, may question whether the judge can set aside this knowledge in a case tried to the judge, whereas in a case tried to a jury, there may be less reason to question the judge's impartiality. The extent to which a judge's impartiality may be compromised, in either reality or appearance, will depend in part on the nature and degree of the judge's participation in settlement discussions and the extent to which the judge has become privy to information that relates directly to the issues the judge will be called upon to decide in cases tried to the judge (for example, evaluations of the merits and damages) or issues which the judge may be called to rule upon during the course of a trial by jury. In the end, a judge's recusal decision following involvement in settlement discussions will be fact specific and should be informed by an appropriate sensitivity to the requirements of impartiality and the appearance of impartiality.

January 14, 1999