## Facts

- Catherine Brooks sued The Lincoln National Life Insurance Company (and, in the case caption, Metropolitan Life Insurance Company d/b/a MetLife as administrator) in the U.S. District Court for the District of Nebraska.
- The court entered a mediation reference order requiring the parties and counsel to attend mediation and participate in good faith, including sending a representative with sufficient settlement authority.
- The parties mediated with Michael Mullin at his office.
- The mediation began around 9:30 a.m. Mullin separated the parties and caucused with each side for about 30 minutes.
- Lincoln authorized Mullin to communicate an initial settlement offer to Brooks.
- Mullin conveyed the offer. Brooks’s counsel regarded it as far below Brooks’s valuation and rejected it.
- Brooks’s counsel did not make a counter-demand and instead told the mediator that Lincoln needed to put a “serious offer” on the table or Brooks and counsel would leave.
- After Mullin relayed that message, Lincoln authorized a “box offer” (Lincoln would increase its offer to a stated amount if Brooks reduced her demand to a stated amount).
- Brooks’s counsel immediately rejected the box offer without making a counteroffer.
- Mullin tried to explain that Lincoln’s evaluation of the claim was much lower than Brooks’s evaluation.
- In doing so, Mullin mistakenly told Brooks that her demand exceeded Lincoln’s representative’s “authority,” when he meant it exceeded Lincoln’s “valuation.”
- Brooks understood the statement to mean Lincoln had not sent a representative with full settlement authority as required by the mediation reference order.
- Mullin did not correct the misstatement. Brooks’s counsel ended the mediation and stated he would seek sanctions.
- Brooks left around 11:45 a.m., less than three hours after the mediation began.
- Brooks moved for sanctions against Lincoln and its counsel for alleged violation of the mediation reference order (particularly the settlement-authority requirement).
- Lincoln moved for sanctions against Brooks, arguing Brooks failed to mediate or negotiate in good faith.

## Issues

1. Whether Lincoln failed to comply with the mediation reference order (including the requirement to attend with sufficient settlement authority), justifying sanctions against Lincoln or its counsel.
2. Whether Brooks and/or her counsel failed to participate in court-ordered mediation in good faith—by refusing to counteroffer and terminating the session early—justifying sanctions against Brooks’s side.

## Decision

- The court denied Brooks’s motion for sanctions based on the claim that Lincoln lacked required settlement authority at mediation.
- The court treated the “authority” statement as a mediator misstatement about valuation, not proof that Lincoln’s representative lacked power to negotiate and settle.
- The court granted Lincoln’s sanctions request in substantial part, finding Brooks’s side did not engage in meaningful bargaining and prematurely ended the court-ordered mediation.
- The court ordered sanctions aimed at reimbursing the defense for expenses caused by the failed mediation and enforcing the mediation order’s good-faith requirement.

## Legal Principles

- A federal court may enforce mediation reference orders and other pretrial directives through sanctions under Rule 16(f) and the court’s own sanction authority.
- “Good faith” participation in court-ordered mediation requires more than appearing; parties must make a real effort to negotiate, including exchanging offers within a reasonable time.
- A party’s refusal to counteroffer, coupled with a quick termination of the mediation, can support a finding of bad-faith participation.
- A low offer or a large gap in the parties’ valuations, without more, does not show bad faith and does not establish a violation of a settlement-authority requirement.
- A misunderstanding during mediation—such as confusing “authority” with “valuation”—does not, by itself, justify sanctions against a party when the evidence shows the party appeared with a representative able to negotiate and settle.

## Conclusion

In Brooks v. Lincoln Life Insurance Co., the court rejected Brooks’s attempt to sanction the defense for allegedly appearing without sufficient settlement authority, finding the dispute stemmed from a mediator’s mistaken phrasing and the parties’ differing valuations rather than noncompliance with the mediation order. The court instead sanctioned Brooks’s side for refusing to bargain by making counteroffers and for ending the court-ordered mediation after only a short time.


Brooks v. Lincoln Life Insurance Co., Case No. 05-118