## Facts

- PRASA contracted with Thames-Dick Superaqueduct Partners to build, operate, and maintain the North Coast Superaqueduct Project in Puerto Rico.
- Thames-Dick issued subcontracts, including to Atlantic Pipe Corporation (APC) for pipe fabrication, to Dick Corp. of Puerto Rico for construction management, and to Thames Water International Ltd. for operation and maintenance.
- After construction, a segment of the pipeline burst, and Thames-Dick incurred substantial repair costs and pursued recovery from other entities.
- Related insurance and liability disputes expanded into complex, multiparty litigation in the U.S. District Court for the District of Puerto Rico, with extensive cross-claims and third-party claims, including claims involving APC.
- Thames-Dick moved for a court-ordered, private, nonbinding mediation before a named mediator, with costs shared among parties.
- The district court ordered all parties to participate and share mediation costs.
- APC objected, arguing the court lacked authority to compel a nonconsenting party to participate in private, nonbinding mediation at its own expense and that the order’s terms were improper.
- After the district court declined to modify or rescind the order, APC sought extraordinary relief in the court of appeals to vacate or limit the mediation order.

## Issues

1. Whether a federal district court may compel an unwilling party to participate in, and share the costs of, private, nonbinding mediation.
2. Whether such authority must rest on an explicit statute or local rule, or may be exercised under the court’s inherent case-management powers.
3. What procedural protections are required for a compulsory, nonbinding mediation order issued under inherent authority.
4. Whether extraordinary-writ review is available to challenge a compulsory mediation order in ongoing litigation.

## Decision

- The court entertained the petition as seeking relief in the nature of mandamus/prohibition and held extraordinary-writ review was appropriate given the importance of the issue and the limits of effective post-judgment review.
- The court held a district court may order mandatory mediation when authorized by statute or local rule.
- The court further held that, even without such an authorizing source, a district court may order mandatory, nonbinding mediation under its inherent powers if the case is suitable and the order includes adequate safeguards.
- The court vacated the mediation order and remanded because the order lacked sufficient safeguards, though it was close to acceptable.

## Legal Principles

- Federal courts may employ inherent powers to manage litigation, including requiring participation in nonbinding mediation, when no statute or local rule directly authorizes the procedure.
- Inherent-power orders compelling mediation must be carefully limited and consistent with fair administration of justice; they may not coerce settlement or impose a binding outcome.
- A compulsory nonbinding mediation order must include “adequate safeguards,” including meaningful restraints on time and cost so mediation does not overwhelm litigation or impose undue burdens on a party.
- Mediation directives should be structured to avoid impairing parties’ ability to litigate (including discovery and motion practice) and to prevent disproportionate expense or delay.
- Extraordinary writs may be used to review procedural orders of broad, recurring importance that would otherwise evade meaningful review if parties were required to await final judgment.

## Conclusion

The First Circuit recognized that district courts can compel participation in private, nonbinding mediation through inherent case-management authority even without a specific rule or statute, but it vacated the particular order because it failed to include adequate safeguards—especially clear limits on time and cost—and remanded for a revised order consistent with those constraints.


In re Atlantic Pipe Corp., 304 F.3d 135 (1st Cir. 2002)