## Facts

- J.F. Edwards Construction Co. served as general contractor on highway lighting projects in Wisconsin and Illinois requiring high-mast lighting towers with lowering devices.
- Edwards ordered project materials from Westinghouse Electric Supply Co., which subcontracted with Anderson Safeway Guard Rail Corp. to supply towers and lowering devices.
- Edwards alleged delays and quality problems attributable to supplied materials; state agencies withheld substantial contract payments from Edwards.
- Edwards sued Anderson in Illinois state court; Anderson removed the case to federal court based on diversity jurisdiction. Edwards later added Westinghouse and additional counts.
- Anderson separately sued Westinghouse in federal court in Michigan for payment for materials; the two federal actions were consolidated in the Southern District of Illinois.
- At a pretrial conference, the district court required a jointly signed stipulation of facts by a set deadline and a signed pretrial order by a later deadline.
- Edwards circulated a draft stipulation; Edwards and Westinghouse ultimately agreed, but Anderson refused to sign and instead informed the court of its objections while stating it was willing to continue negotiations.
- On Edwards and Westinghouse’s motion, the district court struck Anderson’s pleadings, entered judgment against Anderson on its counterclaim, dismissed Anderson’s claim against Westinghouse, and dismissed Westinghouse’s cross-complaint as moot.
- The court held an ex parte jury trial limited to Edwards’s damages and awarded Edwards $89,018.66 based on testimony from Edwards’s chairman.
- The district court denied Anderson’s post-trial motions and rejected Anderson’s request that the judge recuse for alleged bias.

## Issues

1. Whether Federal Rule of Civil Procedure 16 authorizes a district court to require parties to agree to and sign a stipulation of facts as part of pretrial procedure.
2. Whether a party’s refusal to sign a disputed factual stipulation supports dispositive sanctions such as striking pleadings, entering judgment, and dismissing claims.
3. Whether the district judge’s refusal to recuse constituted reversible error.

## Decision

- The Seventh Circuit reversed the sanctions-based dispositions and remanded for further proceedings.
- The court held Rule 16 does not authorize compelling parties to stipulate to facts.
- The court held the sanctions imposed—striking pleadings, entering judgment, and dismissing claims—were improper on this record.
- The court affirmed the denial of recusal and did not require reassignment on remand.

## Legal Principles

- Rule 16 permits a court to manage pretrial proceedings and encourage agreements that simplify trial, but it does not authorize forcing parties to stipulate to contested facts.
- Stipulations of fact are voluntary party concessions; a court may facilitate negotiation but may not convert the process into compelled admissions through dispositive threats.
- Default-type or case-dispositive sanctions must rest on a valid rule-based ground (e.g., willful violation of a lawful order or comparable litigation misconduct); refusal to sign a disputed stipulation, without more, is not equivalent to failure to prosecute or disobedience of a proper discovery order.
- Alleged judicial bias requires a showing of disqualifying prejudice; legal error in case management, by itself, does not establish a basis for recusal.

## Conclusion

The Seventh Circuit held that pretrial management under Rule 16 cannot be used to compel factual stipulations and that a party’s refusal to sign a proposed stipulation does not justify striking pleadings or other dispositive sanctions; it reversed the sanction-based judgments and remanded while leaving the case with the same district judge.


J.F. Edwards Construction Co. v. Anderson Safeway Guard Rail Corp., 542 F.2d 1318 (7th Cir. 1976)