Many litigators prefer taking their chances in state court over federal court because there are just too many ways to stumble in federal court. Federal court case management is more regimented and structured. This paper outlines and discusses several areas which may pose traps for the unwary, dilatory or recalcitrant attorney in a federal civil case:

1. Entry of Default and Judgment by Default
2. Late-Filing of Counter-Claims and Amendments to Pleadings
3. Federal Rule 16(b) Scheduling Order Deadlines
4. Federal Rule 16(e) Pre-Trial Orders
5. Federal Rule 68 Offer of Judgment
6. Waiver of Right to Trial by Jury
7. Dismissal for Failure to Comply with Discovery Orders
8. Sanctions Under 28 USC 1927 and the Court's Inherent Authority
9. Waiver of the Right to Raise Issues on Appeal

1. Entry of Default and Judgment by Default

The duty to respond to a complaint is triggered by the service of summons or lawful process. Rogers v. Hartford Life & Accident Insurance Company, 167 F.3d 933, 937 (5th Cir. 1999). Federal Rule 55(b)(2) requires that notice of a default hearing be given only to a party that has made an appearance. The filing of the service return or a waiver of summons does not constitute an appearance. Rogers v. Hartford Life & Accident Insurance Company, supra at 937-938. The failure to appear waives any venue defects, but not personal jurisdiction. Id. at 940-942.

Federal Rule 55(a) allows the Clerk to enter a default against a party who fails to timely file pleadings upon the submission of an affidavit of other proof of any such default. Federal Rule 55(b)(1) allows the Clerk to enter a judgment by default "for a sum certain or for a sum which can by computation be made certain." In all other cases, Federal Rule 55(b)(2) requires the submission of proper proof before the Court through such proof as may be necessary, and the Court may conduct a hearing or jury trial if necessary.

The "excusable neglect" standard that courts apply in setting aside a default judgment is more rigorous than the "good cause" requirement for setting aside an entry of default. United States v. One Parcel of Real Property, 763 F.2d 181, 183 (5th Cir. 1985); Whitman v. United States, 88 F.R.D. 528, 529 (E.D.Tex. 1980); First Interstate Bank of Oklahoma, N.A. v. Service Stores of America, Inc., 128 F.R.D. 679, 680 (W.D.Okla. 1989); and, E.E.O.C. v. Mike Smith Pontiac GMC, Inc., 896 F.2d 524, 527-28 (11th Cir. 1990). Even so, the distinction between setting aside an entry of default and a judgment by default is often blurred by the courts.

a) Setting Aside an Entry of Default

Rule 55(c) of the Federal Rules of Civil Procedure provides in part that "for good cause shown the Court may set aside an entry of default." The Fifth Circuit has recognized that good cause under Rule 55(c) "is not susceptible of precise definition, and no fixed, rigid standard can anticipate all of the situations that may occasion the failure of a party to answer a complaint timely." Matter of Dierschke, 975 F.2d 181, 183 (5th Cir. 1992).

In upholding the district court's refusal to grant a default judgment, the Fifth Circuit has observed that "where there are no intervening equities any doubt should, as a general proposition, be resolved in favor of the movant to the end of securing a trial upon the merits." Davis v. Parkhill-Goodloe Company, 302 F.2d 489, 495 (5th Cir. 1962); Whitman v. United States, 88 F.R.D. 528, 530 (E.D.Tex. 1980); and, Accu-Weather, Inc. v. Reuters Limited, 779 F.Supp. 801, 802 (M.D.Pa. 1991). District courts "can deal with obstinate and dilatory parties in a variety of ways, and judgment by default should not be the first resort." Sun Bank of Ocala v. Pelican Homestead and Savings Association, 874 F.2d 274, 277 (5th Cir. 1989).

The three factors used by the Fifth Circuit in assessing good cause in considering a motion to set aside an entry of default are as follows:

In determining whether to set aside a default decree, the District Court should consider whether the default was wilful, whether setting it aside would prejudice the adversary, and whether a meritorious defense is presented. 

Matter of Dierschke, supra at 183, citing, United States v. One Parcel of Real Property, 763 F.2d 181, 183 (5th Cir. 1985); See Also, Rogers v. Hartford Life & Accident Insurance Company, 167 F.3d at 938-939; and, Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000). Only one of the three factors needs to be met in order to allow relief to be granted because those factors "are not talismanic." Matter of Dierschke, supra at 184.

Prejudice exists if circumstances have changed since the entry of default such that plaintiff's ability to litigate its claim has become materially impaired or if relevant evidence has become lost or unavailable. Accu-Weather, Inc. v. Reuters Limited, 779 F.Supp. 801, 802 (M.D.Pa. 1991); and, International Brotherhood of Electrical Workers v. Skaggs, 130 F.R.D. 526, 529 (D.Del. 1990). The fact that setting aside the entry of default will require the plaintiff to prove its case on the merits does not constitute prejudice. Bieros v. Nicola, 851 F.Supp. 681, 683 (E.D.Pa. 1994); Accu-Weather, Inc. v. Reuters Limited, 779 F.Supp. 801, 802 (M.D.Pa. 1991); and, Nash v. Signore, 90 F.R.D. 93, 95 (E.D.Pa. 1981).

The Fifth Circuit has also cited other factors which may be considered, which include whether: the public interest was implicated; there was a significant financial loss to the defendant; and, the defendant acted expeditiously to correct the default. Matter of Dierschke, supra at 184. The District Court's assessment of the merits of the Motion to Set Aside an Entry of Default must be guided by equitable principles. Id.

Generally, an entry of default will be set aside where counsel for the defendant has acted in good faith, or has not been grossly negligent, or where a meritorious defense has been presented. See, Whitman v. United States, 88 F.R.D. 528, 530 (E.D.Tex. 1980)(counsel for the defendant filed no responsive pleadings based on his good faith belief that the pending settlement discussions would obviate the need for filing an answer); First Interstate Bank of Oklahoma, N.A. v. Service Stores of America, Inc., 128 F.R.D. 679, 680 (W.D.Okla. 1989)(entry of default set aside where defense counsel miscalculated date on which answer was due by one day); United States v. Harre, 983 F.2d 128, 130 (8th Cir. 1993)(entry of default set aside where answer was filed 12 days late); Wendt v. Pratt, 154 F.R.D. 229, 230-31 (D.Minn. 1994)(entry of default set aside where answer was filed 12 days late).

Other courts have held that an entry of default is a "drastic remedy" which should only be granted where "there has been a clear record of delay or contumacious conduct." Wendt v. Pratt, 154 F.R.D. 229, 230 (D.Minn. 1994); See Also, United States v. Harre, 983 F.2d 128, 130 (8th Cir. 1993).

b. Setting Aside a Judgment by Default

Federal Rule 55(c) provides that a judgment of default may be set aside pursuant to Federal Rule 60(b). Federal Rule 60(b) allows judgments by default to be set aside: for mistake, inadvertence, surprise, or excusable neglect; due to newly discovered evidence not previously discoverable by due diligence; for fraud, misrepresentation or other misconduct by the opposing party; if the judgment is void; or, where the judgment has been satisfied, released or discharge, or a prior judgment on which it was based has been reversed or vacated; and, for any other reason justifying relief.

The Fifth Circuit has "adopted a policy of resolving cases on their merits and against the use of default judgments." Rogers v. Hartford Life & Accident Insurance Company, 167 F.3d 933, 936 (5th Cir. 1999). "Courts construe Rule 60(b)(1) liberally to ensure that they resolve doubtful cases on the merits." Id. at 938. The decision of whether to grant relief under Federal Rule 60(b)(1) falls within the sound discretion of the district court. Id. at 936 & 939. Accordingly, Courts of Appeals must review decisions granting or denying motions to set asides judgments by default based on an abuse of discretion standard and factual determinations are reviewed for clear error. Id. at 936; and, Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000)("[E]ven a slight abuse of discretion may justify reversal."). Default judgments should not be granted where the defendant has merely failed to meet a procedural time requirement. Lacy v. Sitel Corp., supra at 292. "A finding of willful default ends the inquiry." Id.

A district court may refuse to grant relief from a judgment by default where: no meritorious defense is demonstrated; the defendant willfully or carelessly disregarded the Court's process; the neglect of counsel is not excusable; good faith is lacking; or, justice would not be furthered. United States v. One 1978 Piper Navajo PA-31 Aircraft, 748 F.2d 316, 318 (5th Cir. 1984); and, Rogers v. Hartford Life & Accident Insurance Company, 167 F.3d 933, 938-939 (5th Cir. 1999). Generally, confusion of the client or attorney, or mere mistake or inattention, are insufficient to set aside a default judgment. Express Air, Inc. General Aviation Services, Inc., 806 F.Supp. 619, 620 (S.D.Miss. 1992). Relief may be granted where extraordinary circumstances exist, or where statutory or common law protections were available to the defendant. FDIC v. Yancy Camp Development, 889 F.2d 647 (5th Cir. 1989); and, FDIC v. Castle, 781 F.2d 1101 (5th Cir. 1986).

A party is bound by the actions or omissions of his attorney if the party was properly notified or served. Allemand Boat Company v. Kirk, 141 F.R.D. 438, 442 (E.D.La. 1992); Pryor v. U.S. Postal Service, 769 F.2d 281, 288 (5th Cir. 1985); and, United States v. One 1978 Piper Navajo PA-31 Aircraft, 748 F.2d 316, 319 (5th Cir. 1984). There must be a showing that the party was justified in failing to avoid a mistake, and gross carelessness and ignorance of the rules or laws are not adequate excuses. Allemand Boat Company v. Kirk, 141 F.R.D. 438, 442 (E.D.La. 1992).

The common thread in the decisions which have set aside an default judgment is generally that the defendant or its counsel has by its actions indicated a desire or intent to contest the lawsuit. Where the plaintiff's counsel has agreed to extensions by telephone or letters, this has been held to be sufficient to constitute an appearance indicating the defendant's intent to contest the lawsuit and to allow a judgment by default to be set aside. Segars v. Hagerman, 99 F.R.D. 274, 275 (N.D.Miss. 1983); Turner v. Salvatierra, 580 F.2d 199, 201 (5th Cir. 1978); Charlton L. Davis & Co. v. Fedder Data Center, Inc., 556 F.2d 308, 309 (5th Cir. 1977); United States v. Melichar, 56 F.R.D. 49, 50 (E.D.Wis. 1972); Heleasco Seventeen, Inc. v. Drake, 102 F.R.D. 909, (D.Del. 1984); and, H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Lopfe, 432 F.2d 689, 691-692 (D.C.Cir. 1970).

In Lacy v. Sitel Corp., 227 F.3d 290 (5th Cir. 2000), the Fifth Circuit reversed a default judgment where the pro se plaintiff first sent a waiver of summons to the defendant and the Clerk of Court sent the service papers to the defendant four days later pursuant to Federal Rule 4(c)(2) when the plaintiff was allowed to proceed forma pauperis. Id. at 292. Believing the second notice to be a duplicate, the defendant's attorney contacted the plaintiff before the delays for responding expired and advised by telephone and in writing that the waiver of summons was rejected, requested formal service and initiated settlement discussions. Id. at 292-293. Because the Plaintiff did nothing the "disabuse [Sitel] of its mistaken belief," the Court found that the defendant's failure to timely plead was not willful. Id. at 293.

A request for judgment by default may be refused where the Court would be compelled to grant a motion to set aside the default under Federal Rule 60(b). Educational Services, Inc. v. Maryland State Board for Higher Education, 710 F.2d 170, 177 (4th Cir. 1983). The default by the defendant alone does not warrant a judgment by default; rather, there must be a sufficient basis set forth in the pleadings for the relief requested on a motion for judgment by default. Nishimatsu Construction Co., Ltd. v. Houston National Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). A default judgment against a defendant who in good faith did not answer based on his belief that the court had no personal jurisdiction may be set aside. Lichtenstein v. Jewelmart, Inc., 95 F.R.D. 511, 513 (E.D.N.Y. 1982); Bross Utilities Service Corporation v. Aboubshait, 489 F.Supp. 1366, 1368, n. 3 (D.Conn. 1980); Kadet-Kruger & Co. v. Celanese Corp., 216 F.Supp. 249, 250 (E.D.Ill. 1963).

Likewise, a motion to set aside a default may be granted where the defendant was discharged in bankruptcy and the new claim could be properly added to the bankruptcy proceedings as a dischargeable debt. Menier v. United States, 405 F.2d 245 (5th Cir. 1968).

Failing to collect the mail at the corporate address registered with the Secretary of State has been held to be a willful default justifying the denial of a motion to set aside a judgment by default. In Re Martin-Trigona, 763 F.2d 503, 505 (2nd Cir. 1985). Likewise, the failure of an overnight courier to deliver a package containing a summons from the registered agent to the defendant was not "excusable neglect" where the agent telephoned the defendant to advise of the receipt of the lawsuit and the defendant's failure to establish minimum internal procedural safeguards was at least a partial cause of the defendant's failure to respond. Rogers v. Hartford Life & Accident Insurance Company, 167 F.3d at 939. A district court's conclusion that service by certified mail of a summons on a corporation the Friday before a three week company-wide vacation did not constitute excusable neglect was affirmed where the defendant's attorney was sent a courtesy copy of the Complaint on the same date but did not timely file responsive pleadings and made no other efforts to verify service on his client. CJC Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60, 62-64 (5th Cir. 1992). 

A district court in its discretion may find that an attorney's misreading of a procedural rule constitutes excusable neglect. Halicki v. Louisiana Casino Cruise, Inc., 151 F.3d 465, 468 (5th Cir. 1998). Nonetheless, ignorance of the rules and mistakes in construing the rules do not usually constitute excusable neglect, particularly where the meaning of the rule is well-settled. Id. at 468-469.

Where an entry of default has been made and the defendant appears to oppose a motion for default, the standard of review is the same as that for setting aside an entry of default. Kuhlik v. Atlantic Corporation, 112 F.R.D. 146, 148 (S.D.N.Y. 1986); and, Meehan v. Snow, 652 F.2d 274, 277 (2nd Cir. 1981).

2. Late Filing of Counter-Claims and Amendments to Pleadings

Federal Rule 15(a) provides that once a responsive pleading has been served that a party may only file amendments to pleadings by leave of court or the written consent of the adverse party and that "leave shall be freely given when justice so requires." This has been held to reflect a policy of permitting liberal pleading and amendment in order to facilitate the adjudication of all issues on the merits while avoiding "excessive formalism." Jamieson v. Shaw, 772 F.2d 1205, 1208 (5th Cir. 1985). The decision to grant or deny a request for leave to amend is within the sound discretion of the trial court and will not be reversed on appeal absent an abuse of that discretion. Overseas Inns S.A. P.A. v. United States, 911 F.2d 1146, 1150 (5th Cir. 1990); Ashe v. Corley, 992 F.2d 540, 542 (5th Cir. 1993); and, Parish v. Frazier, 195 F.3d 761, 763 (5th Cir. 1999).

The Supreme Court has the factors in considering a motion for leave to amend pleadings as follows:

In the absence of any apparent or declared reason - such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. - the leave sought should, as the rules require, be "freely given."

Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); See Also, Overseas Inns S.A. P.A. v. United States, 911 F.2d 1146, 1150 (5th Cir. 1990). The trial court must have a "substantial reason" for denying a request for leave to amend. Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 103, 2 L.Ed.2d 80(1957).

Delay or prejudice becomes "undue" when it is demonstrated that the party opposing the amendment would be unfairly disadvantaged or deprived of the opportunity to present facts or evidence which it would have offered. See, Harrison Beverage Company v. Dribeck Importers, Inc., 133 F.R.D. 463, 468 (D.N.J. 1990), and the cases cited therein. An amendment is "futile" if it would not withstand a motion to dismiss. Id.; Avatar Exploration, Inc. v. Chevron U.S.A., Inc., 933 F.2d 314, 320 (5th Cir. 1991); and, Addington v. Farmer's Mutual Elevator Insurance Company, 650 F.2d 663, 666-67 (5th Cir. 1981), cert. denied, 446 U.S. 937, 104 S.Ct. 348, 78 L.Ed.2d 314 (1981).

Most if not all federal district courts set deadlines for the amendment of pleadings under Federal Rule 16 scheduling orders, which leads to a conflict as to whether Federal Rule 15 or Federal Rule 16 applies if a request for an amendment to pleadings is made after the scheduling order deadline has passed, which will be discussed in the next section.

3. Federal Rule 16(b) Scheduling Order Deadlines

The Fifth Circuit has repeatedly held that Federal Rule 16 "gives a trial judge wide latitude in governing the proceedings, and can only be modified [on appeal] by a showing of manifest injustice." Book v. Nordrill, Inc., 826 F.2d 1457, 1460 (5th Cir. 1987); Burdis v. Texas & Pacific Railway Co., 569 F.2d 320, 323 (5th Cir, 1978); and, Davis v. Duplantis, 448 F.2d 918, 921 (5th Cir. 1971). Trial courts thus have wide discretion with regard to the conduct and curtailment of discovery. Book v. Nordrill, Inc., 826 F.2d 1457, 1460 (5th Cir. 1987).

The Fifth Circuit has upheld the refusal by district courts' to allow untimely amendments after a motion for summary judgment has been filed by a defendant where the amended pleading was "not merely clerical or corrective", would raise "new factual basis for plaintiffs' claims", and would require additional discovery and add new defenses. Little v. Liquid Air Corp., 952 F.2d 841, 846 (5th Cir. 1992); and, Shivangi v. Dean Witter Reynolds, Inc., 825 F.2d 885, 890 (5th Cir. 1987). The rationale for this rule has been described as follows:

Much of the value of summary judgment procedure . . . would be dissipated if a party were free to rely on one theory in an attempt to defeat a motion for summary judgment and then, should that theory prove unsound, come back long thereafter and fight on the basis of some other theory.

Freeman v. Continental Gin Co., 381 F.2d 459, 469-470 (5th Cir. 1967).

Once a scheduling order is entered which includes a deadline for filing amendments to pleadings, several courts have held that the more liberal standards of Federal Rule 13(f) and Federal Rule 15(a) are not applicable where the request for an amendment is made after the deadline imposed by the scheduling order. Forstmann v. Culp, 114 F.R.D. 83, 85 (M.D.N.C. 1987); Amcast Industrial Corporation v. Detrex Corporation, 132 F.R.D. 213, 218 (N.D.Ind. 1990).

Instead, Federal Rule 16(b) requires a showing of "good cause" to demonstrate that the original deadline could not have been "reasonably met despite the due diligence of the party seeking the extension." See, Federal Rule 16, Advisory Committee's Note on 1983 Amendment; Amcast Industrial Corporation v. Detrex Corporation, 132 F.R.D. 213, 218 (N.D.Ind. 1990); Financial Holding Corp. v. Garnac Grain Co., 127 F.R.D. 165 (W.D.Mo. 1989); Truehart v. Blandon, 684 F.Supp. 1368, 1371-72 (E.D.La. 1988); and, Gestetner Corp. v. Case Equipment Co., 108 F.R.D. 138, 140-141 (D.Me. 1985). A plaintiff seeking leave to amend out of time bears the burden of showing that the delay was due to oversight, inadvertence or excusable neglect. Parish v. Frazier, 195 F.3d 761, 763 (5th Cir. 1999). The Fifth Circuit has held that district courts must "more carefully scrutinize a party's attempt to raise new theories of recovery when the opposing party has filed a motion for summary judgment." Id. at 764.

Once the showing of good cause is made, the party requesting leave to amend must also demonstrate that leave to amend is proper under Federal Rule 15(a). Forstmann v. Culp, 114 F.R.D. 83, 85 (M.D.N.C. 1987); and, Truehart v. Blandon, 684 F.Supp. 1368, 1371-72 (E.D.La. 1988). The decision to grant or deny a motion for leave to amend is within the sound discretion of the trial court. Avatar Exploration, Inc. v. Chevron U.S.A., Inc., 933 F.2d 314, 320 (5th Cir. 1991); and, Topalian v. Ehrman, 954 F.2d 1125, 1139 (5th Cir. 1992).

Generally, amendments may be disallowed unless the subject matter will only require minimal discovery, or concerns legal issues or is a matter of which the opposing party has been previously unaware. Forstmann v. Culp, 114 F.R.D. 83, 85 (M.D.N.C. 1987); and, Sweetheart Plastics, Inc. Detroit Forming, Inc., 743 F.2d 1039, 1044 (4th Cir. 1984).

Several Courts of Appeals have strictly applied deadlines imposed by scheduling orders. See, Mills v. Des Arc Convalescent Home, 872 F.2d 823, 826 (8th Cir. 1989)(Upheld a trial court's denial of leave to amend requested 2 weeks after the scheduling order deadline passed); Doelle v. Mountain States Telephone & Telegraph Company, 872 F.2d 942, 947 (10th Cir. 1989)(Upheld a trial court's denial of leave to amend requested 3 months after the expiration of the scheduling order); Oxford Furniture Companies v. Drexel Heritage Furnishings, Inc., 984 F.2d 1118, 1124 (11th Cir. 1993)(Upheld the trial court's refusal to allow a defendant to amend its answer based on a motion filed 7 days prior to the Pre-Trial Conference and 10 months after the filing of the original complaint); Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981); Financial Holding Corp. v. Garnac Grain Co., 127 F.R.D. 165, 166 (W.D.Mo. 1989)(Leave to amend pleadings denied where request made 6 weeks after deadline passed); and, Fellows v. Earth Construction, Inc., 794 F.Supp. 531, 537 (D.Vt. 1992).

The Fifth Circuit has held that the failure to designate an expert until two weeks after the deadline set by a scheduling order held sufficient to affirm a trial court's refusal to allow the expert to testify at trial. Geiserman v. McDonald, 893 F.2d 787, 790 (5th Cir. 1990).

A trial court's decision to exclude evidence as a means of enforcing a pre-trial order will not be disturbed on appeal absent a clear abuse of discretion. Geiserman v. McDonald, 893 F.2d 787, 790 (5th Cir. 1990). The party seeking to add a witness after the scheduling order deadline must explain the failure to identify the witnesses, describe the importance of the testimony, demonstrate the prejudice caused by the omission of such testimony, and discuss the availability of a continuance to cure any such prejudice. Geiserman v. McDonald, 893 F.2d 787, 791 (5th Cir. 1990). That the omission was a mistake by counsel's office is usually not a sufficient excuse. Geiserman v. McDonald, 893 F.2d 787, 791 (5th Cir. 1990); and, Sturgeon v. Airborne Freight Corp., 778 F.2d 1154, 1158 (5th Cir. 1985).

4. Federal Rule 16(e) Pre-Trial Orders

The Pre-Trial Order supersedes all pleadings and governs the evidence and issues to be presented at trial. Elvis Presley Enterprises, Inc. v. Capee, 141 F.3d 188, 206 (5th Cir. 1998). A claim, defense, issue or other matter is not included in the Pre-Trial Order, it will be deemed to be waived even if the information was set forth in pleadings previously filed by the parties. Id.; and, Valley Ranch Development Co., Ltd. v. FDIC, 960 F.2d 550, 554 (5th Cir. 1992); Canal Insurance Company v. First General Insurance Company, 889 F. 2d 604, 609 (5th Cir. 1989); and, Flannery v. Carroll, 676 F.2d 126, 130 (5th Cir. 1982).

A trial court has "great discretion" in determining whether a theory, claim, defense or other matter is implicitly included in a Pre-Trial Order, and such determinations will only be disturbed on appeal for an abuse of discretion. Hall v. State Farm Fire & Casualty Company, 937 F.2d 210, 212-213 (5th Cir. 1991). In Flannery v. Carroll, the Fifth Circuit announced that "District courts are encouraged to enforce pretrial orders narrowly without fear of reversal." Id., 672 F.2d at 129. Intentional, negligent or reckless omission of issues or claims from a Pre-Trial Order will generally not be sufficient to allow the modification of a Pre-Trial Order.

Likewise, failing to object to the inclusion of new claims, issues or other matters in a Pre-Trial Order constitutes a waiver of any right to object at trial. Matter of Perez, 954 F.2d 1026, 1028 (5th Cir. 1992); Syrie v. Knoll International, 748 F.2d 304, 308 (5th Cir. 1984); and, United States v. Texas, 523 F.Supp. 703, 720 (E.D.Tex. 1981). A trial judge may permit a witness who has not been mentioned in the Pre-Trial Order to testify unless the testimony is offered in bad faith or would be unfairly prejudicial to an opposing party. Brick Masons Pension Trust v. Industrial Fence & Supply, Inc., 839 F.2d 1333, 1340 (9th Cir. 1988).

A Pre-Trial Order may only be modified to "prevent manifest injustice." Federal Rule 16(e). The Fifth Circuit has interpreted this to mean that "no substantial injury will be caused to the opposing party, the refusal to allow the amendment might result in inconvenience to the movant, and the inconvenience to the Court is slight." Sherman v. United States, 462 F.2d 577, 579 (5th Cir. 1972).

Wright, Miller & Kane, Federal Practice & Procedure, Vol. 6A, §1527, p. 279 (2d Ed. 1990), states:

Although federal judges generally recognize the binding effect of the pretrial order, this does not mean that it is rigidly and pointlessly adhered to at trial. The application of preclusion always is viewed as a matter of judicial discretion.

Because a trial judge is given broad discretion in managing a trial, district courts likewise have broad discretion to modify their pre-trial orders to prevent manifest injustice and to preserve the spirit and integrity of the order. Braswell v. Conagra, 936 F.2d 1169, 1176 (11th Cir. 1991); Hodges v. United States, 597 F.2d 1014, 1017-18 (5th Cir. 1979); HBE Leasing Corp. v. Frank, 22 F.3d 41, 45 (2nd Cir. 1994); and, Napolitano v. Compania Sud Americana de Vapores, 421 F.2d 382, 386 (2nd Cir. 1970). A trial court's order modifying a pre-trial order will only be reversed for an abuse of discretion. Spiller v. Ella Smithers Geriatric Center, 919 F.2d 339, 343 (5th Cir. 1990).

5. Federal Rule 68 Offer of Judgment

Federal Rule 68 allows a defendant to make an offer of judgment no later than ten days prior to a trial. If the plaintiff obtains a judgment less favorable than that offered by the defendant, a district court is without discretion to refuse to award the "costs" allowed by a Rule 68. Jordan v. Time, Inc., 111 F.3d 102, 105 (11th Cir. 1997).

An offer of judgment under Rule 68 must be in writing, must be served upon every party to the litigation by delivering a copy to a party's attorney; a Rule 68 offer of judgment cannot be established by verbal settlement discussions. Clark v. Sims, 28 F.3d 420, 424 (4th Cir. 1994).

An offer of judgment made pursuant Rule 68 is not revocable during the ten day period. Richardson v. National Railroad Passenger Corp., 49 F.3d 760, 764-765 (D.C. Cir. 1995); and, Fischer v. Stolaruk Corp., 110 FRD 74, 75 (E.D. Mich. 1986).

Although courts generally use interpretation of contract principles to interpret offers of judgments, one Court of Appeals has held that the doctrine of rescission has no application to an offer of judgment made pursuant to Rule 68. Webb v. James, 147 F.3d 617, 621 (7th Cir. 1998). The proper procedural device for seeking relief from the judgment entered pursuant to Rule 68 is the same relief that must be sought under a motion for relief from a judgment or order under Rules 59 or 60. Id. 622; See Also, Richardson v. National Railroad Passenger Corporation, 49 F.3d 760, 765 (D.C. Cir. 1995).

A defendant may make a Rule 68 offer of judgment conditioned upon acceptance of the offer by all plaintiffs to whom the offer is made. Lang v. Gates, 36 F.3d 73, 75 (9th Cir. 1994), cert. denied, 115 S.Ct. 579, 513 U.S. 1017, 130 L.Ed.2d 494 (1995). 

Federal Rule 68 is not without its traps.

When a Rule 68 offer is silent as to costs, the district court should award appropriate costs in addition to the amount of the offer. Arencibia v. Miami Shoes, Inc., 113 F.3d 1212, 1214 (11th Cir. 1997). The term "costs" under Rule 68 may include attorney's fees if the underlying statute defines "costs" to include attorney's fees. Jordan v. Time, Inc., 111 F.3d 102, 105 (11th Cir. 1997).

An offer of judgment where attorney's fees are at issue should include the fees because the failure to do so may allow the Court to construe attorney's fees as accrued "costs" when comparing the defendant's offer with the judgment rendered to the plaintiff. Scheeler v. Crane Co., 21 F.3d 791, 792 (8th Cir. 1994). An award of costs under Federal Rule 68 may include attorney's fees where the term "costs" is defined in any applicable statute as "costs". Domanski v. Funtime, Inc., 149 F.R.D. 556, 557 (N.D.Oh. 1993); Gil De Rebollo v. Miami Heat Associations, Inc., 137 F.3d 56, 66 (1st Cir. 1998); and, Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 3016-17, 87 L.Ed.2d 1 (1985)..

Federal Rule 68 is not applicable if the defendant obtains a judgment for costs and the plaintiff recovers nothing and has not prevailed, i.e., where the plaintiff loses. Delta Airlines v. August, 450 U.S. 346, 351, 101 S.Ct. 1146, 1150, 67 L.Ed.2d 287 (1981); Ezelle v. Bauer Corporation, 154 F.R.D. 149, 152 (S.D.Miss. 1994); and, Gil De Rebollo v. Miami Heat Associations, Inc., 137 F.3d 56, 66 (1st Cir. 1998).

A defendant may not be allowed to recover costs under Federal Rule 68 where the plaintiff is granted non-monetary relief such as a permanent injunction or a ruling upholding a copyright. Domanski v. Funtime, Inc., 149 F.R.D. 556, 558 (N.D.Oh. 1993); and, Lish v. Harper's Magazine, 148 F.R.D. 516, 519 (S.D.N.Y. 1993).

A defendant who made an offer of judgment in a Title VII case was limited to recovering attorney's fees incurred after the offer of judgment was made and refused by the plaintiff, even though 42 USC 1988 would otherwise allow an award of attorney's fees in connection with the entire action. Smith v. Vaughn, 171 FRD 323, 326-327 (M.D. Fla. 1997). See Also, Marek v. Chesny, 473 U.S. 1, 9 105 S.Ct. 3012, 3016-17, 87 L.Ed.2d 1 (1985). Another court has reached a similar conclusion in a Fair Labor Standards Act lawsuit, holding that any fee-shifting statute requiring the violator to pay plaintiff's costs, including attorney's fees, is overridden by Federal Rule 68 where an offer of judgment has been made. Haworth v. State of Nevada, 56 F.3d 1048, 1051-1052 (9th Cir. 1995). "When a plaintiff rejects a Rule 68 offer, the reasonableness of an attorney fee award under the FLSA will depend, at least in part, on the district court's consideration of the results the plaintiff obtained by going to trial compared to the Rule 68 offer." Id. at 1052. The same rationale applies to any award of costs allowed by any law. Id. 

In Fletcher v. City of Fort Wayne, Indiana, 162 F.3d 975 (7th Cir. 1998) cert. denied, 119 S.Ct. 1814 (1999), the plaintiffs made a very large settlement demands and shortly thereafter accepted what the Court characterized as nuisance-value payments. Id. at 976. The plaintiffs argued that they were "prevailing parties" under 42 USC 1988 and thus entitled to recover attorney's fees. Id. at 975-976. While the Court agreed that the acceptance of a Rule 68 offer produces a settlement, it also held that "[n]othing in Rule 68 supports plaintiffs position that by accepting a Rule 68 offer they automatically become entitled to attorney's fees." Id. at 977.

The Ninth Circuit has extended the application of Rule 68 to include as "judgments" cases resolved by subsequent settlements which terminate the litigation. Id. at 76. "From a plaintiff's perspective, such an application of Rule 68 means that plaintiffs who fail to accept and initial reasonable offer will not recoup attorney's fees if the case is later settled by a later offer of lesser or equivalent value." Id. "To preserve and to promote the purposes of Rule 68, the phrase ‘judgment finally obtained' certainly would encompass and order finally terminating the litigation as a result of settlement. Id. at 77. In that case, the defendants originally made an offer of judgment for $600,000 plus reasonable attorney's fees and costs, which was rejected by one plaintiff and accepted by another. Over nine months later, the district court approved a settlement between the parties on the same terms, but ruled that the plaintiff could not recover attorney's fees for the nine months following the offer of judgment. Id. at 74.

6. Waiver of Right to Trial by Jury

FRCP 38(d) provides that a demand for a jury cannot be withdrawn without the consent of the parties. Federal Rule 38(b) provides that a party must request a jury within ten days after the last pleading directed to that issue. If the party requesting a jury files an ex parte motion to withdraw the jury which is signed by the judge, FRCP 38(b) should require the party who did not request the jury to make a request for a trial by jury within ten days of the either the receipt of the ex parte motion or the court's order. The right to a jury trial may be waived by inaction, or by and through his counsel. Casperone v. Landmark Oil & Gas Corp., 819 F.2d 112, 116 (5th Cir. 1987); Rodenbur v. Kaufman, 320 F.2d 679, 684 (D.C. Cir. 1963); and, DePinto v. Provident Security Life Ins. Co., 323 F.2d 826, 832 (9th Cir. 1963); Reboy v. Cozz: Iron & Metal, Inc., 9 F.3d 1303, 1306 (7th Cir. 1993).

FRCP 49(a) and FRCP 51 provide that failing to object to the omission of, or failing to submit, a special written interrogatory or verdict form instruction to the court prior to the jury retiring concerning an issue of fact raised by the pleadings waives the right to a jury trial on the omitted issue.

Once the right to a jury trial is waived, it cannot be revived unless a party files an amended pleading which contains new issues not raised by previously filed pleadings and go beyond the general area of dispute. Richardson v. Henry, 902 F.2d 414, 416 (5th Cir. 1990); Fort Washington Resources, Inc. v. Pendleton, 852 F.Supp 341, 342 (E.D.Pa. 1994); and, Virgin Air, Inc. v. Virgin Atlantic Airways, Ltd., 144 F.R.D. 56, 58 (S.D.N.Y. 1992). The mere oversight or inadvertence of counsel in failing to timely request a jury trial does not justify a trial court to grant relief from the waiver. Id.; and, Sunenblick v. Harrell, 145 F.R.D. 314, 316 (S.D.N.Y. 1993). Adding new defendants or counter-defendants does not justify a revival of the right to a trial by jury where the issues remain the same. Id.; and, Daniel International Corporation v. Fischbach & Moore, Inc., 916 F.2d 1061, 1063-64 (5th Cir. 1990). 

7. Dismissal for Failure to Comply with Discovery Orders

Federal Rule 37(b)(2)(C) allows a Court to grant a judgment by default for a party's failure to comply with a discovery order. The Fifth Circuit has established four factors to apply when addressing a motion to vacate a judgment by default granted due to the failure to comply with a discovery order:

(1) Whether the violation was willful or in bad faith rather than simply due to inability to comply; (2) whether less drastic sanctions would be adequate; (3) whether the violation prejudiced the opposing party's trial preparation; and, (4) whether the client knew of or participated in the violation or simply misunderstood a court order or innocently hired a derelict attorney.

Batson v. Neal Spelce Associates, Inc., 765 F.2d 511, 514 (5th Cir. 1985).

The Fifth Circuit has only affirmed default judgments in the most extreme cases:

Like all court orders, discovery orders are to be obeyed when issued, and sanctions for violating such orders may be imposed without an explicit prior warning or a litany of precautionary instructions. However, the right to sue is a valuable right that cannot lightly be exterminated. We are thus loathe to approve of the dismissal of a case as a sanction for violating a discovery order without evident of the sort of maleficent conduct that justifies death.

FDIC v. Conner, 20 F.3d 1376, 1382 (5th Cir. 1994). Generally, the more common remedy is to sanction the attorney or party guilty of violating the discovery order by imposing a monetary sanction. Id.; See Also, In Re Bank of Louisiana/Kenwin Shops, Inc. Contract Litigation, 1999 WL 550205 (E.D. La. July 28, 1999)(Shushan, J.). Because of the severity of the sanction, dismissal with prejudice is typically only appropriate if the refusal to comply results from willfulness or bad faith and is accompanied by a clear record of delay or contumacious conduct. Woodson v. Surgitek, Inc., 57 F.3d 1406, 1417 (5th Cir. 1995). Generally, the conduct must be attributable to the client rather than to the attorney, and the misconduct must substantially prejudice the opposing party. Id. The district court is bound to impose the least severe sanction available. Carroll v. Jacques Admiralty Law Firm, 110 F.3d 290, 294 (5th Cir. 1997).

In Chilcutt v. United States, 4 F.3d 1313, 1315 (5th Cir. 1993), the Fifth Circuit affirmed the entry of a judgment of default on liability where the Government disobeyed court orders compelling discovery responses and "attempted to deceive the court and the plaintiffs into believing that certain documents properly requested either did not exist or were not requested."

8. Sanctions under 28 USC 1927 and the Court's Inherent Authority

28 USC 1927 allows a district court to personally satisfy any costs, expenses and attorney's fees reasonably incurred by an opposing party where that attorney "so multiplies the proceedings in any case unreasonably and vexatiously." 28 USC 1927 is penal in nature and must be strictly construed. FDIC v. Conner, 20 F.3d 1376, 1384 (5th Cir. 1994). Application of 28 USC 1927 requires evidence of recklessness, bad faith, or improper motive. Houge v. Royse City, 939 F.2d 1249, 1256 (5th Cir. 1991). Liability under 28 USC 1927 is only warranted by "intentional departure from proper conduct, or, at a minimum, from a reckless disregard of the duty owed by counsel to the court." United States v. Ross, 535 F.2d 346, 349 (6th Cir. 1976), cited by, FDIC v. Conner, 20 F.3d at 1384. "Such a construction of § 1927 is necessary ‘so that the legitimate zeal of an attorney in representing her client is not dampened.'" FDIC v. Conner, 20 F.3d at 1384; See Also, Browing v. Kramer, 931 F.2d 340, 344 (5th Cir. 1991).

"When a party's deplorable conduct is not effectively sanctionable pursuant to an existing rule or statute, it is appropriate for a district court to rely on its inherent power to impose sanctions." Carroll v. The Jaques Admiralty Law Firm, P.C., 110 F.3d 290, 292 (5th Cir. 1997). "A court must, of course, exercise caution in invoking its inherent power, and it must comply with the mandates of due process, both in determining that the requisite bad faith exists and in assessing fees." Chambers v. NASKO, Inc., 501 U.S. 32, 50, 111 S.Ct. 2123, 2136, 115 L.Ed.2d 27 (1991). Cursing at and using extremely offensive language between counsel for an opposing party has been upheld as a basis for a district court's exercise of its inherent authority to sanction that party. Carroll v. The Jaques Admiralty Law Firm, P.C., 110 F.3d at 293-294.

Sanctions may not be awarded for actions by a party or a party's counsel before a case was removed to federal court. Edwards v. General Motors Corporation, 153 F.3d 242, 245 (5th Cir. 1998).

Sanctions under § 1927 must be predicated on actions that are both unreasonable and vexatious. Edwards v. General Motors Corporation, 153 F.3d 242, 246 (5th Cir. 1998). "This requires that there be evidence of bad faith, improper motive, or reckless disregard of the duty owed to the court." Id. 

An attorney who continued to prosecute a case long after she is aware that the case has no merit may be sanctioned for such conduct. Edwards v. General Motors Corporation, 153 F.3d at 246-247. "Crampton was not content to allow her suit to die on the vine. Rather, she kept it alive, hoping to extort a nuisance-value settlement. In so doing, she abused the judicial process to harass, an apparently innocent defendant into paying money to which her client had no rightful claim." 

A district court's inherent power to issue sanctions against an attorney for bad faith conduct in litigation has a high threshold before sanctions may be awarded. Kipps v. Caillier, 197 F.3d 765, 770 (5th Cir. 1999). The district court making such sanctions must to do so based on a specific finding as to the nature of the bad faith actions. Kipps v, .Caillier, 197 F.3d at 770.

The use of the power to sanction "is the exception rather than the rule." Conner v. Travis County, 209 F.3d 794, 799 (5th Cir. 2000). Any punishment imposed under 28 USC 1927 must be "sparingly applied." Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 535 (5th Cir. 1996).

9. Waiver of Right to Raise Issues on Appeal

The Fifth Circuit has carefully distinguished between Motions brought under Federal Rule 59 from Motions brought under Federal Rule 60. Lavespere v. Niagara Machinery & Tool Works, Inc., 910 F.2d, 167, 173 (5th Cir. 1990). "We conclude, therefore, that in order to reopen a case under Rule 59(e) on the basis of evidentiary materials that were not timely submitted, the mover need not show first that her default was the result of mistake, inadvertence, surprise or excusable neglect or that the evidence is such as to show that the judgment was manifestly wrong." Lavespere v. Niagara Machinery & Tool Works, Inc., 910 F.2d at 173-174.

"In any case in which a party seeks to upset a summary judgment on the basis of evidence she failed to introduce on time, two important judicial imperatives clash: the need to bring litigation to an end and the need to render to just decisions on the basis of all the facts. The task of the district court in such a case is to strike the proper balance between these competing interests. In order to do this, the Court should consider, among other things, the reasons for the moving party's default, the importance of the omitted evidence to the moving party's case, whether the evidence was available to the non-movant before she was responded to the summary judgment motion, and the likelihood that the non-moving party will suffer unfair prejudice if the case is reopened." Lavespere v. Niagara Machinery & Tool Works, Inc., 910 F.2d at 174. If a party is guilty of such defaults, "then a district court may, without committing an abuse of discretion, refuse to admit and consider belatedly-filed evidentiary materials." Id. at 175. The district court may consider whether the error to raise a factual or legal issue prior to entry of the summary judgment was a mistake on the part of the attorney for the losing party, and may reopen the case based on this. Id. at 175; See Also, Servants of Paraclete v. Great American Insurance Company, 866 F.Supp. 1560, 1581 (D.N.M. 1994).

Hale v. Townley, 45 F.3d 914, 921 (5th Cir. 1995), upheld the district court's decision to consider supplemental evidence filed after the entry of a summary judgment as part of a motion to alter or amend the judgment. In Ford v. Elsbury, 32 F.2d 931, 937 (5th Cir. 1994), the Fifth Circuit held that a district court abused its discretion by refusing to consider additional evidence proffered with a plaintiff's motion to alter or amend the judgment under Federal Rule 59(e), finding that the plaintiff did not need "to show that with greater diligence the affidavits could not have been obtained earlier" because "a Rule 59(e) motion need not make such a showing." Id.

In Seamon v. Vaughan, 921 F.2d 1217 (11th Cir. 1991), the district court confirmed an arbitration award and awarded attorney's fees to the prevailing party and refused to consider a challenge to the award first raised in a motion to alter or amend. The Court of Appeal affirmed the district court's exercise of its discretion:

We conclude that the district court did not abuse its discretion in declining to entertain this argument as made for the first time after final judgment.

Id. at 1220. One factor in refusing to revisit the issue was the absence of a record on the basis for the arbitrators' decision to impose such liability. Id. at 1220, n. 5.

In American Home Assurance Company v. Glenn Estess & Associates, 763 F.2d 1237, 1238-39 (11th Cir. 1985), the district court granted summary judgment in favor of an insurer based on the application of Alabama law. Id. at 1238. The Court of Appeal found no abuse of discretion in the district court's denial of a Rule 59 motion in which the insured argued for the first time that New York law was properly applicable:

There is a significant difference between pointing out errors in a court's decision on grounds that have already been urged before the court and raising altogether new arguments on a motion to amend; if accepted, the later essentially affords a litigant "two bites at the apple." 

Id. at 1239. Footnote 2 immediately follows the above quote:

We do not imply that a district court abuses its discretion in granting a Rule 59(e) motion to amend on grounds that are urged for the first time in the motion to amend. Instead, we hold only that under the facts of the instant case, the district court did not abuse its discretion in refusing to amend its judgment and apply New York law.

Id. at 1239, n. 2. The Court nonetheless reviewed the insured's argument and found no basis for reversal because the legal questions presented were at least arguable. Id. at 1239. "In short, any error that may have been committed is not the sort of clear and obvious error which the interests of justice demand that we correct." Id.

In Beech Aircraft Corp. v. U.S., 51 F.3d 834 (9th Cir. 1995), the Court refused to consider the plaintiffs' challenge to the district court's placement of the burden of the proof on the plaintiffs made in a post-trial motion filed pursuant to Federal Rule 59(e):

The time for Plaintiffs to object to the allocation of burden of proof was at or prior to trial, when the judge could have remedied the situation if necessary. To raise it only after judgment deprives defendants of the opportunity to meet a burden they thought was on the plaintiffs, and leaves open the possibility of a lengthy and expenses retrial.

Id. at 841. 

Biographical Information

George D. Fagan is one of the founding partners of Leake & Andersson, L.L.P. of New Orleans, Louisiana. He graduated with honors from Washington & Lee University in 1981, and received his juris doctor degree from LSU Law School in 1984. He is a member of the Federation of Insurance and Corporate Counsel, and was recently included in the publication Best Lawyers in America. His practice primarily involves federal court litigation in commercial, employment and insurance law.