SETTLING FTCA CASES INVOLVING MAJOR INJURY: THE LANDMINES ASSOCIATED - PDF document

SETTLING FTCA CASES INVOLVING MAJOR INJURY: THE LANDMINES ASSOCIATED WITH REVERSIONARY TRUSTS Special Needs Alliance Presentation Michael K. Livingston Davis Levin Livingston Honolulu, Hawaii Under the FTCA, the United States is liable in tort in same manner and to same extent that state law would impose liability on a private individual in similar circumstances. The United States shall be liable, respecting the provisions of this title relating to tort claims, in the same manner and to the same extent as a private individual under like circumstances, but shall not be liable for interest prior to judgment or for punitive damages. 28 U.S.C.A. § 2674 (West) The FTCA delegates settlement authority to the Attorney General or his/her designee. The Attorney General or his designee may arbitrate, compromise, or settle any claim cognizable under section 1346(b) of this title, after the commencement of an action thereon. 28 U.S.C.A. § 2677 (West) There is only limited guidance available with respect to settlement procedures and criteria under the FTCA. 4-5.230 - Torts Branch Procedures — Settlement of Federal Tort Claims Act Suits United States Attorneys responsible for the defense of FTCA or other tort litigation (e.g., Suits in Admiralty Act or Vessels Act) are currently delegated $1,000,000 in settlement authority, subject to the limitations set forth in Civil Directive No. 1-15, 28 C.F.R. Part O, Subpart y, App. If a United States Attorney seeks to settle for an amount in excess of the delegated authority, a detailed justification for the settlement must be forwarded to the Torts Branch. The responsible Director will then make a recommendation to the Assistant Attorney General (or if the proposed amount is in excess of $4,000,000 to the Associate Attorney General). Although the Torts Branch endeavors to expedite consideration of settlement proposals, opposing counsel and, if necessary, the court should be informed that immediate action cannot be guaranteed on any settlement proposal. It is customary to consult with the Torts Branch during settlement negotiations when any concern arises regarding the advisability of settlement or of the amount of the settlement. Although authority to settle a case can be obtained in exceptional cases prior to submission of an authorized offer from the other party(ies) to the case, this procedure is highly disfavored and should not be used unless special justification for its use is provided. However, the Torts Branch will provide counsel as to what amount it will

recommend to the Assistant Attorney General in advance of initiation or completion of settlement negotiations. Stipulations for admissions which are tantamount to a stipulation of liability must be approved by whatever level of authority is appropriate based on the highest reasonably predictable judgment that the court could enter predicated upon the stipulation or admission. [updated October 2015] The O’Connor Memorandum – 2008: Although the Attorney General has broad discretion in settling claims under the FTCA, that discretion is not unlimited. Currently, under the U.S. Constitution, disability is neither a suspect nor a quasi-suspect classification leading to stricter scrutiny under the Equal Protection Clause. Consequently, unlike race or gender discrimination, a charge of disability discrimination under the Equal Protection Clause will be evaluated by determining whether the governmental entity was pursuing a legitimate governmental end, and, if so, whether the action was rationally related to that end. See, e.g., City of Cleburne, Tex. v. Cleburne Living Center : Our refusal to recognize the retarded as a quasi-suspect class does not leave them entirely unprotected from invidious discrimination. To withstand equal protection review, legislation that distinguishes between the mentally retarded and others must be rationally related to a legitimate governmental purpose. This standard, we believe, affords government the latitude necessary both to pursue policies designed to assist the retarded in realizing their full potential, and to freely and efficiently engage in activities that burden the retarded in what is essentially an incidental manner. The State may not rely on a classification whose relationship to an asserted goal is so attenuated as to render the distinction arbitrary or irrational.

City of Cleburne, Tex. v. Cleburne Living Ctr., 473 U.S. 432, 446, 105 S. Ct. 3249, 3257- 58, 87 L. Ed. 2d 313 (1985). In other words, the Government can make decisions for any legitimate reason, but not for an improper reason. The Supreme Court, over one hundred years ago, recognized that the Constitu tion prohibits the administration of law “with an evil eye and an unequal hand, so as to practically make unjust and illegal discrimination between persons in similar circumstances.” Yick Wo v. Hopkins, 118 U.S. 356, 373 – 74 (1886). In Nemmers v. United States , the Seventh Circuit applied this fundamental precept to the decisions of the U.S. District court a birth injury case brought against the Government under the FTCA: But a judge may not exercise discretion after the fashion of a kahdi, withholding or handing out favors at whim. “[D]iscretionary choices are not left to a court's ‘inclination, but to its judgment; and its judgment is to be guided by sound legal principles'.” Albemarle Paper Co. v. Moody, 422 U.S. 405, 416, 95 S.Ct. 2362, 2371, 45 L.Ed.2d 280 (1975), quoting from United States v. Burr, 25 F.Cas. 30, 35 (No. 14,692d) (CC Va.1807) (Marshall, C.J.). “[D]iscretion must be judicial discretion. It must be subject to rational criteria, by which particular situations may be adjudged. ... Discretion without a criterion for its exercise is authorization of arbitrariness.” Brown v. Allen, 344 U.S. 443, 496, 73 S.Ct. 397, 441, 97 L.Ed. 469 (1953) (Frankfurter, J.). Nemmers v. United States , 795 F.2d 628, 634-35 (7th Cir. 1986). Some courts have also recognized that the United States Government has what might be viewed as an enhanced responsibility to deal fairly and equitably with citizens in connection with the settlement of claims brought under the FTCA: When the United States Government acts, as the embodiment of the collective conscience of our society, one must expect that the moral fibers of our nation — honor, integrity and commitment — will be reflected as a model to our citizens. Reed By & Through Reed v. United States , 717 F. Supp. 1511, 1517-18 (S.D. Fla. 1988) aff'd, 891 F.2d 878 (11th Cir. 1990). Similarly, the United States Supreme Court noted in Heckler v. Community Health Services , that the citizens of this nation have a legally cognizable interest “in s ome minimum standard of decency, honor and reliability in their dealings with the Government.” Heckler v. Community Health Services , 467 U.S. 51, 104 S. Ct. 2218, 2224, 81 L.Ed.2d 42 (1984). These minimum standards apply even when citizens are dealt decisions reached largely in secret, behind the closed doors of the DOJ.

The FTCA settlement process is a black box, and therefore almost completely immune from judicial scrutiny . There are only a few cases that deal with questions regarding the settlement process under the FTCA. In general, these cases uphold the approval process, as summarized in the Torts Branch Procedures, 4-5.230, set out above: “[T]he federal government, though not independent of the court's authority, is also not like any other litigant.” United States v. U.S. Dist. Court for N. Mariana Islands, 694 F.3d 1051, 1059 (9th Cir.2012). Indeed, it would be “highly impractical, if not physically impossible,” for the Assistant Attorney General to prepare for and appear at all settlement conferences for all cases that he possesses the authority to settle. Id.; see also In re Stone, 986 F.2d 898, 905 (5th Cir.1993) (district court abused its discretion by routinely requiring a Government representative with “ultimate settlement authority” to be present at all pretrial or settlement conferences). A.P. ex rel. Phinisee v. United States , 556 F. App'x 132, 136-37 (3d Cir. 2014). The cases make it clear that a settlement agreement reached by an Assistant United States Attorney (AUSA) negotiating directly with the plaintiffs is a conditional settlement, with an implied “condition precedent,” and does not become final until approved by the Attorney General or his/her designee. See, e.g., Ostman v. St. John's Episcopal Hosp., 918 F. Supp. 635, 644 (E.D.N.Y. 1996) ( “the necessity of Government ratification [] constitute[s] an implied condition precedent to the maturation of the remaining duties under the settlement agreement.” ). A “condition precedent” is defined as an act or event that must occur, unless performance of t he condition is excused, before a duty to perform a promise in the agreement arises. 17B C.J.S. Contracts § 671. The promisor has an implied obligation to exercise good faith and to make a reasonable effort to see to it that the condition is fulfilled, particularly where the promisor's obligation is conditioned on the occurrence of a contingency whose happening is solely within the control of the promisor. Id . A breach by the promisor of that duty to act reasonably and in good faith in connection with the performance of the condition precedent will excuse the performance of the condition. Id .; 14 Williston on Contracts § 43:16 (4th ed.). In short, there is a sound legal basis for arguing that the Attorney General or his/her designee has a duty of good faith and fair dealing in connection with the review and approval or disapproval of a conditional settlement reached by an AUSA in a FTCA case. See, e.g., A.P. ex