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DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Part 18
Use of Settlement Judges In Proceedings Before the Office of
Administrative Law Judges
AGENCY: Office of the Secretary, Labor.
ACTION: Final rule.
SUMMARY: This final rule permits the appointment of settlement judges in proceedings before the Office of Administrative Law Judges. The procedure uses informal conferences to encourage claim settlement without adjudication. This is a voluntary procedure intended to reduce the costs to parties of filing and defending complaints and to expedite the resolution of complaints pursuant to the Administrative Dispute Resolution Act of 1990; Executive Order No. 12778 (Oct. 23, 1991); and the Department of Labor's Alternative Dispute Resolution Interim Policy.
EFFECTIVE DATE: August 16, 1993.
FOR FURTHER INFORMATION CONTACT: John M. Vittone, Deputy Chief Administrative Law Judge, Office of Administrative Law Judges. Telephone: (202)633-0341.
SUPPLEMENTARY INFORMATION: On January 11, 1993, the Department of Labor published a notice of proposed rulemaking in the Federal Register (58 FR 3822-3823) which set forth proposed settlement judge procedures in furtherance of its Alternative Dispute Resolution Interim Policy, 57 FR 7292 (1992). This rule allows use of settlement judges in certain proceedings before the Office of Administrative Law Judges. It is modeled on Recommendation 88-5 of the Administrative Conference of the United States, 1 CFR 305.88-5, and the settlement judge procedures of other agencies. See 18 CFR 385.603 (FERC; 24 CFR 104.620 (HUM 29 CFR 2200.101 (OSHRC); 47 CFR 1.244 (FCC); 48 CFR 6302.30 (DOT). The procedure supplements rather than supplants settlement techniques traditionally used by administrative law judges. See, e.g., 29 CFR 18.8 (discussion of negotiation, compromise or settlement of prehearing conferences); 29 CFR 18.9 (deferment of hearing for settlement negotiations by the parties).
The regulation permits appointment of a settlement judge by the Chief Administrative Law Judge at the request of the parties or the presiding judge.
Any party can veto use of the procedure. The settlement judge will be an active or retired administrative law judge other than the presiding judge. The settlement judge will direct settlement negotiations, assess the relative merits of the case for the parties, and consult with the parties either jointly or individually. The duration of the procedure is limited because it is meant to quicken rather than delay dispute resolution, and because an exigent hearing motivates serious negotiation. The settlement judge is prohibited from discussing any aspect of the case with the presiding judge. Any statements or conduct by the parties or the settlement judge at settlement negotiations are not admissible in later proceedings before the Department.
Settlement judges are not available in Black Lung or Longshore cases. The Benefits Review Board has found that the Black Lung Benefits Act prohibits settlements. See Gerzarowski v. Lehigh Valley Anthracite, Inc., 12 BLR 1-62 (1988); Ladigan v. Central Industries, Inc., 7 BLR 1-192 (1984). Even without the prohibition, settlement judge procedures are not appropriate where entitlement to be a benefit is an all-ornothing question, as in Black Lung cases, since a settlement judge could do nothing except convince one party to concede.
Longshore cases are so often settled informally that neither the Department nor the public would benefit from a formal settlement judge procedure. The Iongshore bar is comfortable with techniques used by the Office of Administrative Law judges for many years, such as early prehearing exchanges, calendar calls in which settlement possibilities are discussed, and opportunities for discussion immediately prior to a hearing. See Notice of Amendment to Interim ADR Policy, 57 FR 28701, 28702-3 (June 26, 1992). See also Joseph & Gilbert, Breaking the Settlement Ice: The Use of Settlement Judges in Administrative Proceedings, 2 Administrative L.J. 571, 594-595 (1989/1990) (indicating that if large numbers of cases are currently settled without the use of settlement judges, imposing the procedure is not advised).
Written comments regarding the proposed rule were required to be submitted by February 25, 1993. The following comments were received and evaluated.
Comment: In order to create greater flexibility in the settlement judge process, the phrase "jointly and/or" should be substituted for "both jointly and" in proposed paragraph 18.9(e)(1).
Response: This change has been adopted.
Comment: In order to avoid limiting the role of the settlement judge and permit greater flexibility, the language "may include facilitating fair and equitable solutions and providing an assessment of the relative merits of the respective positions of the parties" should be substituted for "is solely to facilitate fair and equitable solutions and to provide an assessment of the relative merits of the respective positions of the parties" in proposed paragraph 18.9(e)(1).
Response: This change has not been adopted. Initially, it is important to keep the role of the settlement judge well defined. The intent of the regulation is to allow the settlement judge to negotiate settlements between the parties in order to avoid litigation. The rule as proposed provides sufficient flexibility for the settlement judge to negotiate such settlements without including this language.
Comment: It was suggested that provisions be made for sanctions against violators of confidentiality provisions.
Response: This change has not been adopted because regulatory provisions already exist for sanctioning administrative law judges, parties, attorneys, or other representatives who fail to act with integrity or in an ethical manner in proceedings before the Office of Administrative Law Judges. Specifically, Part 18 requires all persons appearing in such proceedings to comply with a minimal standard of conduct, and the administrative law judge may exclude any such persons for violations of that standard, see 29 CFR 18.34(g)(3), and may certify certain types of misbehavior to a federal District Court for appropriate remedies, see 29 CFR 18.29(b). In addition, administrative law judges acting as settlement judges are subject to sanctions for violation of their duties in the same degree as if they were acting as the presiding judge. See 5 U.S.C. 7521; 5 CFR 930.214.
Comment: In order to avoid any negative inference that might influence a decision on the merits, it was recommended that when no settlement is reached, the settlement judge should simply advise the presiding judge without elaboration that no settlement was reached.
Response: This change was adopted in part. The final rule has been modified to provide that, should the parties fail to reach a settlement, the parties themselves will report to the presiding judge that no settlement had been reached, without further elaboration. The parties, rather than the settlement
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judge should be responsible for all communications with the presiding judge in order to preclude any contact between the settlement judge and the presiding judge regarding the case.
Comment: One commentator questioned whether there was evidence to support the assumptions that the settlement judge procedure would reduce litigation costs and expedite dispute resolution and suggested that the future of the procedure be contingent on periodic program evaluations to determine the procedure's effectiveness.
Response: There is no direct objective evidence at this time guaranteeing that this procedure will reduce the parties' litigation costs and expedite dispute resolution. Although there is evidence that alternative dispute resolution techniques do generally reduce costs and expedite resolution of disputes, it should be noted that these are only two goals of alternative dispute resolution. Another important objective is to enable the parties to negotiate resolutions that are mutually acceptable, thereby creating greater satisfaction with the process as a whole.
Although this procedure will be monitored to determine its effectiveness, review of the effectiveness of a regulation is a matter of management rather than regulation. Therefore the regulation makes no specific reference to its review.
Comment: A request was made for the estimated costs of implementing the settlement judge procedure and the possibility of the need to appoint new administrative law judges. Would the costs outweigh the benefits?
Response: Presently, there are judges within the Department of Labor's Office of Administrative Law Judges trained in alternative dispute resolution. These judges are capable of satisfying any initial requests for settlement judges. If the requests for settlement judges exceed the office's present capacity, more judges will be trained at a cost undetermined. There are no plans to appoint now administrative law judges to meet settlement judge requests. As there is no objective evidence to predict whether or not the procedure will be successfull in decreasing the costs of litigation or expediting the resolution of cases, or even how much use will be made of the procedure, it has not yet been determined whether the costs will outweigh the benefits. However, if successful, the reduced costs in litigation and the earlier resolution of cases should outweigh the costs of implementing and maintaining the settlement judge procedure. Since the appointment of settlement judges is at the discretion of the Chief Administrative Law Judge, if the procedure is not cost effective, it is within that official's power to limit the use of the procedure.
Comment: A commentator raised concerns that the proper role of the administrative law judge will become confused since the primary duty of the settlement judge will be to resolve disputes rather than to interpret law. Although these two roles are not necessarily inconsistent, in cases involving important public policy issues, the settlement judge procedure may not be appropriate. It was suggested that a record be made of at least the factual and legal basis of any agreements reached since administrative law judges are responsible for keeping accurate and complete records of administrative dispute proceedings. This responsibility must be balanced with the confidentiality of the parties.
Response: Since the appointment of a settlement judge is at the discretion of the Chief Administrative Law Judge, requests for settlement judge procedures may be denied where use of a settlement judge does not appear to be appropriate. However, the regulation has been modified to provide that settlement judges may terminate settlement judge proceedings if it becomes apparent that the issues involved are inappropriate for a settlement by means of this procedure.
The maintenance of detailed records for all settlement judge sessions would encumber the process and endanger confidentiality. Since confidentiality is crucial to the integrity of the procedure, such risks to confidentiality could discourage parties' participation in the procedure. Furthermore, as this procedure is entirely voluntary, parties cannot be coerced either to use the settlement judge procedure or to adopt suggestions made by the settlement judge, and may withdraw from the proceedings at any time without prejudice. For these reasons, the desirability of a complete and accurate record of all settlement judge proceedings for review purposes is outweighed by the risks to confidentiality and the danger of formalizing what is intended to be an informal procedure.
Comment: Parties should be allowed to participate in the selection of settlement judges to eliminate factors that may make parties hesitant to use the procedure.
Response: This suggestion has not been adopted. In other forms of alternative dispute resolution such as arbitration, where parties are bound by the decision of the third party, selection of the third party neutral by the parties is desirable. However, this is not true in settlement judge proceedings where the neutral makes no binding decision but merely offers the parties an additional forum for voluntary resolution of their dispute and has no coercive authority. Participation by the parties in the selection of the settlement judge could lead to an additional point of controversy between the parties and could potentially create another layer of bureaucracy. This would defeat the purpose of the procedure to reduce the costs and expedite adjudication of claims.
There was concern that the settlement judges, who are
employees of the Department of Labor, would not be independent in their
evaluation of the controversy but would be biased in
favor of the agency.
Response: Although administrative law judges are employees of the Department of Labor, they are appointed pursuant to the Administrative Procedure Act which guarantees independence of administrative law judges by protecting their tenure and pay, and prohibits the performance of inconsistent duties. 5 U.S.C. 3105, 3344, 5372, 7521. There is nothing to indicate that settlement judges would be any more disposed to negotiate outcomes that are favorable to the agency than presiding administrative law judges would be disposed to make or recommend final decisions that are favorable to the agency.
Comment: It was suggested that disciplinary proceedings against administrative law judges before the Merit Systems Protection Board be excluded from the definition of "subsequent administrative proceedings" in paragraph (e)(4) of the proposal.
Response: The Department of Labor can only ensure that confidentiality of settlement judge negotiations will be maintained in Department of Labor administrative proceedings. The Merit Systems Protection Board is an independent agency and it is contemplated that the confidentiality provision of the settlement judge rule could not be used as a shield by the judge in a disciplinary proceeding. To make it clear that confidentiality can only be ensured in administrative proceedings before the Department of Labor, paragraph (e)(8) of § 18.9 has been revised.
Comment: There was concern that the procedure would become just another layer of bureaucracy.
Response: The settlement judge procedure was drafted to expedite rather than lengthen the resolution of cases. In order to avoid a prolonged procedure,
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provisions were made to limit the duration of the settlement judge procedure and to permit termination of the procedure at any time the settlement judge believes that settlement is unlikely. In addition, discovery is not necessarily suspended during the course of the procedure, unless a suspension is granted by the presiding judge, so that in the event the parties fail to reach a settlement, the case could proceed to a formal hearing without significant delay. It is hoped that this informal proceeding will eliminate delays that are sometimes involved in a formal proceeding.
Comment: In order to evaluate the effectiveness of the procedure, it was suggested that both the Department of Labor and the Office of Personnel Management or the Merit Systems Protection Board should review the actions of Settlement Judges.
Response: Informal review of actions by settlement judges will occur through continued review of settlement programs. A more formal type of review would require management of records and other types of controls which would endanger confidentiality and the integrity of the process and could potentially interfere with the independence of the judges.
Comment: It was suggested that the regulation should provide whether it is applicable to the deportation and exclusion proceedings under the Immigration and Nationality Act of 1952, as amended, which are civil in nature. In addition, it was suggested that the regulation specifically provide for a delegation of authority to undertake settlement negotiations from the chief judge to the individual immigration judges. Finally, it was suggested that the regulation should provide for referral to a settlement judge upon the request of an alien in a deportation or exclusion proceeding without concurrence of the Service.
Since the Department of Labor's Office of
Administrative Law Judges does not preside over deportation matters arising
under the Immigration and Nationality Act, these comments are not relevant to
Comment: One commentator questioned the need for the language contained in paragraph 18.9(e)(1), "A settlement judge is an active or retired administrative law judge who convenes and presides over settlement conferences and negotiations, confers with the parties both jointly and individually, and seeks voluntary resolution of the issues." The settlement judge does not render a formal judgment or decision but merely facilitates fair and equitable solutions and provides an assessment of the relative merits of the respective positions of the parties. To require that the settlement judges be active or retired administrative law judges is inconsistent with the philosophy of alternative dispute resolution. There should be broad discretion in agreeing to the selection of the third party neutral assigned to case. Also, limiting appointment would not provide a broad base of settlement judges and would leave parts of the country without the availability of settlement judges or require extensive travel to conference sites.
Response: The settlement judge rule is only one method of alternative dispute resolution, and nothing in this rule prohibits parties from choosing to use other procedures. The settlement judge rule is being offered as a means of dispute resolution for those cases which have reached the Office of Administrative Law judges for formal adjudication, presumably because prior settlement attempts using other methods have been unsuccessful. The regulation restricts the class of people allowed to become settlement judges to ensure that settlement judges have the necessary expertise in cases arising before the Office of Administrative Law judges and as a measure to avoid the costs of hiring outside mediators. Because the settlement judge procedure applies to cases in which other offices of the Department of Labor are parties, participation by employees from these other offices as settlement judges could potentially create a conflict of interest. The Office of Administrative Law judges is the only office within the Department which has both the institutional independence and the expertise in cases arising before this office to ensure the integrity of the procedure.
Administrative law judges trained in settlement techniques are already available within the Department of Labor's Office of Administrative Law judges, which has district offices in ten locations throughout the country. Should the need for settlement judges increase, additional judges will be trained. Until that time, judges presently trained in settlement techniques will be assigned to mediate settlements negotiations in cases where the Chief judge approves the use of the procedure.
The following technical changes were also made to the regulation. In citing provisions of the Administrative Dispute Resolution Act of 1990 in the authority citation, the phrase "5 U.S.C. 581" was corrected to read "5 U.S.C. 571 note". in paragraph 18.9 (e)(2) the word "when" was substituted for the word "where". In paragraph 18(e)(7) the word "when" was substituted for the word "where". In paragraph 18(e)(7)(i) "the settlement judge is scheduled to preside in other proceedings in the same place" was substituted for "a conference may be scheduled in a place and on a day that the settlement judge is scheduled to preside in other proceedings."
This is not major rule as defined by Executive Order 12291. The Agency Head has certified that this rule does not have a significant economic impact upon a substantial number of small entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The rule does not contain any information collection or recordkeeping requirements as defined in the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).
List of Subjects in 19 CFR Part 18
Administrative practice and procedure.
Accordingly, part 18 of title 29 of the Code of Federal Regulations is amended as follows:
PART 18-RULES OF PRACTICE AND PROCEDURE FOR ADMINISTRATIVE HEARINGS BEFORE THE OFFICE OF ADMINISTRATIVE LAW JUDGES
1. The authority citation for part 18 is revised to read:
Authority: 5 U.S.C. 301; 5 U.S.C. 551-553; 5 U.S.C. 571 note; E.O. 12778; 57 Fed. Reg. 7292.
2. Section 18.9 is amended by revising the section heading and adding
new paragraph (e) to read as follows:
§ 18.9 Consent order or settlement; settlement judge procedure.
(e) (1) Settlement judge procedure; purpose. This paragraph establishes a voluntary process whereby the parties may use a settlement judge to mediate settlement negotiations. A settlement judge is an active or retired administrative law judge who convenes and presides over settlement conferences and negotiations, confers with the parties jointly and/or individually, and seeks voluntary resolution of issues. Unlike a presiding judge, a settlement judge does not render a formal judgment or decision in the case; his or her role is solely to facilitate fair and equitable solutions and to provide an assessment of the relative merits of the respective positions of the parties.
(2) How initiated. A settlement judge may be appointed by the Chief Administrative Law judge upon a request by a party or the presiding
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administrative law judge. The Chief Administrative Law Judge has sole discretion to decide whether to appoint a settlement judge, except that a settlement judge shall not be appointed when-
(i) A party objects to referral of the matter to a settlement judge;
(ii) Such appointment is inconsistent with a statute, executive order, or regulation;
(iii) The proceeding arises pursuant to the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 901 at seq., and associated acts such as the District of Columbia Workmen's Compensation Act, 36 DC Code 501 et seq.; or
(iv) The proceeding arises pursuant to Title IV of the Federal Mine Safety and Health Act, 30 U.S.C. 901 et seq., also known as the Black Lung Benefits Act.
(3) Selection of settlement judge. (i) The selection of a settlement judge is at the sole discretion of the Chief Administrative Law Judge, provided that the individual selected-
(A) is an active or retired administrative law judge, and
(B) is not the administrative law judge assigned to hear and decide the case.
(ii) The settlement judge shall not be appointed to hear and decide the case.
(4) Duration of proceeding. Unless the Chief Administrative Law Judge directs otherwise, settlement negotiations under this section shall not exceed thirty days from the date of appointment of the settlement judge, except that with the consent of the parties, the settlement judge may request an extension from the Chief Administrative Law Judge. The negotiations will be terminated immediately if a party unambiguously indicates that it no longer wishes to participate, or if in the judgment of the settlement judge, further negotiations would be fruitless or otherwise inappropriate.
(5) General powers of the settlement judge. The settlement judge has the power to convene settlement conferences; to require that parties, or representatives of the parties having the authority to settle, participate in conferences; and to impose other reasonable requirements on the parties to expedite an amicable resolution of the case, provided that all such powers shall terminate immediately if negotiations are terminated pursuant to paragraph (e)(4).
(6) Suspension of discovery. Requests for suspension of discovery during the settlement negotiations shall be directed to the presiding administrative law judge who shall have sole discretion in granting or denying such requests.
(7) Settlement conference. In general the settlement judge should communicate with the parties by telephone conference call. The settlement judge may, however, schedule a personal conference with the parties when:
(i) The settlement judge is scheduled to preside in other proceedings in a place convenient to all parties and representatives involved;
(ii) The offices of the attorneys or other representatives of the parties, and the settlement judge, are in the same metropolitan area; or
(iii) The settlement judge, with the concurrence of the Chief Administrative Law Judge, determines that a personal meeting is necessary for a resolution of substantial issues, and represents a prudent use of resources.
(8) Confidentiality of settlement discussions. All discussions between the parties and the settlement judge shall be off-the-record. No evidence regarding statements or conduct in the proceedings under this section is admissible in the instant proceeding or any subsequent administrative proceeding before the Department, except by stipulation of the parties. Documents disclosed in the settlement process may not be used in litigation unless obtained through appropriate discovery or subpoena. The settlement judge shall not discuss any aspect of the case with any administrative law judge or other person, nor be subpoenaed or called as a witness in any hearing of the case or any subsequent administrative proceedings before the Department with respect to any statement or conduct during the settlement discussions.
(9) Contents of consent order or settlement agreement. Any agreement disposing of all or part of the proceeding shall be written and signed by a parties. Such agreement shall conform to the requirements of paragraph (b) of this section.
(10) Report of the settlement. If a settlement is reached, the parties shall report to the presiding judge in writing within seven working days of the termination of negotiations. The report shall include a copy of the settlement agreement and/or proposed consent order. If a settlement is not reached, the parties shall report this to the presiding judge without further elaboration.
(11) Review of agreement by presiding judge. A settlement agreement arrived at with the help of a settlement judge shall be treated by the presiding judge as would be any other settlement agreement.
(12) Non-reviewable decisions. Decisions concerning whether a settlement judge should be appointed, the selection of a particular settlement judge, or the termination of proceedings under this section, are not subject to review by Department officials.
Signed at Washington, DC this 7 day of July, 1993.
Robert B. Reich,
Secretary of Labor.
[FR Doc. 93-16928 Filed 7-15-93; 8:45 am]
BILLING CODE 4510-23-M