|October 5, 2012|
Previously published on October 2, 2012
The Ninth Circuit in U.S. v. U.S. District Court for the Northern Mariana Islands (“Northern Mariana Islands”), No. 11-72940, 2012 WL 3984406, recently granted relief to the government and directed a district court to vacate orders that directed the government to send a representative with full authority to settle a civil tax refund lawsuit to an initial settlement conference. Although the appellate court held that the district court has the authority to order parties, including the federal government, to participate in mandatory settlement conferences, the Ninth Circuit found that the district court abused its discretion in ordering attendance by a representative with full settlement authority under the circumstances of the case. The Ninth Circuit cited two factors important to its determination: (1) the lowest-ranking official with settlement authority over the case was the Assistant Attorney General of the Tax Division (“Assistant Attorney General”) and it would be impractical to require the Assistant Attorney General to appear at all settlement conferences in all cases involving amounts within his or her settlement authority; and (2) the initial settlement conference was a matter of routine practice under the district court’s local rules, and the personal participation of the person able to make a final decision was not vital. While the practice of not sending a representative with ultimate settlement authority is fairly standard for the Department of Justice, the Ninth Circuit’s decision adds guidance with respect to an important issue for taxpayers, as settling a case can be more difficult when not dealing directly with the ultimate decision-maker.