Katherine T. Wallace v. Skadden, Arps, Slate, Meagher & Flom, Llp

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 22, 2004 Decided March 26, 2004
No. 03-7026
KATHERINE T. WALLACE,
APPELLANT
v.
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM, LLP, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 98cv01946)
Katherine T. Wallace, pro se, argued the cause.
Neal D. Mollen argued the cause for the appellees. Bar-
bara Berish Brown and Richard L. Brusca were on brief.
Ernest L. Barcella, Jr. entered an appearance.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.

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Before: H ENDERSON , RANDOLPH and ROGERS , Circuit Judges.
Opinion for the court filed by Circuit Judge HENDERSON.
KAREN LE CRAFT HENDERSON, Circuit Judge: The appellant,
Katherine T. Wallace, appeals the lower court’s: (1) refusal to
recuse itself in her case; (2) decision to award costs and
attorneys’ fees against her pursuant to 28 U.S.C. § 1927; and
(3) adoption of the report by a magistrate judge acting as a
special master recommending fees and costs of $25,000. We
find no error with regard to the first two rulings but conclude
that the district court erred regarding the third when it
ignored the procedural requirements of Fed. R. Civ. P. 53.
We therefore vacate that decision and remand for further
proceedings in accordance with this opinion.
I. BACKGROUND
In 1995, Wallace was fired from her job as an associate in
the Washington, D.C. office of the law firm of Skadden, Arps,
Slate, Meagher & Flom, LLP (Skadden). She responded by
suing the firm and some of its lawyers in Superior Court for
defamation and wrongful discharge. As part of discovery in
that suit, Wallace subpoenaed several former Skadden em-
ployees as witnesses. Skadden offered to provide legal rep-
resentation for those former employees, some of whom ac-
cepted. The Superior Court ultimately granted summary
judgment to Skadden. Skadden’s provision of legal represen-
tation to its former employees led Wallace to sue Skadden,
the witnesses and their lawyers and law firms participating in
the Superior Court case (the appellees here) in federal court
in August 1998 under the Racketeer Influenced and Corrupt
Organizations Act (RICO). 18 U.S.C. § 1964(c). Wallace
broadly alleged that the appellees conspired to control and
withhold testimony in her Superior Court case – citing brib-
ery, obstruction of justice and witness tampering as the
underlying predicate acts – and sought $120 million in dam-
ages.
In September 1998, the appellees moved to dismiss the
complaint pursuant to Fed. R. Civ. P. 12(b)(6). As part of
that motion, they also moved for an award of attorneys’ fees

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and costs pursuant to 28 U.S.C. § 1927 because Wallace’s
claims were ‘‘baseless’’ and made in ‘‘bad faith.’’ Joint Ap-
pendix (JA) 85-88.1 In response, Wallace countered that her
claims were legally and factually supported. Regarding the
request for attorneys’ fees, however, Wallace merely suggest-
ed – in the introduction and the conclusion of her brief – that
the appellees’ ‘‘motion for costs and fees’’ also be denied
‘‘[b]ecause TTT there is a genuine issue of material fact as to
whether’’ the appellees had violated RICO. JA 92-93. Al-
most one year later, in September 1999, the district court
dismissed Wallace’s case pursuant to Fed. R. Civ. P. 12(b)(6).
It found inter alia that Wallace’s RICO claims were based
solely on ‘‘bare and conclusory’’ allegations. JA 140-43. It
further granted the appellees’ motion for costs and fees under
28 U.S.C. § 1927, observing that Wallace had offered ‘‘no
direct opposition’’ to the motion and thus there was ‘‘an
uncontroverted record suggesting that Dr. Wallace had en-
gaged in this litigation out of bad faith.’’ JA 143-44.
Following that order, the district court set a schedule to
determine the amount of costs and fees but Wallace appealed
the district court’s order. Wallace subsequently voluntarily
dismissed the portion of her appeal related to the district
court’s decision to sanction her under 28 U.S.C. § 1927 and
instead pursued only her appeal of the dismissal of her RICO
claims. In support of her appeal, Wallace cited an ex parte
communication between the district judge’s law clerk and
counsel for Skadden, claiming that the contact contributed to
an ‘‘appearance of bias and misconduct’’ on the part of the
district court and required the district judge’s recusal. See
Appellees’ Br. at B31-B33. In May 2000, we affirmed the
district court without opinion, finding Wallace’s RICO allega-
1 28 U.S.C. § 1927 provides:
Any attorney or other person admitted to conduct cases in
any court of the United States or any Territory thereof
who so multiplies the proceedings in any case unreason-
ably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses, and attor-
neys’ fees reasonably incurred because of such conduct.

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tions factually insufficient and ‘‘no impropriety’’ or ‘‘evidence
of judicial bias’’ resulting from Skadden’s counsel’s ex parte
contact with the district judge’s law clerk. JA 149A.
Again before the district court, the appellees sought a
determination of the amount of their fee award. For her
part, Wallace disputed the court’s original decision to sanction
her under 28 U.S.C. § 1927 and in January 2001 again moved
to disqualify the district judge based on the prior ex parte
communication. The district court denied her motion, noted
that the issue whether to sanction her had been decided two
years earlier and referred the determination of the appropri-
ate amount to a magistrate judge for a report and recommen-
dation. JA 258-59; see 28 U.S.C. § 636(b)(1); Fed. R. Civ. P.
72. A few weeks later, the court modified – with the parties’
subsequent consent – the original referral, appointing the
magistrate judge to act as a special master. See 28 U.S.C.
§ 636(b)(2); Fed. R. Civ. P. 53.
The magistrate judge initially referred the case for media-
tion but that proved unsuccessful. It then conducted, in July
2001, an evidentiary hearing during which several appellees
and their counsel as well as Wallace testified. On January
21, 2003, the magistrate judge, acting as a special master,
issued an eighteen-page report which concluded by ‘‘sug-
gest[ing] that Dr. Wallace be ordered to pay $25,000.’’ JA
278. The report was filed with the district court the following
day. Neither side filed objections to the report or made any
motion with regard to it.
On February 11, 2003, the district court sua sponte adopted
the special master’s report. JA 279. The court noted that
Wallace had filed no written objection to the report. Invok-
ing Local Civil Rule 72.3(b), the court adopted the magistrate
judge’s recommendation and ordered Wallace ‘‘to pay $25,000
as a deterrent to future filing of frivolous legal actions.’’ JA
279-80.
II. DISCUSSION
Wallace’s first claim – that the district judge should have
recused herself – need not occupy us long. To the extent that

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Wallace seeks review of the district judge’s decision not to
recuse on the basis of an ‘‘appearance of impropriety,’’ Appel-
lant’s Br. at 30 (emphasis in original), she asserted as much
on her first appeal. See Appellees’ Br. at B29 (including
Wallace’s original appellate brief which alleged ‘‘actual or
apparent impropriety’’). We concluded then that there was
‘‘no impropriety’’ or ‘‘evidence of judicial bias’’ on the district
judge’s part with regard to the ex parte communication
between her law clerk and Skadden’s counsel. JA 149A. We
cannot consider this claim anew. United States v. Alaw, 327
F.3d 1217, 1220 (D.C. Cir. 2003) (law of case doctrine bars
review of claims decided in earlier appeal).
Wallace’s second claim is equally unavailing. We review
the district court’s decision to sanction a party pursuant to 28
U.S.C. § 1927 for abuse of discretion. LaPrade v. Kidder
Peabody & Co., 146 F.3d 899, 904 (D.C. Cir. 1998). Wallace
argues that we should reverse the district court’s sanction
because her RICO claims ‘‘were colorable and brought in
good faith’’ and because ‘‘the district court failed to make
findings sufficient [to] meet the requirements of due process.’’
Appellant’s Br. at 11. But Wallace failed to oppose the
appellees’ original sanctions motion in district court. In an
earlier case, we declined to consider a claim that a district
court abused its discretion, or did not adequately support its
decision with findings of fact, in imposing sanctions pursuant
to Fed. R. Civ. P. 11 because the appellant failed to oppose
the motion in district court. See Geller v. Randi, 40 F.3d
1300, 1303-04 (D.C. Cir. 1994). Here Skadden’s section 1927
motion – made in conjunction with its motion to dismiss –
specifically sought costs and attorneys’ fees based not only on
the baselessness of Wallace’s RICO claims but also on her
‘‘bad faith’’ in pursuing them – including, among other things,
the fact that Wallace sent copies of her complaint to local
judges, the media, other lawyers and the Independent Coun-
sel investigating President Clinton. See JA 85-87. Wallace
responded to that motion by focusing exclusively on the
sufficiency of her RICO claims pursuant to Rule 12(b)(6); she
only cursorily referenced the section 1927 motion in the
introduction and the conclusion of her brief and completely

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failed to respond to the bad faith allegations. In granting the
section 1927 motion, the district court stated that Wallace’s
RICO claims ‘‘utterly lack[ed] merit’’ and that the ‘‘uncontro-
verted record suggest[ed] that Dr. Wallace has engaged in
this litigation out of bad faith.’’ JA 144 (emphasis added).
We find no reason to allow Wallace to challenge the district
court’s decision for the first time on appeal.2
We do find error, however, in the district court’s adoption
of the report of the magistrate judge acting as a special
master. Although the initial referral to the magistrate judge
was pursuant to 28 U.S.C. § 636(b)(1), Wallace v. Skadden,
No. 98CV-1946 (Feb. 10, 2001); see Fed. R. Civ. P. 72; the
district court, with the parties’ consent, modified that referral
and specified the magistrate judge as a special master pursu-
ant to Fed. R. Civ. P. 53. See Wallace v. Skadden, No. 98CV-
1946 (March 16, 2001) (noting ‘‘the Court’s intention that the
previous referral to [the magistrate judge] be converted into
an appointment of [the magistrate judge] as a special master,
pursuant to 28 U.S.C. § 636(b)(2), Fed. R. Civ. P. 53, and
[Local Civil Rule] 72.1(b)(5)’’); Wallace v. Skadden, No.
98CV-1946 (Apr. 4, 2001) (noting parties’ consent to ‘‘having
this matter referred to [the magistrate judge] as Special
2 Were we to review the merits of her claims, we would find no
abuse of discretion. In Wallace’s original appeal we summarily
affirmed the district court’s dismissal of her RICO claims, see JA
149A, and – irrespective of Wallace’s alleged good faith in bringing
them – the district court found bad faith. See Lipsig v. Nat’l
Student Mktg. Corp., 663 F.2d 178, 182 (D.C. Cir. 1980) (per
curiam) (affirming imposition of attorneys’ fees based on appellant’s
bad faith in prosecuting suit); see also Lone Ranger Television,
Inc. v. Program Radio Corp., 740 F.2d 718, 726-27 (9th Cir. 1984)
(relying on Lipsig for proposition that ‘‘[s]ome merit in counsels’
actions, however, does not preclude an award under 28 U.S.C.
§ 1927’’). Furthermore, we have rejected as ‘‘empty formalism’’
any requirement that the district court invoke ‘‘magic words’’ to
impose sanctions pursuant to 28 U.S.C. § 1927 and have declined to
require findings if the record makes clear that the sanctioned
party’s actions were both unreasonable and vexatious. LaPrade,
146 F.3d at 905-06.

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Master pursuant to Fed. R. Civ. P. 53’’).3
Rule 53 includes specific procedural requirements that the
district court ignored here.4 The version of Rule 53 in effect
at the time of the district court’s order provided that:
Application to the court for action upon the report
[of a special master] and upon objections thereto
shall be by motion and upon notice as prescribed in
[Federal] Rule [of Civil Procedure] 6(d). The court
after hearing may adopt the report or may modify it
or may reject it in whole or in part or may receive
further evidence or may recommit it with instruc-
tions.
Former Fed. R. Civ. P. 53(e)(2) (amended 2003). Thus while
the rule appeared to require the filing of a motion, the parties
were at least entitled to notice before the district court could
adopt a special master’s report. Id.; see 9A Charles Alan
Wright & Arthur Miller, Federal Practice & Procedure
§ 2612, at 692 (1995) (‘‘Application to the district court for
action upon the [special master’s] report TTT is by motion and
upon notice as prescribed in Rule 6(d).’’). But cf. Fed. R. Civ.
P. 53(g) advisory committee’s note to 2003 amendments (‘‘If
no party asks the court to act on a master’s report, the court
is free to adopt the master’s action or to disregard it at any
relevant point in the proceedings.’’). The district court was
also required to hold a hearing on the report. Former Fed.
R. Civ. P. 53(e)(2) (amended 2003); see 9A Wright & Miller,
Federal Practice & Procedure § 2612, at 692 (‘‘The court
3 A district court may, with the parties’ consent, ‘‘designate a
magistrate judge to serve as a special master’’ pursuant to 28
U.S.C. § 636(b)(2). Fed. R. Civ. P. 53 makes clear that a magis-
trate judge acting as a special master is ‘‘subject to this rule TTT
when,’’ as here, see supra, ‘‘the order referring a matter to the
magistrate judge expressly provides that the reference is made
under this rule.’’ Former Fed. R. Civ. P. 53(f) (amended 2003);
Fed. R. Civ. P. 53(i).
4 Fed. R. Civ. P. 53 was substantially rewritten in 2003 but the
revised version did not become effective until December 1, 2003,
long after the district court’s February 2003 decision. See Fed. R.
Civ. P. 53 & advisory committee’s note to 2003 amendments.

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must hold a hearing on the motion[.]’’); see also Kieffer v.
Sears, Roebuck & Co., 873 F.2d 954, 956 & n.3 (6th Cir. 1989)
(‘‘plain language of rule TTT clearly states the court may
adopt the report after hearing’’); cf. Fed. R. Civ. P. 53
advisory committee’s notes to 2003 amendments (‘‘The re-
quirement that the court must afford an opportunity to be
heard can be satisfied by taking written submissions when
the court acts on the report without taking live testimony.’’).
Instead, the district court here invoked sua sponte Local
Civil Rule 72.3(b) and the parties’ failure to file any written
objections to the special master’s report in adopting the
recommended $25,000 sanction. JA 279.5 This was yet an-
other mistake. Local Civil Rule 72.3(b) applies only to mat-
ters a district court refers to a magistrate judge for hearing
and recommendation under Local Civil Rule 72.3(a). D.D.C.
Loc. Civ. Rule 72.3(b) (‘‘Any party may file written objections
to the magistrate judge’s proposed findings and recommenda-
tions issued under paragraph (a)’’ (emphasis added)).6 It
5 Local Rule 72.3(b) provides:
Any party may file written objections to the magistrate
judge’s proposed findings and recommendations issued
under [Local Rule 72.3](a) within ten days after being
served with a copy thereof. The objections shall specifical-
ly identify the portions of the proposed findings and
recommendations to which objection is made and the basis
for the objection.
Failure to file timely objections may waive appellate re-
view of a District Court order adopting the magistrate
judge’s report. All magistrate judge’s reports shall con-
tain a notice substantially as follows:
Failure to file timely objections to the findings and
recommendations set forth in this report may waive
your right of appeal from an order of the District Court
adopting such findings and recommendations. See
Thomas v. Arn, 474 U.S. 140 (1985).
D.D.C. Loc. Civ. R. 72.3(b); see also 28 U.S.C. § 636(b)(1) (10 day
filing deadline and de novo review by district court based only on
objections); Fed. R. Civ. P. 72 (same).
6 Local Civil Rule 72.3(a) sets out inter alia those matters a
district court may refer to a magistrate judge for report and

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does not, by its own terms, apply to the report of a special
master (or that of a magistrate judge acting as a special
master). The district court appears to have recognized the
distinction when it sought the parties’ consent to modify its
referral in that it noted that it was authorized to appoint the
magistrate judge as a special master pursuant to Local Civil
Rule 72.1(b)(5) and that a magistrate judge acting as a special
master is governed by 28 U.S.C. § 636(b)(2) and Fed. R. Civ.
P. 53. Wallace v. Skadden, No. 98CV-1946 (March 16, 2001)
(requesting parties’ consent to ‘‘appointment of [the magis-
trate judge] as a special master, pursuant to 28 U.S.C.
§ 636(b)(2); Fed. R. Civ. P. 53, and [Local Civil Rule]
72.1(b)(5)’’); see D.D.C. Loc. Civ. Rule 72.1(b)(5) (district
court can appoint magistrate judge to ‘‘[s]erve as a special
master in civil actions pursuant to Rule 53, Federal Rules of
Civil Procedure’’ (emphasis added)). The parties’ consent
likewise declared: ‘‘the parties TTT hereby jointly consent to
having this matter referred to [the magistrate judge] as
Special Master pursuant to Fed. R. Civ. P. 53.’’ Wallace v.
Skadden, No. 98CV-1946 (Apr. 4, 2001) (emphasis added).
Unlike the procedure governing referral to a magistrate
judge for report and recommendation pursuant to 28 U.S.C.
§ 636(b)(1), Fed. R. Civ. P. 72 and Local Civil Rule 72.3(a) –
that is, not as a special master – there was – and still is – no
explicit waiver language regarding a party’s failure to timely
object to the report of a magistrate judge acting as a special
master pursuant to 28 U.S.C. § 636(b)(2), Fed. R. Civ. P. 53,
and Local Civil Rule 72.1(b)(5). See also 9A Wright & Miller,
Federal Practice & Procedure § 2612, at 692 (noting under
‘‘present practice’’ ‘‘the report of a master’’ is not ‘‘regarded
as confirmed if the parties fail[ ] to file [objections] within the
time allowed by the rule’’). Instead, Fed. R. Civ. P. 53
provided simply that ‘‘[w]ithin 10 days after being served with
notice of the filing of the report any party may serve written
objections thereto upon the other parties.’’ Former Fed. R.
Civ. P. 53(e)(2) (amended 2003).7 Nor was Wallace put on
recommendation under 28 U.S.C. § 636(b)(1)(B) and Fed. R. Civ. P.
72. See D.D.C. Loc. Civ. Rule 72.3(a).
7 Indeed, the recent revisions to Rule 53 increased the time to
respond to 20 days and the advisory committee’s notes explain that

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notice, as is the practice under Local Civil Rule 72.3(b), that
her failure to object to the report of the magistrate judge qua
special master could ‘‘waive appellate review of a District
Court order adopting the magistrate judge’s report.’’ D.D.C.
Loc. Civ. Rule 72.3(b) (‘‘All magistrate judge’s reports shall
contain a notice substantially as follows: Failure to file timely
objections to the findings and recommendations set forth in
this report may waive your right of appeal from an order of
the District Court adopting such findings and recommenda-
tions.’’) By treating the magistrate judge qua special mas-
ter’s report as a run-of-the-mill referral for a report and
recommendation under 28 U.S.C. § 636(b)(1), Fed. R. Civ. P.
72, and Local Rule 72.3(b), the district court erred as a
matter of law. See Kona Enters., Inc. v. Estate of Bishop,
229 F.3d 877, 883 (9th Cir. 2000) (reviewing de novo district
court’s adoption of special master’s report).
The parties pass over these mistakes and instead argue the
merits of the $25,000 sanction.8 Under Fed. R. Civ. P. 53,
the ‘‘time limits for objecting TTT are not jurisdictional’’ and that
‘‘the court may excuse the failure to seek timely review’’ and ‘‘[e]ven
if no objection is made TTT review [the master’s report] for clear
error TTT [or] de novo.’’ Fed. R. Civ. P. 53(g)(2) & advisory
committee’s notes to 2003 Amendments.
8 To the extent the appellees rely on Fed. R. Civ. P. 72, and our
case law interpreting it, to argue that we lack jurisdiction to
consider Wallace’s claims regarding the amount of the sanction, see
Appellees’ Br. at 17-18, Charter Oil Co. v. Am. Employers’ Ins. Co.,
69 F.3d 1160, 1172 & n. 4 (D.C. Cir. 1995), they repeat the district
court’s error. We need not decide whether a party’s failure to
object to the report of a magistrate judge qua special master under
former Fed. R. Civ. P. 53 constitutes a waiver of its right to pursue
those claims on appeal because the appellees failed to raise the
claim. See Pendleton v. Rumsfeld, 628 F.2d 102, 105-09 (D.C. Cir.
1980) (questioning impact of parties’ failure to object to special
master’s findings below but reviewing claims on appeal); id. at 109
n.2 (Wald, J., dissenting) (district court can correct errors regard-
less of objections to master’s findings); compare Provident Bank v.
Manor Steel Corp., 882 F.2d 258, 261 (7th Cir. 1989) (‘‘[W]hen a
matter has been referred to a magistrate, acting as a special master

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however, it was the district court’s duty – after motion, notice
and hearing – to review the special master’s legal conclusions
de novo, United States v. Lothridge, 324 F.3d 599, 601 (8th
Cir. 2003); Cook v. Niedert, 142 F.3d 1004, 1010 (7th Cir.
1998); Gottlieb v. Barry, 43 F.3d 474, 486 (10th Cir. 1994);
and to review the special master’s findings of fact for clear
error. Former Fed. R. Civ. P. 53(e)(2) (amended 2003) (‘‘the
court shall accept the master’s findings of fact unless clearly
erroneous’’); Lothridge, 324 F.3d at 601; Cook, 142 F.3d at
1010; Gottlieb, 43 F.3d at 486; see also Livas, 607 F.2d at 119
(‘‘The district court has the obligation to determine that the
findings of the master are not clearly erroneous.’’).
For the foregoing reasons, we remand the case to the
district court for proceedings consistent with this opinion.
So ordered.
pursuant to 28 U.S.C. § 636(b)(2) and Fed. R. Civ. P. 53, a party
waives his right to appeal if he has not preserved the issues for
appeal by first presenting them to the district court as objections to
the magistrate’s report.’’) and Smith v. Frank, 923 F.2d 139, 141 n.1
(9th Cir. 1991) (‘‘Failure to object to special master’s findings and
conclusions is treated identically to failure to object to magistrate’s
findings and conclusions.’’), with Livas v. Teledyne Movible Off-
shore, Inc., 607 F.2d 118, 119 (5th Cir. 1979) (per curiam) (appel-
lant’s failure to object to findings of magistrate judge acting as
special master ‘‘does not TTT bar him from raising the independent
obligation of the court to determine that the master’s findings are
not clearly erroneous’’).

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