Paul Wm. POLIN and Marsha Polin, Plaintiffs-Appellants, v. DUN & BRADSTREET, INC., Defendant-Appellee, 634 F.2d 1319

SEYMOUR, Circuit Judge. This diversity action applying Oklahoma law was brought by Paul and Marsha Polin against Dun & Bradstreet, Inc. for damages resulting from alleged invasions of privacy. The trial court granted defendant’s motion for

summary judgment on the ground that the applicable statute of limitations barred the action. On appeal, we reversed and remanded for further proceedings. Polin v. Dun & Bradstreet, Inc., 511 F.2d 875 (10th Cir. 1975). After remand, the court ordered the cause referred to a special master to make final findings of fact, and to recommend conclusions of law and the judgment to be entered thereon. .

Upon stipulation of the parties, the judge entered a later order enlarging the authority of the special master to conduct all further proceedings and stating that “judgment will be entered in the case by this Court as recommended by such Special Master.” Rec., vol. IV, at 761. The special master handled pretrial matters and then entertained a motion for

summary judgment. He granted

summary judgment in .favor of defendant. On the same day, the district court entered judgment “[i]n conformity with the Order entered by [the] Special Master . . . . ” Rec., vol. IV, at 868. The Polins appealed. The issue of the propriety of the reference was not raised by the parties either before the district court or on appeal. However, a panel of this court exercised its supervisory power to order the case reversed and remanded with directions that the cause be heard and determined by a district judge.

The panel held that the reference to a special master was improper under Fed.R.Civ.P. 53(b), and that it amounted to an abdication of the judicial function. We granted rehearing en banc so the parties could brief and argue the validity of the reference. Upon rehearing, we hold that this case must be remanded for exercise by the district court of its responsibilities under Fed.R.Civ.P. 53(e)(4). Although this court has expressed disapproval of the reference to a special master when made outside the limitations of Rule 53(b), see Wilver v. Fisher, 387 F.2d 66 (10th Cir. 1967); Bartlett-Collins Co. v.

Surinam Navigation Co., 381 F.2d 546 (10th Cir. 1967), such a reference does not raise an issue of jurisdiction. Cruz v. Hauck, 515 F.2d 322, 327 (5th Cir. 1975), cert. denied, 424 U.S. 917, 96 S.Ct. 1118, 47 L.Ed.2d 322 (1976); Diamond Door Co. v. Lane-Stanton Lumber Co., 505 F.2d 1199, 1206 (9th Cir. 1974). At most it constitutes an abuse of discretion. See La Buy v. Howes Leather Co., 352 U.S. 249, 77 S.Ct. 309,1 L.Ed.2d 290 (1957) (parties objected to reference); Wilver, 387 F.2d at 69. We have not previously exercised our supervisory powers to vacate a reference under Rule 53(

b) and reverse on that ground. See Wilver, 387 F.2d 66; Bartlett-Collins, 381 F.2d 546. Here, however, we are faced with a more serious problem namely the district court’s failure to review the legal conclusions in the special master’s order. As noted above, the trial court entered judgment “in conformity with” the special master’s order on the same day the master issued his order. Unlike the district court in Bartlett-Collins or Wilver, it is apparent that the judge here did not review the special master’s report.

Failure of the district court to review and consider questions of law arising upon the special master’s report violates Rule 53(e)(4). Duryea v. Third Northwestern National Bank, 602 F.2d 809, 810 (8th Cir. 1979); De Costa v. Columbia Broadcasting System, Inc., 520 F.2d 499, 508-09 (1st Cir. 1975), cert. denied, 423 U.S. 1073, 96 S.Ct. 856, 47 L.Ed.2d 83 (1976). District court scrutiny is essential for several reasons: “[Sjuch review permits correction of possible error at the earliest time. Thus, an improper verdict may be detected and corrected before appeal.

Similarly an erroneous charge to the jury or an incorrect ruling of law by the magistrate or master can be rectified by ordering a new trial. Finally, not only will review at the district court level often save parties the expense and difficulty of appeal, but it will also give the appellate court the benefit of the district court’s reasoned consideration.” Sick v. City of Buffalo, 574 F.2d 689, 693 (2d Cir. 1978) (footnotes omitted). This case is remanded to the district court for review of the special master’s report in accordance with Rule 53(e)(4). The decision whether

summary judgment was proper should be made in the first instance by the trial judge after he has reviewed the legal conclusions reached by the special master. . Rule 53(

b) provides: “A reference to a master shall be the exception and not the rule. In actions to be tried by a jury, a reference shall be made only when the issues are complicated; in actions to be tried without a jury, save in matters of account and of difficult computation of damages, a reference shall be made only upon a showing that that some exceptional condition requires it.” The panel found an absence of any reason in the record to support the reference under Rule 53(b). . On rehearing en banc, the Polins argued for the first time that the reference was improper and should be vacated. .

Rule 53(e)(4) provides: “Stipulation as to Findings. The effect of a master’s report is the same whether or not the parties have consented to the reference; but, when the parties stipulate that a master’s findings of fact shall be final, only questions of law arising upon the report shall thereafter be considered. ” (Emphasis added). . A new avenue available to the court and to parties to avoid the limitations of Rule 53(e)(4) is found in the broad scope of the United States Magistrate’s Act, 28 U.S.C.A. §§ 631 et seq. (1979).

With the consent of the parties, a designated United States magistrate may conduct any proceedings in a jury or nonjury civil matter and order entry of judgment in the case. Id. § 636(c)(1). The aggrieved party may appeal directly to the appropriate court of appeals without prior review by the district court. Id. § 636(c)(3).