Judge Bruce G. Iwasaki, Case Number: 22STCV07064, Date: 2024-04-09 Tentative Ruling

Tentative Ruling: The Motion for Determination of Good Faith Settlement is continued.

On February 25, 2022, Plaintiff Nataly Consuelo (Plaintiff) filed a Complaint alleging 14 employment-related causes of action stemming from an alleged assault, including, but not limited to, harassment, discrimination, retaliation, failure to engage in the interactive process, failure to provide a reasonable accommodation, wrongful termination, and whistleblower retaliation.

On October 11, 2023, the parties – Defendants Lyneer Staffing Solutions, LLC and Employers HR, LLC (Settling Defendants), on the one hand, and Plaintiff, on the other hand – signed a settlement agreement (Settlement Agreement) in this action. The Settlement Agreement provides that Settling Defendants will pay $30,000 to Plaintiff in exchange for a full settlement and release of all claims against them and a dismissal of the Complaint. The Settlement Agreement depends upon the Court’s approval of the Motion for Good Faith Settlement.

On March 13, 2024, Settling Defendants moved for a good faith settlement with respect to the Settlement Agreement. Defendant Fashion Logistics, Inc. and Franco Vago L.A. Inc. (Non-Settling Defendants) oppose the motion.

The other potential parties involved include the following: Fashion Logistics, Inc., Franco Vago L.A., Inc., Joseph Lopez and Jose Arciega, Franco Vago SpA, and Nippon Express Italia SpA.[1]

“A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code Civ. Proc., § 877.6, subd. (c).)

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488 (Tech-Bilt), our Supreme Court explained that in making a good faith settlement determination, a trial court should “inquire, among other things, whether the amount of the settlement is within the reasonable range of the settling tortfeasor's proportional share of comparative liability for the plaintiff's injuries.” (Id. at p. 499.) “The party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., § 877.6, subd. (d).)

“In the context of section 877.6, ‘[t]he trial court is given broad discretion in deciding whether a settlement is in “good faith” for purposes of section 877.6, and its decision may be reversed only upon a showing of abuse of discretion.’ ” (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 957.)

Settling Defendants request the Court find their settlement with Plaintiff in the amount of $30,000 was made in good faith based on its position that the Settlement Agreement meets all the relevant Tech-Bilt factors.

Acknowledging that there is no precise method to determine whether parties entered into a good faith settlement, the Supreme Court in Tech-Bilt provided guidelines for determining whether a settlement is made in good faith. (38 Cal.3d at 495.) The court must strike a balance between the public policy favoring settlements and the competing policy favoring equitable allocation of costs between tortfeasors. (Id. at pp. 498-99.) To accomplish this, the Tech-Bilt Court provided the following factors for determining whether a proposed settlement is based on good faith: (1) a rough approximation of plaintiff’s total recovery and the settling defendant’s proportionate liability; (2) the amount paid in settlement; (3) allocation of settlement amounts among plaintiffs; (4) recognition that a settlor should pay less in settlement than it would if it were found liable after trial; (5) financial conditions and insurance policy limits of the settling defendant; and (6) the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants. (Id. at 499-500.) The burden of proof in asserting that a settlement lacked good faith falls upon the party making the assertion and it must show that “the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of [Code of Civil Procedure section 877.6].” (Ibid.)

Here, under the Settlement Agreement, Settling Defendants are to pay the sum of $30,000.00. Settling Defendants argue that this amount is within the ballpark of Settling Defendant’s liability. Specifically, Settling Defendants submit evidence that they did not employ Defendants Joseph Lopez and Jose Arciega (Individual Defendants) – the individuals who allegedly perpetrated the assault – did not place Individual Defendants at the subject work location owned by Defendant Fashion Logistics, had no control over the Individual Defendants, and did not direct the activities of the Individual Defendants. (Kierig Decl., ¶ 7.) Further, Settling Defendants do not, and have never had, any control over the property or business operations of Fashion Logistics, nor have they ever had the authority to supervise or direct Fashion Logistics’s employees. (Kierig Decl., ¶ 8.) Settling Defendants also submit evidence that Plaintiff never reported any of Non-Settling Defendants misconduct to Defendant Lyneer. (Kierig Decl., ¶ 12.) Rather, Defendant Lyneer merely assigned Plaintiff to work at Fashion Logistics and Employers HR is Lyneer’s professional employer organization (PEO). (Kierig Decl., ¶¶ 4(a)-(b), 7-9.)

Settling Defendants contend that given the absence of their liability for Plaintiff’s alleged injuries, they intended to file a motion for summary judgment, which would have cost approximately $30,000 in attorney’s fees and costs to file. However, based on this cost and their lack of liability, Settling Defendants made a final settlement offer to Plaintiff in that amount of $30,000, which Plaintiff accepted. (Kierig Decl., ¶ 14.)

In opposition, Non-Settling Defendants submit evidence that Lyneer maintained control over Plaintiff’s work with Defendant Fashion Logistics, Inc. Specifically, Lyneer directed Plaintiff through human resources documents to contact Lyneer if there were any problems at the work site and to immediately notify Lyneer if her work position was changed; Fashion Logistics could not change the job description or duties of Plaintiff without Lyneer’s approval; Fashion Logistics could not change the work hours of Plaintiff without Lyneer’s approval; Fashion Logistics reported to Lyneer the time records for when Plaintiff worked; and Lyneer paid Plaintiff, including withholding of social security and Medicare, and maintained payroll records for Plaintiff. (Magherini Decl., ¶ 4; Mojtehedi Decl., ¶¶ 8-9, Exs. 2, 3.)

This evidence merely shows control over Plaintiff, but no evidence that Settling Defendants controlled either Non-Settling Defendants’ employees or specific workplace conditions. Further, there is no evidence Settling Defendants had actual notice of the unlawful conditions. (See e..g., Mathieu v. Norrell Corp. (2004) 115 Cal.App.4th 1174, 1185.) Non-Settling Defendants provide no legal authority suggesting that these facts impose liability on Settling Defendants.[2] Said another way, Non-Settling Defendants’ evidence does not show that $30,000 is “out of the ball park” of Settling Defendant’s proportionate liability where the evidence plausibly shows that the liability is nonexistent.

Additionally, Non-Settling Defendants note that Plaintiff claims over $32,000,000 in special damages alone. But as they acknowledge, these damages have not been substantiated.

Based on the foregoing, the settlement amount of $30,000 is reasonable and is within the ballpark of Settling Defendants possible share of liability, with the understanding that, under Tech-Bilt, a party should not be required to pay more in a settlement than if found liable at trial.

Further, Settling Defendants assert that this settlement was reached in good faith as an arm’s length transaction. (Kierig Decl., ¶¶ 10-11, 18.) Settling Defendants also submit evidence that Settling Defendants’ financial conditions or their insurance coverage limits did not affect the Parties’ settlement negotiations in this matter, and therefore, the Court should decline to find any bad faith on that basis. (See Kierig Decl., ¶ 17.) Non-Settling Defendants speculate that the parties only settled because of Plaintiff’s counsel’s malpractice. This argument is based on evidence that Lyneer served a 988 Offer in February 2023 and then later settled for only $10,000 more – on the same day Plaintiff’s opposition to Lyneer’s motion to compel was due. Non-Settling Defendants suggest that “Plaintiff only agreed to the settlement because she was in a bad position and wanted to avoid the aftermath.” (Opp. 7:18-19.) This argument is unpersuasive: it has no connection to whether the settlement is in good faith.

Non-Settling Defendants also argue there is no evidence regarding Settling Defendants’ financial condition. However, as the reply notes, this factor is not applicable where they did not settle based on financial need; thus, financial conditions and applicable insurance policies are irrelevant to the Court’s analysis of this settlement. (Kierig Decl., ¶ 17.)

Finally, under Code of Civil Procedure section 877.6, “the party asserting the lack of good faith shall have the burden of proof on that issue.” In opposition, Non-Settling Defendants Fashion Logistics, Inc. and Franco Vago L.A. Inc. argue that cannot assess whether the Settlement Agreement is fair because the agreement was not provided to Non-Settling Defendants. In support, Non-Settling Defendants cite Mediplex of California, Inc. v. Superior Court (1995) 34 Cal.App.4th 748 for the proposition that Settling Defendants were required to provide the written settlement agreement for review and the failure to do so “thwarts meaningful opposition to the settlement and emasculates section 877.6.” (Id. at 751.) This argument is well taken. In Mediplex, the court held that, in uncontested 877.6 cases, parties may withhold the written agreement as long as they have revealed the important terms, but “that is not the case on a contested motion.” (Mediplex of California, Inc. v. Superior Court, supra, 34 Cal.App.4th at 753 [citing Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121].)

Rather than address this legal authority, Settling Defendants merely argue that Non-Settling Defendants never requested the Settlement Agreement “until they filed their Opposition brief to this Motion.” There is no requirement that Non-Settling Defendants request the written settlement agreement within a certain timeframe.

Thus, on this basis the Court will continue the motion in order to provide Non-Settling Defendants with a copy of the settlement Agreement.

The Motion for Determination of Good Faith Settlement is continued to a date to be set at the hearing. Defendants Fashion Logistics, Inc. and Franco Vago L.A. Inc. may file supplemental briefing on the specific terms of the Settlement Agreement (no more than 3 pages, not including additional evidence) no later than ten court days before the hearing. Defendants Lyneer Staffing Solutions, LLC and Employers HR, LLC may file responsive supplemental briefing on the specific terms of the Settlement Agreement (no more than 3 pages, not including additional evidence) no later than five court days before the hearing.

[1] To date, neither Franco Vago SpA nor Nippon Express Italia SpA have been served with Plaintiff’s Complaint or appeared in the action.

[2] Rather, these facts only suggest an employment relationship with Plaintiff such that FEHA claims may apply but the evidence does not demonstrate specific liability for the underlying allegations here. (Bradley v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1629 [“[t]he key is that liability is predicated on the allegations of harassment or discrimination involving the terms, conditions, or privileges of employment under the control of the employer, and that the employment relationship exists for FEHA purposes within the context of the control retained.”].)

Department 58