Esthela Ibarra v. California Box Company, et al.

DETERMINATION OF GOOD FAITH SETTLEMENT 

 

MOVING PARTY: Defendants California Box Company and Samuel Reyes

RESPONDING PARTY(S): Defendant iStaff Solutions LLC

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an employment dispute. Plaintiff Esthela Ibarra worked for Defendants California Box Company and iStaff Solutions, LLC, as a machinist assistant. Defendant California Box owned and operated a plant manufacturing corrugated boxes. Defendant iStaff is a private staffing agency. Plaintiff alleges she faced sexual harassment from her supervisor, Defendant Samuel Reyes. Plaintiff alleges she reported Reyes’ conduct to Defendant iStaff Solutions, who told Plaintiff it would find her another assignment. However, Defendant never reassigned Plaintiff, thereby terminating her employment.

Defendants California Box Company and Samuel Reyes now move for an order determining that the settlement between Plaintiff and moving Defendants was made in good faith under CCP § 877.6. Defendant iStaff Solutions opposed. 

TENTATIVE RULING:

Defendants’ Motion for Determination of Good Faith Settlement is GRANTED.

Moving party to give notice, unless waived.  

DISCUSSION:

Motion for Determination of Good Faith Settlement

A. Legal Standard

In an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt, a party to that action may file a motion seeking a determination from the court that the settlement between the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors was made in good faith. (CCP § 877.6(a).) The notice of motion or application for good faith determination must list each party and pleading or portion of pleading affected by the settlement and the date on which the affected pleading was filed. (CRC Rule 3.1382.) 

 

The California Supreme Court in Tech-Bilt, Inc. v. Woodward-Clyde & Assoc. (1985) 38 Cal.3d 488, established the standard for determining whether a settlement was made in good faith. Under Tech-Bilt, the following factors are considered: (1) a rough approximation of plaintiff’s total recovery and the settlor’s proportionate liability; (2) the amount paid in settlement; (3) the allocation of settlement proceeds among plaintiffs; (4) a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial; (5) the financial conditions and insurance policy limits of settling defendants; and (6) the existence of collusion, fraud, or tortious conduct aimed to injure the interests of the non-settling defendants. (Id. at 498-501.) Additionally, the evaluation must be made based on the information available at the time of settlement. (Id. at 599.) 

Where good faith is contested, the burden begins with the settlor to demonstrate the settlement.  (City of Grand Terrace, 192 Cal. App. 3d 1251, 1261.)  “Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the non-settlor who asserts that the settlement was not made in good faith.” (Id. at 1262; CCP § 877.6(d).) The nonsettlor should demonstrate “that the settlement is so far ‘out of the ballpark’ in relation to the [Tech-Bilt] factors as to be inconsistent” with a settlement made in good faith. (Id. at 500.) Where good faith is not contested, a “barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.”  (City of Grand Terrace, 192 Cal. App. 3d 1251, 1261.)  A court must weigh the Tech-Bilt factors only when good faith is contested.  (Id.)  

If the court makes a good faith determination, the court may dismiss the settling party from comparative indemnity claims if the settling party has made such a request at the time of making the good faith motion. (CCP §§ 877, 877.6(c); CRC 3.1382.) 

 

B. Analysis

Plaintiff brought this action against Defendants California Box and Samuel Reyes, who employed Plaintiff as a machinist assistant. (Compl. ¶ 21.) Plaintiff also named iStaff Solutions—the staffing company who placed Plaintiff into the position—as a Defendant. Plaintiff alleges Defendants were her employers or joint-employers. (Id. ¶ 9.) Plaintiff alleges she was sexually harassed by Defendant Reyes and was then terminated by iStaff Solutions when she complained about the harassment. (Id. ¶¶ 23, 28.) 

On June 4, 2021, this court (Judge Stuart Rice) granted Defendants’ motion to compel arbitration. Prior to arbitration, the parties engaged in mediation. Through mediation, Plaintiff and Defendants California Box Company and Reyes reached a settlement whereby Defendants will pay Plaintiff $95,000 in exchange for a release of all claims against these Defendants. 

Defendant iStaff engaged in the mediation—at least for some period—but was not a part of the settlement. This leaves iStaff as the only remaining Defendant. 

The moving Defendants now contend “the offer of $95,000 as an approximation of two thirds of a potential minimum damage recovery by the Plaintiff if the settling defendants were found liable is a fair settlement offer.” (Mtn. 6: 19-20.) Defendants also contend the “matter is not covered by insurance,” and the “financial condition of the Defendants supports a determination of good faith.” (Mtn. 6: 21-22.) 

Defendants contend the evidence from discovery demonstrates that (1) no harassment occurred; (2) that Plaintiff never complained of harassment during her employment; (3) that Plaintiff had a “relationship” with Defendant Reyes prior to working with Defendant California Box; and (4) that Defendants had valid reasons for Plaintiff’s termination, as Defendant was decreasing the amount of temporary employees based on the Covid-19 outbreak and a slowdown in production.

Where good faith is contested, the burden begins with the settlor to demonstrate the settlement.  (City of Grand Terrace, 192 Cal. App. 3d 1251, 1261.)  “Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the non-settlor who asserts that the settlement was not made in good faith.” (Id. at 1262; CCP § 877.6(d).) The non-settlor should demonstrate “that the settlement is so far ‘out of the ballpark’ in relation to the [Tech-Bilt] factors as to be inconsistent” with a settlement made in good faith. (Id. at 500.) 

The moving Defendants have met their initial burden to demonstrate the settlement. This shifts the burden to the non-settling Defendant. 

Under Tech-Bilt, the following factors are considered: (1) a rough approximation of plaintiff’s total recovery and the settlor’s proportionate liability; (2) the amount paid in settlement; (3) the allocation of settlement proceeds among plaintiffs; (4) a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial; (5) the financial conditions and insurance policy limits of settling defendants; and (6) the existence of collusion, fraud, or tortious conduct aimed to injure the interests of the non-settling defendants. (Id. at 498-501.) Additionally, the evaluation must be made based on the information available at the time of settlement. (Id. at 599.) 

Non-settling Defendant iStaff Solutions opposes the motion. While iStaff initially engaged in settlement discussions and contemplated a global settlement, it contends the settling Defendants “excluded iStaff and its counsel from further settlement discussions.” (Hellmich Decl. ¶ 10.) Defendant contends the settlement amount is disproportionate to the Settling Defendants’ liability. Defendant suggests the reason for settlement was “to cut off iStaff’s right to indemnity from CalBox.” (Opp. 9: 13-14.) Defendant maintains that the settling Defendants should be liable for 100% of Plaintiff’s damages—not two-thirds. They contend the settlement amount “is grossly disproportionate to Settling Defendants’ liability for Plaintiff’s injuries.” (Opp. 7: 24.) They also contend settling Defendants have failed to provide sufficient evidence showing they lack insurance to cover the matter.

Defendant also takes issue with the settling Defendants’ failure to provide a copy of the settlement with the moving papers, without which, iStaff contends it cannot sufficiently review the terms and conditions of the settlement. Defendants provide a copy of the settlement in reply.  [FN 1]

Finally, in the alternative to denial of the motion, Defendant “requests a continuance of the hearing on this Motion to permit discovery on, among other things, the entire Settlement Agreement and all other facts relevant to the Tech-Belt analysis.” (Opp. 7: 10-12.)

Here, considering the evidence, iStaff has failed to meet its burden to demonstrate a lack of good faith. Defendant has failed to demonstrate based on the law or facts that the settling Defendants would or should be liable for 100 percent of Plaintiff’s damages. In other words, lacking here is an adequate showing that $95,000 is not proportionate to the settling parties’ liability. 

There is likewise no evidence whatsoever that Plaintiff and settling Defendants “colluded” to cut iStaff out of the settlement. Considering the allegations and evidence presented, the settlement is a good faith estimate of the settling Defendants’ liability to Plaintiff.  

Accordingly, Defendants’ Motion for Determination of Good Faith Settlement is GRANTED.

Moving party to give notice, unless waived.  

IT IS SO ORDERED.

Dated:   December 12, 2023 ___________________________________