Judge: Upinder S. Kalra, Case: 21STCV09623, Date: 2023-02-09 Tentative Ruling
Case Number: 21STCV09623 Hearing Date: February 9, 2023 Dept: 51
Tentative Ruling
Judge Upinder S. Kalra, Department 51
HEARING DATE: February 9, 2023
CASE NAME: Jose Ayala v. Somatdary, Inc., et al.
CASE NO.: 21STCV09623
DEFENDANTS’ MOTION TO SEAL
Judge Upinder S.
Kalra, Department 51
HEARING DATE: February
9, 2023
CASE NAME: Jose Ayala v. Somatdary, Inc., et al.
CASE NO.: 21STCV09623
MOTION
FOR DETERMINATION OF GOOD FAITH SETTLEMENT
MOVING PARTY: Defendants ADP TotalSource FL XVI,
Inc., and ADP TotalSource, Inc.
RESPONDING PARTY(S): None as of February 6, 2023
REQUESTED RELIEF:
1. An
order determining that the settlement between the parties was entered in good
faith
TENTATIVE RULING:
1. The
Motion for Determination of Good Faith Settlement is GRANTED
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
On March 11, 2021, Plaintiff Jose Ayala (“Plaintiff”) filed
a complaint against Defendants Somatdary, Inc., dba Rapid Plumbing, ADP Total
Source FL XVI, Inc., ADP Total Source, Inc., and Abbas Pournahavandi
(“Defendants.”) The complaint alleged 18 causes of action, including various
labor code violations, fraud, intentional infliction of emotional distress, and
negligent hiring and retention. The complaint alleges that Plaintiff worked for
Defendants from 2015 to 2019 as a technician. During Plaintiff’s employment,
they were not paid correctly, including failure to pay overtime, failure to pay
all wages entitled to, charging Plaintiff for business expenses. Additionally,
Plaintiff alleges that Defendants violated various Labor Code sections by not
having a commission plan for Plaintiff and requiring Plaintiff to provide their
own tools.
On April 30, 2021, Defendants ADP TotalSource FL XVI and ADP
TotalSource, Inc., filed a Demurrer.
On August 26, 2021, Defendant Abbas Pournahavandi filed an
Answer.
On August 26, 2021, Defendant Somatdary Inc., filed an
Answer.
On December 8, 2021, Defendants ADP TotalSource FL XVI and
ADP TotalSource, Inc., filed an Answer.
On January 13, 2023, Defendants ADP TotalSource FL XVI and
ADP TotalSource, Inc., filed the current Motion for Determination of Good Faith
Settlement. As of February 6, 2023, no Opposition has been filed.
LEGAL STANDARD:
California Code of Civil Procedure
section 877.6, subdivision (a)(1), provides, in relevant part,
that, on noticed motion, “[a]ny party to an action wherein it is alleged
that two or more parties are joint tortfeasors or co-obligors on a
contract debt shall be entitled to a hearing on the issue of the good faith of
a settlement entered into by the plaintiff . . . and one or more
alleged tortfeasors or co-obligors . . . .” “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).) Although a determination that
a settlement was in good faith does not discharge any other party from
liability, “it shall reduce the claims against the others in the amount
stipulated” by the settlement. (Code Civ. Proc., § 877,
subd. (a).)
“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 City of Grand View Terrace v. Superior Court (1987) 192
Cal.App.3d 1251, 1261, the court provided the following guidance regarding a
motion for a good faith settlement determination:
This
court notes that of the hundreds of motions for good faith determination
presented for trial court approval each year, the overwhelming majority are
unopposed and granted summarily by the trial court. At the time of filing
in many cases, the moving party does not know if a contest will develop.
If each motion required a full recital by declaration or affidavit setting
forth a complete factual response to all of the Tech-Bilt factors, literally thousands of attorney hours would
be consumed and inch-thick motions would have to be read and considered
by trial courts in an exercise which would waste valuable judicial and
legal time and clients’ resources. . .. That is to say, when no one objects,
the 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.
If
the good faith settlement is contested, section 877.6, subdivision (d), sets
forth a workable ground rule for the hearing by placing the burden of proving
the lack of good faith on the contesting party. 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 nonsettlor who asserts that the
settlement was not made in good faith. If contested, declarations by
the nonsettlor should be filed which in many cases could require the
moving party to file responsive counterdeclarations to negate the
lack of good faith asserted by the nonsettling contesting party.
(192 Cal.App.3d 1251,
1260-1261 [citation omitted].)
In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38
Cal.3d 488, 499, the California Supreme Court identified the following
nonexclusive factors courts are to consider in determining if a settlement is
in good faith under section 877.6: “a rough approximation of
plaintiffs’ total recovery and the settlor's proportionate liability, the
amount paid in settlement, the allocation of settlement proceeds among
plaintiffs, and a recognition that a settlor should pay less in settlement than
he would if he were found liable after a trial. Other relevant
considerations include the financial conditions and insurance policy limits of
settling defendants, as well as the existence of collusion, fraud, or
tortious conduct aimed to injure the interests of nonsettling defendants.”
The evaluation of whether a settlement
was made in good faith is required to “be made on the basis
of information available at the time of settlement.” (Tech-Bilt, Inc., supra, 38 Cal.3d at p. 499.) “‘[A]
defendant’s settlement figure must not be grossly disproportionate to what a
reasonable person, at the time of the settlement, would estimate the settling
defendant’s liability to be.’ [Citation.]” (Ibid.)
“The party asserting the lack of good
faith, who has the burden of proof on that issue (§ 877.6, subd. (d)),
should be permitted to demonstrate, if he can, that the settlement is so
far ‘out of the ballpark’ in relation to these factors as to be
inconsistent with the equitable objectives of the statute. Such
a demonstration would establish that the proposed settlement was not
a ‘settlement made in good faith’ within the terms of section
877.6.” (Id. at pp.
499-500.)
“[A] court not only looks at the alleged
tortfeasor's potential liability to the plaintiff, but it must also
consider the culpability of the tortfeasor vis-à-vis other parties alleged to
be responsible for the same injury. Potential liability for indemnity to
a nonsettling defendant is an important consideration for the trial court in
determining whether to approve a settlement by an alleged tortfeasor.
[Citation.]” (TSI Seismic Tenant
Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.)
ANALYSIS:
Defendants ADP TotalSource FL XVI
and ADP TotalSource, Inc., move to have the court determine that the settlement
agreement was entered in good faith.
1.
Burden:
“The
party asserting the lack of good faith shall have the burden of proof on that
issue.” (Code Civ. Proc., § 877.6, subd. (d).) Here, Plaintiff has the burden to prove that the good
faith settlement should be denied. As of February 6, 2023, no opposition has
been filed.
2.
Factors:
To determine whether settlement has been in good faith,
courts look at certain factors. In Tech-Bilt,
Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499, the
California Supreme Court identified the following nonexclusive factors courts
are to consider in determining if a settlement is in good faith under section
877.6: “a rough approximation of plaintiffs’ total recovery and the
settlor's proportionate liability, the amount paid in settlement, the
allocation of settlement proceeds among plaintiffs, and a recognition that a
settlor should pay less in settlement than he would if he were found liable
after a trial. Other relevant considerations include the financial
conditions and insurance policy limits of settling defendants, as well as
the existence of collusion, fraud, or tortious conduct aimed to injure the
interests of nonsettling defendants.”
3. Analysis:
This matter concerns Plaintiff’s
employment with Somatdary and ADPTS Defendants. Defendants are Professional
Employer Organizations, and “provided services to Somatdary in accordance with
a contractual relationship between ADPTS and Somatdary.” (Motion 3: 7-9.) Defendants
processed payroll, which was provided by Defendant Somatdary. (Id. at 11-18.)
The Terms of the Settlement is
confidential, and this confidentiality was a material term of the agreement.[1]
One factor is the proportionate
liability. Defendants argue that the alleged proportional liability is minimal.
Specifically, Defendants dispute that they controlled Plaintiff’s employment.
Defendants argue that Defendant Somatdary controlled Plaintiff’s employment,
and ADPTS Defendants did not engage in any decision-making regarding
Plaintiff’s employment. (Motion 8: 13-17.)
A second factor is the settlement
amount. The settled amount is stated in the unredacted Declaration of Peter M.
Waneis, which was filed under seal with the Court. Defendants argue that even
if Plaintiff had survived a potential summary judgment motion, the jury would
have likely allocated “a majority percentage of fault to the nonsettling
defendants who were Plaintiff’s employers.” (Motion 8: 24-26.) This figure is
fair representation given Defendants “ballpark liability and exposure given the
damages and the fault that would likely be attributed to the nonsettling
defendants.” (Motion 9: 1-3.)
The third factor concerns settlement allocation. Here, there
is only one plaintiff and the allocation of the entire amount in settlement is
reasonable. (Motion 9: 11-13.)
Another factor is a “recognition
that a settlor should pay less in settlement than he would if he were found
liable after trial.” (Tech-Bilt, supra,
38 Cal.3d 488 at pg. 499). Here,
Defendants assert that the parties recognize the risk of trial and the desire
to avoid future litigation. Moreover, verdict ranges are “never an exact
science,” and can less or more than the settlement amount. (Motion 9: 20-23.)
The fifth factor is Defendants’ financial condition and
insurance policy limits. Here, Defendants had “adequate resources and insurance
coverage.” (Motion 9: 25-26.)
Lastly, another factor is that the settlement negotiations
were done with a third-party neutral without fraud or collusion. Here, the
nonsettling Defendants – Defendant Somatdary and Mr. Pournahavandi – were
invited to meditation between Defendants ADPTS and Plaintiff, but did not
attend. The settlement was the result of arms-length negotiations through
private mediation with a well-respected mediator. (Motion 10: 12-18; Waneis
Dec. ¶ 5, 6, 10.) There is no evidence of raud, collusion or tortious conduct
between the parties.
The Tech-Bilt
factors have been satisfied. The parties engaged in a fair mediation, with no
evidence of tortious conduct. The proposed settlement is fair. Defendants’
proportionate liability is low, given that Defendants did not have any
decision-making power over Plaintiff, and were utilized for services dealing
with payroll. A trial would incur additional fees and costs. Lastly, Plaintiff and
the non-settling Defendants have not filed any opposition, and the non-settling
Defendants were informed of the mediation, but chose not to attend.
Motion for Determination of
Good Faith Settlement is GRANTED.
Conclusion:
For
the foregoing reasons, the Court decides the pending motion as follows:
Motion for Determination of Good
Faith Settlement is GRANTED.
Moving party is to give notice.
IT IS SO ORDERED.
Dated: February
9, 2023 __________________________________ Upinder
S. Kalra
Judge
of the Superior Court
[1]
Defendants have filed a Motion to Seal concurrently. That motion concerns the
specifications of the agreement between Plaintiff and Defendants.
MOVING PARTY: Defendants ADP TotalSource FL XVI, Inc., and ADP TotalSource, Inc.
RESPONDING PARTY(S): None as of February 6, 2023
REQUESTED RELIEF:
1. An order granting the motion to seal the settlement agreement between Plaintiff and Defendants
TENTATIVE RULING:
1. Motion to Seal is GRANTED.
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
On March 11, 2021, Plaintiff Jose Ayala (“Plaintiff”) filed a complaint against Defendants Somatdary, Inc., dba Rapid Plumbing, ADP Total Source FL XVI, Inc., ADP Total Source, Inc., and Abbas Pournahavandi (“Defendants.”) The complaint alleged 18 causes of action, including various labor code violations, fraud, intentional infliction of emotional distress, and negligent hiring and retention. The complaint alleges that Plaintiff worked for Defendants from 2015 to 2019 as a technician. During Plaintiff’s employment, they were not paid correctly, including failure to pay overtime, failure to pay all wages entitled to, charging Plaintiff for business expenses. Additionally, Plaintiff alleges that Defendants violated various Labor Code sections by not having a commission plan for Plaintiff and requiring Plaintiff to provide their own tools.
On April 30, 2021, Defendants ADP TotalSource FL XVI and ADP TotalSource, Inc., filed a Demurrer.
On August 26, 2021, Defendant Abbas Pournahavandi filed an Answer.
On August 26, 2021, Defendant Somatdary Inc., filed an Answer.
On December 8, 2021, Defendants ADP TotalSource FL XVI and ADP TotalSource, Inc., filed an Answer.
On January 13, 2023, Defendants ADP TotalSource FL XVI and ADP TotalSource, Inc., filed the current Motion for Determination of Good Faith Settlement. As of February 6, 2023, no Opposition has been filed.
LEGAL STANDARD:
California law authorizes the sealing of court records containing confidential information. (NBC Subsidiary, Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1222, n. 46.) California Rules of Court Rule 2.551(a) provides that a record may not be filed under seal without a court order and the court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties. (Cal. Rules of Court, rule 2.551(a).) The party requesting a record be filed under seal must file a motion or an application for an order sealing the record that is accompanied by a memorandum or declaration containing facts to justify the sealing. (Id., rule 2.551(b)(1).) “The court may order that a record be filed under seal” if it finds that there is an overriding interest in favor of maintaining the confidentiality of the information. (Id., rule 2.550(d).)
The factual findings requires to seal records require the court to expressly find that (1) there exists an overriding interest that overcomes the right of public access to the record; (2) the overriding interest supports sealing the record; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest. (Cal. Rules of Court, rule 2.550(d)(1)-(5).)
The Supreme Court identified in NBC Subsidiary (KNBC-TV) v. Superior Court (1999) 20 Cal.4th 1178 the following examples of overriding interests:
1) protection of minor victims of sex crimes from further trauma and embarrassment;
2) privacy interests of a prospective juror during individual voir dire;
3) protection of witnesses from embarrassment or intimidation so extreme that it would traumatize them or render them unable to testify;
4) protection of trade secrets;
5) protection of information within the attorney-client privilege;
6) enforcement of binding contractual obligations not to disclose;
7) safeguarding national security;
8) ensuring the anonymity of juvenile offenders in juvenile court; and
9) ensuring the fair administration of justice by preserving confidential investigative information.
(NBC Subsidiary (KNBC-TV) v. Superior Court (1999) 20 Cal.4th 1178, 1222 fn. 46.)
ANALYSIS:
Defendants move to have the Settlement between Plaintiff and Defendants sealed.
Defendants contend that good cause exists to seal the agreement. The Agreement is a binding contract between Defendants and Plaintiff, that was negotiated in good faith to resolve the claims against Defendants. Defendants cite to NBS Subsidiary for the argument that settlement agreements – binding contractual agreements – “constitutes an overriding interest sufficient to justify the sealing of such documents.” (Motion 6: 20-25, citing to NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1222 fn. 46, citing Publicker Industries, Inc. v. Cohen (3d Cir. 1984) 733 F.2d 1059, 1073.)
The Court finds that the sealing of these documents is appropriate. The Court finds that all five factors under Rules of Court, Rule 2.550(d)(1)-(5).) have been met. First, there exists an overriding interest as the sealed files contain confidential settlement agreements. Second, there is an overriding interest in preventing public access to this private information since these documents concern negotiations between parties, and this process allows parties to freely discuss terms of the settlement without the fear of these discussions being used against them later. Third, if the agreement is not sealed, there is a probability that Defendants will suffer prejudice, as this information could be used by other individuals in potential future cases against Defendants. Fourth, the request is narrowly tailored as it only requests the agreement to be sealed, not the entirety of the Good Faith Determination motion. Lastly, there are no less restrictive means because without sealing the agreement, Defendants may be exposed to future lawsuits.
Therefore, the Motion to Seal is GRANTED.
CONCLUSION:
For the foregoing reasons, the Court decides the pending motion as follows:
Motion to Seal is GRANTED.
Moving party is to give notice.
IT IS SO ORDERED.
Dated: February 9, 2023 _________________________________ Upinder S. Kalra
Judge of the Superior Court