Judge William A. Crowfoot, Case Number: 23AHCV01436, Date: 2025-03-28 Tentative Ruling

Judge: William A. Crowfoot, Case: 23AHCV01436, Date: 2025-03-28 Tentative Ruling

On June 23, 2023, plaintiffs Jiandong Wang and Xia Li (collectively, “Plaintiffs”), individually and as successors in interest to Xu Wang (“Wang”) filed this action against defendants Ciam S.p.A. (“CIAM”), AE Holdings, USA, LLC (“AE”), and Advanced Gourmet Equipment & Design, LLC (“Advanced Gourmet”). Plaintiffs allege that Wang, a 25-year old man, died from compression asphyxia caused by a defective refrigerated bakery display case after his chest and body were caught between a motorized li and stationary cabinet (“Product”). CIAM allegedly designed, manufactured, and sold the display case and AE and Advanced Gourmet were CIAM’s authorized sellers of the Product in the United States.

AE and Advanced Gourmet (collectively, “Defendant Distributors”) have settled with Plaintiffs in exchange for their policy limits of $6,000,000. The settlement is conditioned on a court’s determination that it was made in good faith. Therefore, on February 24, 2025, Defendant Distributors filed this motion for a determination of good faith settlement.

If a settlement is made in good faith, the Court “shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor . . . for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code Civ. Proc., § 877.6, subd. (c).) “A determination as to the good faith of a settlement, within the meaning of section 877.6, necessarily requires the trial court to examine and weigh a number of relevant factors, one of the most important of which is the settling party’s proportionate liability. In making such examination, the court must look at the state of the evidence as it exists at the time the motion for a good faith determination is heard. [Citation.] If . . . there is no substantial evidence to support a critical assumption as to the nature and extent of a settling defendant’s liability, then a determination of good faith based upon such assumption is an abuse of discretion.” (Toyota Motor Sales U.S.A., Inc. v. Superior Court (1990) 220 Cal.App.3d 864, 871; L.C. Rudd & Son, Inc. v. Superior Court (1997) 52 Cal.App.4th 742, 750 [“It is the burden of the settling parties to explain to the court and to all other parties the evidentiary basis for any allocations and valuations made sufficient to demonstrate that a reasonable allocation was made”].)

The non-settling tortfeasors or obligors bear the burden of demonstrating the absence of good faith in the settlement. (Code Civ. Proc., § 877.6, subd. (d).) To demonstrate a lack of good faith, the non-settling party must show that the settlement is so far “out of the ballpark” as to be inconsistent with the equitable objectives of Section 877.6. (Nutrition Now, Inc. v. Superior Court (2003) 105 Cal.App.4th 209, 213.) The Court will typically consider: (1) the plaintiff’s (roughly) approximated total recovery; (2) the settlor’s share of liability; (3) the size of the settlement at issue; (4) the distribution of settlement proceeds among plaintiffs; (5) the usual discount value when plaintiffs settle before trial; the settlor’s financial condition and insurance policy limits; and (6) whether there is evidence of “collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.” (Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499.) These factors will be evaluated accordingly to what information is available at the time of settlement. (Ibid.)

Defendant Distributors argue that the standard for good faith has been met because the settlement amount of $6 million is reasonable in light of Plaintiffs’ potential total recovery and Defendant Distributors’ proportionate liability. Defendant Distributors provide the search results for verdicts and settlements relating to wrongful death and products liability actions involving accidents with industrial machines, particularly fatal crushing accidents; these results show potential recoveries of $4.5 million to $30 million. Defendant Distributors argue that the policy limits settlement of $6 million is not only within the ballpark of Plaintiffs’ potential recovery at trial, but also recognizes that they have no or little liability. Defendant Distributors did not design, manufacture, install, service, or provide instructions for the Product. (Motion, Hall Decl., ¶¶ A, 1, 4.) They merely sold it to Yu Cake Bakery and it was used daily for three years. (Motion, pp. 15-17.) Accordingly, their liability is based entirely on their status as sellers of the Product and there is no evidence for any basis for separate liability on their part.

Defendant Distributors also argue that there is no collusion or fraud and that the settlement was entered into good faith after negotiations in an adversarial setting. (Motion, p. 18-19.) At the time the settlement was reached, CIAM was the only known non-settling party and efforts to arrange an early global mediation were unsuccessful when CIAM’s insurance carrier, Groupama Assicuazioni S.p.A (“Groupama”), denied coverage to CIAM. After mediation failed to go forward, Plaintiffs made a policy limits demand and Defendant Distributors agreed to pay the policy limits of $6 million after evaluating the following:

1. Wang’s documented promises to support Plaintiffs, including a lengthy poem in Chinese with an English translation in which Wang expresses admiration for his father, his desire to make his father proud of him, his duty to take care of the family, and his resolution to go to college and study English to that end.

2. The Chinese cultural tradition of filial piety which expects children to care for and support their parents in old age.

3. The fact that Wang, born in 1997, was his parents' only child as a result of China's one-child policy.

4. Security camera footage of Wang being slowly squeezed to death and collapsing to the floor and descriptions of his discolored and marred flesh as described in police and coroner reports.

5. Photographs of Wang's mother at his funeral in a state of extreme distress, being supported and restrained by family members.

6. The Product was the only one of its type in North America and had been disposed of, rendering it extremely difficult to defend CIAM’s design and manufacturing, notwithstanding Defendant Distributor’s exposure to strict liability for the alleged defects.

While Defendant Distributors would be settling Plaintiffs’ claims, their cross-complaint against CIAM and Groupama, as well as Yu Cake Bakery (Wang’s employer and owner/operator of the Product), for indemnity and apportionment of fault would proceed because Hanover Insurance Company, the insurance carrier for Defendant Distributors, is subrogated to their claims in the amount.

In opposition, CIAM argues that Defendant Distributors’ motion is defective because there is no evidence supporting their contentions of no liability. CIAM also argues that Defendant Distributors and Plaintiffs have colluded to impede its litigation goals because CIAM attempted to remove the case to federal court but Defendant Distributors supported Plaintiffs’ successful efforts to remand the case to state court. CIAM emphasizes that this support for remand is “incredibly unusual” because Defendant Distributors did not provide a reason opposing removal. (Motion, p. 3.) CIAM also refers to a letter in which Defendant Distributors’ counsel told Plaintiff’s counsel that they would “fully cooperate and coordinate litigation efforts” and claims that Plaintiffs delayed serving Defendant Distributors so that they could oppose CIAM’s attempts to remove the action and cause CIAM to incur attorney fees. (Motion, p. 12.) CIAM also claims that Defendant Distributors and Plaintiffs have an agreement to divide any recovery from CIAM between them, which improperly encourages continued litigation. CIAM also states that in discovery, it determined that Hanover made the decision to settle the matter and complains that Defendant Distributor’s person most knowledgeable only testified that they were advised by their lawyers and insurance company that they “didn’t have a chance of winning in California.” (Opp., p. 9.) CIAM further claims it was denied information relevant to the Motion because Hanover refused to produce documents and answer questions in deposition.

Both Plaintiffs and Defendant Distributors filed replies addressing CIAM’s claims for collusion and lack of good faith. First, they point out that liability for Defendant Distributors’ is limited because courts have refused to impose strict liability on businesses in the chain of production and marketing if the facts did not establish a sufficient causative relationship or connection to satisfy the policies underlying the strict liability doctrine. Second, they cite to the Cal-OSHA Investigation Summary as the evidence that would be presented to describe Wang’s injuries and conditions and considered in the settlement process. Third, they emphasize that Plaintiffs’ policy demand was time-limited and there would have been potential exposure if the offer was rejected and the policy was opened. Fourth, Defendant Distributors state that Hanover, their insurance company, has the power to settle the case pursuant to their insurance policy. Fifth, Defendant Distributors claim that remand would have occurred even without their support because CIAM did not explain their absence and did not reach out before removing the case. Sixth, Defendant Distributors address the purported stonewalling and emphasize that CIAM’s questioning and request for productions violated the Code of Civil Procedure’s requirements for subpoenas for personal records as well as the attorney-client privilege.

Ultimately, CIAM fails to provide any evidence that a $6 million settlement amount is “out of the ballpark” in light of the facts showing limited wrongdoing by Defendant Distributors and the evidence of other similar verdicts and settlements. And, as Plaintiffs point out, the defect in the Product was in its design because the placement of the button which activates the motorized lid of the Product was in a position where it was most likely to be accidentally triggered by someone who had to lean into the case to clean it. (Plaintiff’s Reply, pp. 3-4.) Plaintiffs further argue that there were also no warnings of the crush hazard posed by this product and a simple mechanical device that could have incorporated into the design to prevent the lid from closing while someone was cleaning it or a plastic cover to prevent the button from being accidentally activated.

Last, there is no evidence of collusion. Plaintiffs explain that their attorney asked CIAM’s counsel if the policy limits would be tendered to be divided pursuant to their agreement to make a joint policy limits demand and consequently “open” the policy. (Plaintiffs’ Reply, p. 9.) The discussion between Plaintiffs and Defendant Distributor’s counsel regarding cooperation concerned “basic cooperation . . . for the purpose of obtaining a finding of good faith settlement and supporting [Defendant Distributors]’ ability to recover what was paid as a result of CIAM’s refusal to participate in the settlement process.” (Defs.’ Reply, pp. 10-11.)

In light of the foregoing, the motion for determination of good faith settlement is GRANTED.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.