Shoals v. Owens & Minor Distribution, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 MARCUS SHOALS, SR., an No. 2:18-cv-02355 WBS EFB individual, 13 Plaintiff, 14 MEMORANDUM AND ORDER RE: v. DEFENDANT STAFFMARK 15 INVESTMENT, LLC’S MOTION FOR OWENS & MINOR DISTRIBUTION, GOOD FAITH SETTLEMENT 16 INC., a corporation; STAFFMARK HOLDINGS, INC., a corporation; 17 STAFFMARK INVESTMENT, LLC, a limited liability company; JOHN 18 CLINE, an individual; and DOES 1 through 50, inclusive, 19 Defendants. 20 21 ----oo0oo---- 22 Before the court is defendant Staffmark Investment, 23 LLC’s (“Staffmark Investment”) motion for determination of good 24 faith settlement. (Mot. (Docket No. 39).) The motion is 25 unopposed by the remaining non-settling defendants. 26 I. Background 27 Staffmark Investment is a temporary services agency 28 1 that places its employees in various temporary jobsites 2 throughout California. (Mot. at 1.) Plaintiff Marcus Shoals, 3 Staffmark Investment’s former employee, claims he was subjected 4 to racial discrimination, sexual harassment, and retaliation 5 during his placement with defendant Owens & Minor Distribution, 6 Inc. (“O&M”). (Request for Judicial Notice (“RJN”), Ex. B 7 (“First Am. Compl.”) ¶¶ 18-19, 23 (Docket No. 39-1).) After 8 plaintiff left O&M, Staffmark Investment placed him at Penske 9 Logistics LLC in December 2014. (Decl. of Susan Steward 10 (“Steward Decl.”) ¶ 13 (Docket No. 39-2).) Plaintiff ended his 11 employment with Staffmark Investment after he accepted a full- 12 time position with Penske. (Id. ¶ 17.) 13 Plaintiff brought this action in California state court 14 against O&M, his supervisor at O&M, John Cline, Staffmark 15 Investment, and Staffmark Holdings, Inc. (“Staffmark Holdings”), 16 alleging seven causes of action: (1) Unlawful Harassment/Hostile 17 Environment in violation of California Government Code § 18 12940(j)(3); (2) Unlawful Harassment/Hostile Environment in 19 violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. 20 §2000 et seq.; (3) Discrimination in violation of the California 21 Fair Employment and Housing Act (“FEHA”), Cal. Gov. Code §§ 22 12900-12996; (4) Discrimination in violation of Title VII; (5) 23 Retaliation in violation of California Government Code § 24 12940(h); (6) Retaliation in violation of Title VII; and (7) 25 Failure to Prevent Discrimination and Harassment in violation of 26 California Government Code § 12940(k). (See generally First Am. 27 Compl.) All defendants agreed to remove the case to this court. 28 (Docket Nos. 1, 7.) Staffmark Holdings and Staffmark Investment 1 then moved to compel arbitration on August 31, 2018. (Docket No. 2 12.) 3 This court denied plaintiff’s subsequent motion to 4 remand and granted the motion to compel arbitration. (Docket No. 5 34.) After proceeding through JAMS arbitration before the 6 Honorable Rebecca Westerfield (Ret.), plaintiff agreed to dismiss 7 Staffmark Holdings in exchange for a waiver of costs. (Steward 8 Decl. ¶ 13.) The court ordered the dismissal of Staffmark 9 Holdings on October 15, 2019. (Docket No. 37.) On December 9, 10 2019, plaintiff served Staffmark Investment a statutory offer to 11 compromise pursuant to California Code of Civil Procedure § 998 12 for $110,000. (Steward Decl. ¶ 14, Ex. G.) Staffmark Investment 13 and plaintiff eventually settled for $70,000. (Id. ¶¶ 18-20, Ex. 14 I.) Staffmark Investment now seeks a judicial determination that 15 the settlement was reached in good faith. (Docket No. 39.) 16 II. Discussion 17 A. Applicable Law 18 In California, state substantive law on settlements is 19 codified at California Code of Civil Procedure Section 877. 20 Section 877.6, the procedural mechanism for implementing Section 21 877, is intended to promote the equitable sharing of costs among 22 the parties at fault and encourage settlement. Tech-Bilt, Inc. 23 v. Woodward-Clyde & Ass’n, 38 Cal. 3d 488, 494 (1985). While the 24 procedures set forth in Section 877.6 “do not govern a federal 25 action” like the one here, “the substantive provisions of 26 California law” are applicable. Fed. Sav. & Loan Ins. Corp. v. 27 Butler, 904 F.2d 505, 511 (9th Cir. 1990). 28 Courts are permitted to approve a settlement under 1 Section 877.6 if it was made in good faith. Cal. Civ. P. § 2 877.6. To access whether a settlement was made in good faith, 3 courts must determine whether the settlement is within the 4 “reasonable range” of the settling tortfeasor’s share of 5 liability for the plaintiffs’ injuries. Tech-Bilt, 38 Cal. 3d at 6 499. Courts consider the following, among other practical 7 factors: (1) a rough approximation of the plaintiff’s total 8 recovery and the settlor’s proportionate liability; (2) the 9 amount to be paid in settlement; (3) the allocation of settlement 10 proceeds among the plaintiffs (if there are multiple plaintiffs); 11 (4) a recognition that a settlor should pay less in settlement 12 than he would if he were found liable after a trial; (5) the 13 financial conditions and insurance policy limits of the settling 14 defendants; and (6) the existence of collusion, fraud, or 15 tortious conduct aimed to injure the interests of non-settling 16 defendants. Id. Ultimately, the determination is left to the 17 trial court’s discretion. Id. at 502. 18 B. Application to Plaintiff’s Claims 19 Staffmark Investment agreed to settle with plaintiff 20 for $70,000. (Stewart Decl. ¶¶ 18-20, Ex. I.) The terms of 21 their settlement agreement are as follows: (1) dismissal without 22 prejudice of this litigation and the Arbitration Action against 23 Staffmark Investment; (2) timely payment of the settlement funds; 24 (3) mutual release of claims arising out of plaintiff’s 25 employment with Staffmark Investment, including a waiver under 26 California Civil Code § 1542; (4) mutual agreement by each party 27 to bear its own attorneys’ fees, costs, and expenses; and (5) no 28 admission of liability from Staffmark Investment for the 1 allegations made against it in plaintiff’s complaint. (Id.) 2 The first through fourth Tech-Bilt factors consider 3 whether the agreed upon settlement accurately reflects the 4 settlor’s liability and whether the settlement amount is 5 equitable under the circumstances. 38 Cal. 3d at 499. 6 Settlements need only be “in the ballpark” of the settling 7 party’s proportionate share of liability rather than calculated 8 with exacting mathematical certainty. Id. at 501 n.9. 9 Here, plaintiff’s Statutory Offer to Compromise was for 10 $110,000. (Steward Decl., Ex. G.) Staffmark Investment’s 11 subsequent offer to settle for $70,000 was made after extensive 12 written discovery, witness investigations, and depositions. 13 (Steward Decl. ¶¶ 7-9; Mot. at 13.) Staffmark Investment 14 maintains it is not liable for any of the injuries alleged in 15 plaintiff’s complaint. (Mot. at 7, 10.) However, it recognizes 16 that settling plaintiff’s claims is the most cost-effective means 17 by which to end its involvement in this case. (Id. at 7.) While 18 Staffmark Investment claims $70,000 is “much greater” than its 19 potential liability at arbitration, the amount reflects the 20 anticipated litigation costs to end plaintiff’s action with a 21 dispositive motion. (Mot. at 12.) 22 As the court stressed in Tech-Bilt, it is appropriate 23 for the settling parties to pay less in settlement than they 24 would through the course of litigation. 38 Cal. 3d at 499. The 25 final settlement, $70,000, is within the reasonable range of 26 liability for Staffmark Investment and was arrived at through 27 arm’s length negotiations. Accordingly, it satisfies the first 28 four Tech-Bilt considerations. 42.10 UV LI YY MVVUPLIOCEIl $a PHO edwiey Payee vviv 1 Although Staffmark Investment’s motion contains no 2 discussion its financial condition or policy limits, there 3 appears to be no indication of any collusion, fraud, or tortious 4 conduct aimed to injure the interests of non-settling defendants, 5 and counsel for O&M and John Cline have not opposed the present 6 | motion. Accordingly, the relevant Tech-Bilt factors favor a 7 finding of good faith. 8 IT IS THEREFORE ORDERED that Staffmark’s motion for 9 determination of good faith settlement (Docket No. 39) be, and 10 the same hereby is, GRANTED. 11 IT IS FURTHER ORDERED that: 12 1. The settlement between plaintiff and Staffmark Investment 13 was made in good faith under Cal. Civ. P. § 877.6 and Tech 14 Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal. 3d 488 15 (1985); 2. Any and all claims or future claims for contribution or 17 indemnity, arising out of the facts alleged in the 18 complaint, and as further identified and provided for in the 19 settlement, regardless of when such claims were asserted or 20 by whom, are barred; 21 3. Plaintiff’s complaint is dismissed without prejudice as to 22 Staffmark Investment, LLC; 23 4, Each party will bear its own attorneys’ fees, costs, and 24 expenses. 25 | Dated: April 28, 2020 bette 2d. □□ 26 WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 27 28