Dole Food Co. v. Superior Court
242 Cal. App. 4th 894
Cal. Ct. App.2015Background
- Carousel tract in Carson, CA was developed on former Shell crude oil storage reservoirs; soil contamination discovered and Water Board issued a Cleanup and Abatement Order (RAP) requiring Shell to remediate (estimated cost $146M).
- ~1,491 individual residents (Acosta plaintiffs) and the City of Carson sued Shell and developer codefendants for personal injury, property damage, nuisance, etc.; property damage claims against Shell were largely struck on statute of limitations grounds.
- Shell settled with the individual plaintiffs for $90 million (cash) and with Carson by mutual release (no cash); settlement documents required plaintiffs’ counsel/Special Master to allocate the $90M among plaintiffs and to cooperate with RAP implementation.
- Shell moved for a §877.6 good faith determination to bar contribution/indemnity claims by nonsettling developer-defendants; trial court granted the motion without assigning a dollar value to the RAP or allocating the $90M among individual plaintiffs.
- Developer-defendants sought writ relief arguing the court had to (1) monetize Shell’s preexisting RAP obligation (so it would offset nonsettling liability) and (2) require allocation of the $90M among the 1,491 plaintiffs and between economic/noneconomic damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Shell’s obligation to implement the Water Board RAP must be assigned a dollar value and included as settlement consideration for §877.6 purposes | RAP is separate and not part of settlement consideration | RAP has substantial monetary value (~$146M) and must be monetized so nonsettling defendants receive appropriate offset | RAP remediation was a preexisting regulatory obligation and not consideration for the settlement; it need not be monetized for the good-faith determination; trial court’s reliance on it was harmless because $90M alone was within the ballpark of liability. |
| Whether the trial court must allocate the $90M settlement among the 1,491 plaintiffs at the good-faith hearing | No allocation required at this stage; plaintiffs’ counsel/Special Master will allocate later | Allocation among individual plaintiffs and between economic/noneconomic damages is required to protect nonsettling defendants’ offsets | No individualized allocations required at the good-faith stage; requiring them would convert the hearing into 1,491 mini-trials and is not mandated. |
| Whether excluding RAP value from settlement shows collusion to reduce offsets to nonsettling defendants | Excluding RAP is proper because it is not consideration | Exclusion is collusive and aims to minimize offsets | Exclusion is not collusive because RAP performance was mandated by the Water Board; exclusion was permissible. |
| Whether the $90M cash payment is grossly disproportionate to Shell’s proportionate liability | $90M is reasonable given causation defenses and extinguished property claims | $90M is far less than plaintiffs’ asserted damages and thus inadequate | $90M was within the ‘ballpark’ given weak causation evidence, prior dismissal of property claims, and evidence assigning substantial fault to developers. |
Key Cases Cited
- Abbott Ford, Inc. v. Superior Court, 43 Cal.3d 858 (concerning the “ballpark” test for good-faith settlements and cautioning against mini-trials)
- Tech-Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal.3d 488 (adopting the rough-approximation/"ballpark" approach for §877.6 review)
- West v. Superior Court, 27 Cal.App.4th 1625 (court should make a rough approximation of plaintiff’s actual recovery at settlement time)
- Erreca’s v. Superior Court, 19 Cal.App.4th 1475 (appellate standard: substantial evidence supports trial court’s good-faith determination)
- Mattco Forge, Inc. v. Arthur Young & Co., 38 Cal.App.4th 1337 (discretionary nature of good-faith rulings)
- Espinoza v. Machonga, 9 Cal.App.4th 268 (postverdict allocation method applying jury’s economic/noneconomic ratio to settlement)
- Rashidi v. Moser, 60 Cal.4th 718 (recognizing Espinoza’s postverdict allocation as widely accepted)
- Asmus v. Pacific Bell, 23 Cal.4th 1 (legal principle that promising to do what one is already legally bound to do is not consideration)
- Alcal Roofing & Insulation v. Superior Court, 8 Cal.App.4th 1121 (invalidating an approval when settling parties allocated only a small portion of settlement to issues affecting a nonsettling defendant)
- Knox v. County of Los Angeles, 109 Cal.App.3d 825 (requiring evidentiary support when settling parties allocate less than full settlement to certain causes of action)