Leeman v. Adams Extract & Spice CA1/4
236 Cal. App. 4th 1367
| Cal. Ct. App. | 2015Background
- Leeman sued Adams under Proposition 65 alleging Adams’ food extracts contained the carcinogen 4‑MEI without a required warning, seeking injunctive relief and civil penalties.
- The parties negotiated a settlement and submitted a stipulated consent judgment under Code Civ. Proc. § 664.6 and Prop. 65’s settlement‑approval procedures, including a provision that Adams pay $72,500 for Leeman’s attorney fees and costs (a discount from actual fees).
- The trial court approved the settlement but, without explanation, reduced the stipulated fee award to $35,839.67 instead of rejecting the settlement or explaining why the fee was unreasonable.
- Leeman moved to correct the judgment to reinstate the agreed $72,500; Adams joined. The court granted other modifications but refused to restore the agreed fee amount and issued an amended judgment; Leeman appealed.
- The Court of Appeal held the trial court erred by unilaterally modifying a material term of the parties’ settlement under § 664.6 and Prop. 65; it reversed and remanded with instructions to either approve or reject the original settlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court could reduce the parties’ stipulated attorney‑fee term in a settlement entered as a consent judgment under Code Civ. Proc. § 664.6 and approved under Prop. 65 | The court lacked authority to alter a material term of a settlement; parties agreed to $72,500 and the court must accept or reject the settlement, not modify it | The court implicitly asserted authority (or discretion) to review and adjust fee awards as part of its settlement‑approval function under Prop. 65 | The trial court erred: it may approve or reject a settlement but cannot unilaterally modify material terms of an agreed settlement; reversed and remanded to either approve or reject the proposed consent judgment |
Key Cases Cited
- Graham v. DaimlerChrysler Corp., 34 Cal.4th 553 (California Supreme Court 2004) (attorney fees available under Code Civ. Proc. § 1021.5 in successful public‑interest actions)
- California State Auto. Assn. Inter‑Ins. Bureau v. Superior Court, 50 Cal.3d 658 (California Supreme Court 1990) (court may reject but not add to settlement terms under § 664.6; may refuse approval if contrary to public policy)
- Weddington Productions, Inc. v. Flick, 60 Cal.App.4th 793 (Cal. Ct. App. 1998) (trial court cannot create material settlement terms beyond parties’ agreement)
- Hernandez v. Board of Education, 126 Cal.App.4th 1161 (Cal. Ct. App. 2004) (settlement terms must reflect mutual intent; court cannot rewrite agreement)
- Skulnick v. Roberts Express, Inc., 2 Cal.App.4th 884 (Cal. Ct. App. 1992) (§ 664.6 permits entry of judgment per parties’ settlement)
- 7‑Eleven Owners for Fair Franchising v. Southland Corp., 85 Cal.App.4th 1135 (Cal. Ct. App. 2000) (court should not modify settlement fee terms because doing so effectively unwinds the settlement)
- Reed v. Murphy, 196 Cal. 395 (California Supreme Court 1925) (consent judgment differing from stipulation may be set aside)
- Gouvis Engineering v. Superior Court, 37 Cal.App.4th 642 (Cal. Ct. App. 1995) (contract interpretation principles apply to settlements)
- Consumer Defense Group v. Rental Housing Industry Members, 137 Cal.App.4th 1185 (Cal. Ct. App. 2006) (Prop. 65 requires trial court findings before approving settlement, including that attorney’s fees are reasonable)