Galinis v. Bayer Corp.
| Decision Date | 14 April 2020 |
| Docket Number | Case No. 09-cv-04980-SI (RMI) |
| Parties | SUSAN GALINIS, et al., Plaintiffs, v. BAYER CORPORATION, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Now pending before the court are dueling motions to enforce a settlement agreement filed by both parties, as well as a motion for sanctions filed by Plaintiffs. On October 11, 2019, the parties agreed to a settlement of this case, the terms of which were placed on the record. See (dkt. 170); see also Transcript ("Tr.") (dkt. 207 *SEALED*). Later that day, the Parties jointly filed a Statement of Settlement (dkt. 169), through which they confirmed that they had arrived at an agreement as to all material terms for all matters in controversy. Id. at 3. Thereafter, in February of 2020, Plaintiffs and Defendants ("Bayer") both filed motions to enforce the settlement agreement. (dkts. 193, 201). For the reasons described below, Plaintiff's motion to the enforce the agreement is granted, Plaintiffs' request for sanctions is denied, and Bayer's motion to enforce the agreement is granted in part and denied in part.
On October 11, 2019, in the course of a telephonic settlement conference, the parties reached an agreement. See Tr. (dkt. 207 *SEALED*) at 2. Plaintiffs' counsel then proceeded to enumerate the terms of the agreement for the record as such: (1) Plaintiffs will accept Defendant's offer of a certain sum of money in full settlement of all their claims; (2) the funds will be paid by check or wire transfer to counsel for Plaintiffs; (3) Plaintiffs will sign releases containing a general release of all claims and a waiver of all rights under California Civil Code Section 1542; (4) Plaintiffs will agree to satisfy all liens from the settlement proceeds and to indemnify Defendants from any lien claims brought by any lienholder; (5) Plaintiffs will dismiss their complaint with prejudice, with each side bearing its own costs and fees; (6) having agreed to certain confidentiality provisions, the Parties expected to finalize those details later that evening; (7) "[a]nd there are no other terms." Id. at 2-3. The court then asked whether Bayer agreed with these terms and agreed to be bound by them; counsel for Bayer responded, Id. at 3. The court then asked counsel for Plaintiffs, "having stated the terms for the record and with the authority of Plaintiffs, do you agree to be bound by them as well?" Id. Plaintiffs' counsel likewise responded in the affirmative. Id. at 4. As to the remaining details pertaining to the confidentiality provision, the court told the parties that they could be "relieved of the deadlines that are due tonight if they're able to file a notice with the court that they have finalized . . . the remaining portion that the parties were discussing." Id. at 4. As mentioned, later that day, the parties filed their joint notice of settlement. See (dkt. 169). At the heart of the parties' current dispute is the nature of the releases that Plaintiffs agreed to execute, as well as what might be an appropriate protocol for the resolution of liens; accordingly, each party has moved for an order that would enforce their interpretation of these terms of the settlement agreement. See generally Pls.' Mot. (dkt. 193-1), and Def.'s Mot. (dkt. 201).
On February 3, 2020, Plaintiffs moved for enforcement and submitted that they have complied with all terms of the parties' settlement agreement by providing Bayer with the required release, and with their agreement to satisfy all liens, to indemnify Bayer from claims brought by any lienholder, and to dismiss their claims with prejudice. Pls.' Mot. (dkt. 193-1) at 3. Submitting that although the terms of the settlement agreement did not require it, Plaintiffs also authorized Bayer to deduct the sum for the common benefit award found by Judge Illston to be reasonable (see Order (dkt. 192) at 6) from the settlement proceeds and to pay that amount directly to the common benefit fund for the Multi-District Litigation ("MDL"). See Pls.' Mot. (dkt. 193-1) at 3.Plaintiffs, therefore, suggest that "Bayer's continued refusal to disburse the funds is not only a breach of the parties' settlement agreement, it would also appear to be a violation of Judge Illston's order." Id. at 4. Lastly, Plaintiffs seek an award of sanctions, including attorney's fees for bringing the enforcement motion as well as interest on the settlement proceeds from the date of Plaintiffs' Motion until the time that the settlement funds are disbursed. See id. at 1, 5-6.
On February 18, 2020, Bayer filed its own enforcement motion and submitted that Plaintiffs should be made to sign the standard release form that Bayer has used in settlements for other cases that also involve drospirenone-containing oral contraceptives, which includes key elements missing from Plaintiffs' release, such as warranties that Plaintiffs have capacity, authority, and that they have conferred with their counsel, as well as providing for a particular lien resolution protocol. See Defs.' Mot. (dkt. 201) at 5-6. At bottom, Bayer contends that "Plaintiffs' unilateral interpretation of the settlement terms is fundamentally inapplicable in a settlement context, for it does not end the litigation between the parties, as they intended." Id. at 6. Thus, Bayer adds that "it simply cannot agree to Plaintiff's purported release . . . [because] it cannot provide closure to either side." Id. In more than 19,000 other settlements involving the same class of medications, Bayer notes that it has insisted on the use of a standard release form, entitled, "Release, Indemnity, and Assignment" (hereafter, "Yasmin Release"), and that Plaintiffs' counsel was aware of Bayer's practice in these other cases due to having been involved "in dozens of such cases." Id. at 8. According to Bayer, the differences between the release executed by Plaintiffs and the Yasmin Release are "provisions that would guarantee Plaintiffs have not assigned away their claims to others, warrant that Plaintiffs have the capacity to execute the settlement, provide consent and acknowledge that Bayer must report the settlement to Medicare, and outline a lien resolution protocol designed to avoid future litigation between the parties over settlement fund distributions." Id. at 9. Thus, while Bayer maintains that "[t]he parties agree that a settlement was reached in October 2019 during a telephone call with Judge Illman," that nevertheless, "[o]nly Bayer's release permits the parties to move on." Id. at 11.
In this respect, Bayer contends that failure to use the Yasmin Release "leaves the parties in a world where future litigation is likely, if not inevitable." Id. Because Plaintiffs' release containsno provision "where the claimants and counsel warrant, among other things, that Plaintiffs actually have the authority to execute the release and that Plaintiffs have not sold or transferred their claims to someone else," Bayer submits that "there is no release because Bayer secures no assurance that the parties to whom they are paying the settlement funds can actually settle the case." Id. at 11-12. Likewise, Bayer argues that the same is true due to the fact that Plaintiffs' release fails to represent or warranty that Plaintiffs have had the opportunity to confer with their counsel to discuss the settlement. Id. at 12. Bayer also submits that, unlike Plaintiffs' release, the Yasmin Release contains a preferable lien resolution protocol such that Plaintiffs and their counsel identify lienholders and arrive at agreements with those parties about how to resolve the liens, and then to represent to Bayer that they have identified liens and agreed to pay those liens from settlement funds. Id. at 12 n.5. Bayer contends that "[a]bsent such a provision, lienholders will have recourse to sue Bayer (and potentially Plaintiffs' counsel)." Id. at 12. This sort of uncertainty, Bayer submits, does not Id. Bayer further submits that while "Plaintiffs agreed to sign a release," the Parties dispute whether or not such release should extend not only to Bayer, but also to subsidiaries, suppliers, distributors, and directors, where Plaintiffs contend that such a broad release was not negotiated and not included in the settlement terms placed on the record. Id. at 13. Once again, Bayer submits that the provisions contained in the Yasmin Release should be binding on Plaintiffs in this case because Plaintiffs' counsel have been "parties to dozens of these settlements and have always used the standard release," and thus, "[w]here two parties have an extensive course of dealing with one another prior to entering into a contract, the meaning of the contractual terms is informed by that course of dealing." Id. at 14-16.1 Bayer also contends thatPlaintiffs' waiver of rights under California Civil Code § 1542 is defective because that section of the civil code was amended more than a year ago, but that Plaintiffs' release quotes the pre-amendment language. Id. at 13. Lastly, Bayer argues that Plaintiffs' sanctions demand is meritless because Bayer has worked with Plaintiffs in good faith to resolve this dispute, including suggesting that the parties work with the undersigned to that end "mere hours after Plaintiffs sent Bayer a purported release omitting key release provisions bringing finality to the litigation . . ." Id. at 17-18.
By the time the Parties filed their reply briefs, the issue concerning the appropriate amount that should be paid to the common benefit fund was resolved when Judge Illston fixed the amount at 6...
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