Neary v. Regents of University of California, No. S020515

CourtUnited States State Supreme Court (California)
Writing for the CourtBAXTER; LUCAS; MOSK; KENNARD
Citation834 P.2d 119,3 Cal.4th 273,10 Cal.Rptr.2d 859
Parties, 834 P.2d 119, 61 USLW 2116, 76 Ed. Law Rep. 463 George NEARY, Plaintiff and Appellant, v. The REGENTS OF the UNIVERSITY OF CALIFORNIA et al., Defendants and Appellants.
Docket NumberNo. S020515
Decision Date13 August 1992

Page 859

10 Cal.Rptr.2d 859
3 Cal.4th 273, 834 P.2d 119, 61 USLW 2116, 76 Ed. Law Rep. 463
George NEARY, Plaintiff and Appellant,
v.
The REGENTS OF the UNIVERSITY OF CALIFORNIA et al., Defendants and Appellants.
No. S020515.
Supreme Court of California,
In Bank.
Aug. 13, 1992.

[3 Cal.4th 275] Howard, Rice, Nemerovski, Canady, Robertson & Falk, Jerome B. Falk, Jr., Steven L. Mayer, Richard A. Marcantonio, San Francisco, Ramsey, Morrison, Wallis & Abramson and O.J. Ramsey, Jr., Sacramento, for defendants and appellants.

Keker & Brockett, John W. Keker and David J. Meadows, San Francisco, for plaintiff and appellant.

Morrison & Foerster, James J. Brosnahan, Grant L. Kim, Marc N. Bernstein, Mark W. Danis, Wright, Robinson, McCammon, Osthimer & Tatum, James C. Nielsen, Barnum, Balthazar & De Lara, Christine Balthazar, Carroll, Burdick & McDonough, Donald T. Ramsy, Rodney L. Eshelman and David M. Rice, San Francisco, as amici curiae.

BAXTER, Justice.

While this appeal was pending in the Court of Appeal, the parties agreed to settle their dispute and jointly requested the Court of Appeal to reverse the trial court's judgment in plaintiff's favor. The Court of Appeal declined to do so. The issue is whether a Court of Appeal should grant a [834 P.2d 120] stipulated request by all parties pending appeal to set aside a trial court judgment in order to effectuate the parties' agreement to settle their dispute and terminate further litigation. We hold that as a general

Page 860

rule parties are entitled to a stipulated reversal by the Court of Appeal absent a showing of extraordinary circumstances that warrant an exception. No such circumstances are present in this case, and we therefore reverse the judgment of the Court of Appeal.
FACTS

Plaintiff George Neary, a cattle rancher, obtained a jury verdict of $7 million in a libel action against the Regents of the University of California [3 Cal.4th 276] and three veterinarians employed by the University of California at Davis in its School of Veterinary Medicine (hereafter the University). The action arose from the University's publication of a report asserting that Neary had engaged in deficient ranch management practices that caused illness and death of many of Neary's cattle. Neary contended the cattle had been poisoned by a pesticide sprayed by governmental agencies to control an infestation of scabies mites.

Defendants appealed, and Neary cross-appealed. While the appeals were pending, the parties agreed to settle. Defendants would pay Neary $3 million, and in return, he joined with all defendants in a stipulation providing that: the appeals would be dismissed with prejudice, the Court of Appeal would vacate the trial court's judgment, and the action in the trial court would then be dismissed. Pursuant to this stipulation, the parties filed a joint application in the Court of Appeal asking it to reverse the trial court's judgment and remand the case to the trial court for dismissal with prejudice. The Court of Appeal rejected the request.

DISCUSSION

I. Appellate courts' authority

The threshold issue of whether an appellate court has the authority to reverse a trial court judgment to effectuate the parties' settlement of their dispute need not long detain us. Indeed, even though the Court of Appeal in this case declined the parties' request, the court did not conclude that it lacked the authority to grant the request. (Of course, the parties in this case, who are seeking the stipulated reversal, also agree that the appellate courts have this authority.) Likewise, we are aware of no provision in our state's Constitution or statutes that denies appellate courts the authority to reverse a judgment in order to effectuate a settlement and terminate further litigation.

Conversely, it is well established that California's Constitution provides the courts, including the Courts of Appeal, with inherent powers to control judicial proceedings. (Cal. Const., art. VI, § 1; Walker v. Superior Court (1991) 53 Cal.3d 257, 266-267, 279 Cal.Rptr. 576, 807 P.2d 418; Keeler v. Superior Court (1956) 46 Cal.2d 596, 600, 297 P.2d 967.) To the same effect, Code of Civil Procedure section 128, subdivision (a)(8) authorizes every court "[t]o amend and control its process and orders so as to make them conform to law and justice." This provision is consistent with and codifies the courts' traditional and inherent judicial power to do whatever is necessary and appropriate, in the absence of controlling legislation, to ensure the prompt, fair, and orderly administration of justice. The orderly termination of litigation the parties themselves no longer wish to pursue has a direct [3 Cal.4th 277] and substantial effect on the use and conservation of the appellate court's resources and is therefore a matter within the courts' inherent power to control its own processes. Moreover, when the parties themselves no longer wish to litigate, a stipulated reversal is consistent with the courts' authority to conform their orders with justice. (Code Civ.Proc., § 128, subd. (a)(8).) We hold that California's appellate courts have the legal authority to reverse (or otherwise vacate) a trial court's judgment when the parties stipulate to such action as a condition of a proposed settlement pending appeal.

[834 P.2d 121] II. The correct presumption in favor of settlement

We further conclude that, as a general rule, the parties should be entitled to a stipulated reversal to effectuate settlement absent a showing of extraordinary circumstances that warrant an exception to this general rule. This presumption in favor of a stipulated reversal is sound and salutary

Page 861

for several reasons. The facts of this case in particular demonstrate why the settlement should be effectuated pursuant to the parties' terms, including their request for a stipulated reversal.

A. The efficiency of postjudgment settlements

This court recognized a century ago that settlement agreements " 'are highly favored as productive of peace and good will in the community,' " as well as " 'reducing the expense and persistency of litigation.' " (McClure v. McClure (1893) 100 Cal. 339, 343, 34 P. 822.) The need for settlements is greater than ever before. "Without them our system of civil adjudication would quickly break down." (Lynch, California Negotiation and Settlement Handbook (1991), p. vii [foreword by California Supreme Court Chief Justice Malcolm M. Lucas].) Settlement is perhaps most efficient the earlier the settlement comes in the litigation continuum. The benefits of settlement, however, do not evaporate when judgment is entered.

A pretrial settlement does, of course, avoid the costs of trial. That much is a truism. It is also an incomplete assessment because it views the litigation process only with hindsight. The matter must also be viewed prospectively. Although a postjudgment settlement is perhaps less efficient than a pretrial one, equally true is that a postjudgment settlement is nonetheless efficient in its own right because it will preclude the need for future expenditures of time and money by the parties and the judiciary. Requiring parties to continue to litigate a matter over which there is no longer a real dispute "is wasteful of the resources of the judiciary." (Federal Data Corp. v. SMS Data Products Group (Fed.Cir.1987) 819 F.2d 277, 280 [directing administrative agency to vacate decision after parties settled].) Our appellate courts' own policies [3 Cal.4th 278] demonstrate this point. In 1985, one-half of the Courts of Appeal had no settlement program, either formal or informal. (Cal.Civil Appellate Practice (2d ed., Cont.Ed.Bar 1985) § 11.1, p. 329.) Four years later, settlement conference procedures were in place in every Court of Appeal with two exceptions. (Eisenberg, Cal.Practice Guide: Civil Appeals & Writs (The Rutter Group) p 6:2, p. 6-1.) At present, every Court of Appeal provides for settlement conferences, reflecting the now uniform recognition that the policy favoring settlement continues after judgment. Even more telling is the fact that Courts of Appeal throughout the state, including the Court of Appeal in this case, have routinely granted the parties' requests for stipulated reversals and similar procedures to effectuate settlement agreements. The principle that even a belated settlement saves resources is also well recognized in the federal courts. (Federal Data Corp. v. SMS Data Products Group, supra, 819 F.2d 277, 280; Nestle Co., Inc. v. Chester's Market, Inc. (2d Cir.1985) 756 F.2d 280, 282-283.) Indeed, "the Supreme Court has summarily vacated judgments in cases settled while pending on appeal after a court of appeals has refused to do so." (Id., at p. 282, citing New Left Ed. Proj. v. Board of Reg. of the U. of Tex. Sys. (5th Cir.1973) 472 F.2d 218, vacated 414 U.S. 807, 94 S.Ct. 118, 38 L.Ed.2d 43.)

The policy in favor of settlement, even when it requires a stipulated reversal, is rooted in practicality. If settlement on appeal is prohibited, the appeal must be heard and decided. If the judgment is reversed and retrial is allowed (not an unusual result), considerable future expense and trial court resources will be consumed. The present case is an excellent example of the merit of postjudgment settlements. The Court of Appeal's refusal to implement the parties' agreement would have the following consequences:

(1) The Court of Appeal would expend substantial resources in deciding the merits of the underlying appeal. The trial lasted [834 P.2d 122] four months. The record consists of 63 volumes of reporter's transcript containing nearly 13,000 pages and a 19-volume clerk's transcript of 5,366 pages. The action has been the subject of a prior appeal. (Neary v. Regents of the University of California (1986) 185 Cal.App.3d 1136, 230 Cal.Rptr. 281.) When settlement was reached during the present appeal, the Court of Appeal had already granted three defendants' requests to...

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106 practice notes
  • People v. Ledesma, No. S014394.
    • United States
    • United States State Supreme Court (California)
    • August 17, 2006
    ...a case while the appeal is pending are entitled to a stipulated reversal. (See Neary v. Regents of University of California (1992) 3 Cal.4th 273, 10 Cal.Rptr.2d 859, 834 P.2d 119.) The standard established in Neary was based, in large part, on policies relevant to the settlement of civil ac......
  • Nickerson v. Stonebridge Life Ins. Co., B234271
    • United States
    • California Court of Appeals
    • August 29, 2013
    ...expressly eschewed by the party it would benefit. As the Supreme Court stated in Neary v. Regents of University of California (1992) 3 Cal.4th 273, 10 Cal.Rptr.2d 859, 834 P.2d 119: “The primary purpose of the public judiciary is ‘to afford a forum for the settlement of litigable matters be......
  • Lealao v. Beneficial California, Inc., No. A085992.
    • United States
    • California Court of Appeals
    • July 10, 2000
    ...our Supreme Court has placed an extraordinarily high value on settlement (see, e.g., Neary v. Regents of University of California (1992) 3 Cal.4th 273, 277-280, 10 Cal.Rptr.2d 859, 834 P.2d 119, citing, inter alia, McClure v. McClure (1893) 100 Cal. 339, 343, 34 P. 822),17 it would seem cou......
  • Lealao v. Beneficial Calif.
    • United States
    • California Court of Appeals
    • July 10, 2000
    ...our Supreme Court has placed an extraordinarily high value on settlement (see, e.g., Neary v. Regents of University of California (1992) 3 Cal.4th 273, 277-280, citing, inter alia, McClure v. McClure (1893) 100 Cal. 339, 343),17 it would seem counsel should be rewarded, not punished, for he......
  • Request a trial to view additional results
106 cases
  • People v. Ledesma, No. S014394.
    • United States
    • United States State Supreme Court (California)
    • August 17, 2006
    ...a case while the appeal is pending are entitled to a stipulated reversal. (See Neary v. Regents of University of California (1992) 3 Cal.4th 273, 10 Cal.Rptr.2d 859, 834 P.2d 119.) The standard established in Neary was based, in large part, on policies relevant to the settlement of civil ac......
  • Nickerson v. Stonebridge Life Ins. Co., B234271
    • United States
    • California Court of Appeals
    • August 29, 2013
    ...expressly eschewed by the party it would benefit. As the Supreme Court stated in Neary v. Regents of University of California (1992) 3 Cal.4th 273, 10 Cal.Rptr.2d 859, 834 P.2d 119: “The primary purpose of the public judiciary is ‘to afford a forum for the settlement of litigable matters be......
  • Lealao v. Beneficial California, Inc., No. A085992.
    • United States
    • California Court of Appeals
    • July 10, 2000
    ...our Supreme Court has placed an extraordinarily high value on settlement (see, e.g., Neary v. Regents of University of California (1992) 3 Cal.4th 273, 277-280, 10 Cal.Rptr.2d 859, 834 P.2d 119, citing, inter alia, McClure v. McClure (1893) 100 Cal. 339, 343, 34 P. 822),17 it would seem cou......
  • Lealao v. Beneficial Calif.
    • United States
    • California Court of Appeals
    • July 10, 2000
    ...our Supreme Court has placed an extraordinarily high value on settlement (see, e.g., Neary v. Regents of University of California (1992) 3 Cal.4th 273, 277-280, citing, inter alia, McClure v. McClure (1893) 100 Cal. 339, 343),17 it would seem counsel should be rewarded, not punished, for he......
  • Request a trial to view additional results

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