Provost v Regents of the University of California 12/14/11

CCP section 664.6; Enforcement; Mediation confidentiality

          Plaintiff was employed as an anesthesiologist at the UC Irvine Medical Center. He filed a complaint against the Regents and two physicians under the Whistleblower Protection Act (Gov. Code section 8547, et seq.) claiming he was wrongfully terminated after he reported alleged illegal conduct by defendants. The parties attended mediation in 2007 and again in 2008. Following the last session in April 2008, they resumed the process, resulting in a stipulated settlement including payment of $475,000 to plaintiff and a dismissal of the entire action. The settlement stated that it was subject to approval of the Regents. The stipulation was signed by four people: (1) plaintiff, (2) one of his lawyers, (3) one of Regents’ in-house counsel, Carolyn Yee, who had been appointed as the party representative and authorized to sign on behalf of Regents, and (4) defendants’ lawyer. Yee had attended all of the mediation sessions as the party representative.

One week later, plaintiff’s counsel filed a notice of settlement of the entire case. Defense counsel prepared a final settlement document and in September, Regents approved the stipulated settlement. In the meantime, plaintiff personally sent a letter to the trial judge stating he had become aware of certain “irregularities” prior to the mediation. He mentioned that he had spoken to the State Bar and would like time to get “an independent legal opinion” on those issues “prior to any further processing” of the action. The court replied with copies to all counsel, that it could not communicate personally with plaintiff.

At a voluntary settlement conference in October, plaintiff told the court he would not sign the final settlement agreement. This was the first time defendants received definitive confirmation plaintiff was not willing to execute the document. Regents filed a motion to enforce the stipulated settlement under Code of Civil Procedure section 664.6, which the court denied on the basis that Regents had not signed the stipulated settlement because Yee was their in-house lawyer, and not a party. Regents then filed a petition for writ of mandate arguing Yee was properly designated as a party representative and could sign. An alternative writ was issued, and the trial court held a rehearing, at which time the motion was granted. A judgment was then entered, and this appeal followed.

The Fourth Appellate District, Division Three noted that section 664.6 declares a settlement may be enforced by motion if the writing is signed by the parties. (Levy v Superior Court (1995) 10 Cal.4^th 578) Plaintiff argues the stipulated settlement was never signed by Regents because Yee’s signature was ineffective. In Levy, lawyers for two individual parties executed a writing settling the case, but the plaintiff refused to sign. The Supreme Court determined that under the statute, “parties” means the litigants themselves. The Justices noted that lawyers may take action incidental to the management of the lawsuit, but settling a case is not incidental and requires the client’s knowledge and express consent. As a result, the settlement agreement signed in Levy, not being signed by plaintiff, was not enforceable, under section 664.6.

In Gauss v GAF Corp. (2002) 103 Cal.App.4^th 1110, relying on Levy,  the court refused to enforce a settlement under 664.6, despite the fact the defendant corporation had specifically designated the signatory as its “sole agent” and given it exclusive authority and discretion to settle the case. The appointed signer was an employee of an outside company defendant had formed and contracted with to handle the multitude of mass tort actions in which it was involved. The defendant argued that a signature by its exclusive agent was sufficient because a corporation can act only through its employees and agents.

The Fourth DCA opined that to interpret Gauss to preclude enforcement of a settlement under 664.6 unless the document has been signed by a corporate officer is too narrow. The Justices read the opinion to state that the settlement was not enforceable under section 664.6 because it was not signed by an authorized corporate representative. (Gauss, at p. 1120) Here, Yee was employed by the Regents in the Office of the General Counsel. She was designated as the party representative by Regents’ General Counsel, an officer and the person in charge of all legal matters pertaining to the University. As such, he had authority to appoint Yee. As an employee of Regents, Yee could be designated as the party representative to execute the settlement on its behalf.

Yee’s designation and action on behalf of Regents fully satisfies the rationale of Levy, which instructs that the litigants direct participation tends to ensure that the settlement is the result of their mature reflection and deliberate assent. This protects the parties against hasty and improvident settlement agreements by impressing upon them the seriousness and finality of the decision to settle, and minimizes the possibility of conflicting interpretations of the settlement. It also protects the parties from impairment of their substantial rights without their knowledge and consent. (Levy, at p. 585) Yee was familiar with the case, understood the seriousness of the terms, and settled within Regents’ guidelines, as evidenced by their subsequent approval of the agreement.

The decision does not extend to apply to any employee of a corporation in any circumstance. On the other hand, holding that an officer, as opposed to another designated and qualified employee, must sign a settlement for it to be enforceable under section 664.6 makes no practical sense.  When the signer is an employee, under the circumstances presented here, there is no reason why, merely by virtue of their size, that large corporations or entities that are involved in a multitude of lawsuits should be deprived of access to the summary process of section 664.6. It was enacted to provide “an expedient and cost effective means of enforcing a settlement agreement” and as a valid alternative to a motion for summary judgment and other methods of enforcement. (City of Fresno v Maroot (1987) 189 Cal.App.3d 755)  Yee signed as a designated employee of the corporate party, and just because she happened to be an attorney does not prohibit her from acting on Regents’ behalf.

Plaintiff next argues the settlement is not enforceable because it was conditioned upon approval by Regents and he revoked his agreement before Regents approved the settlement. The Justices turned to the record which contained the letter written by plaintiff to the court. The letter contains no revocation language. It merely stated that he wanted to speak to the State Bar. Nor is there any evidence the purported revocation was ever communicated to the Regents. Instead, the evidence is that the Regents first learned of plaintiff’s revocation at the voluntary settlement conference. Plaintiff also argues there was neither mutual consent nor an intent to be bound. On the merits, the argument fails, because the parties expressed mutual consent and an intention to be bound by executing the stipulated settlement, which states it “is binding on the parties,” and which Regents then formally approved. (See Stewart v Preston Pipeline, Inc. (2005) 134 Cal.App.4^th 1565)

Plaintiff also seeks reversal by asserting that the stipulated settlement cannot be enforced because he was coerced into signing it by both defendants’ counsel, and his own. He contends that, at the mediation, the mediator told him Regents would have criminal charges filed against him if he did not sign the stipulated settlement that night. His own lawyers informed him juries in Orange County are “pro-defense” and he had little chance of success at trial. If he did prevail the award would likely be low.  The Justices refrained from commenting on the substance of the alleged duress and coercion, which defendants denied, but found the trial court correctly determined the evidence plaintiff presented was protected from disclosure by the mediation privilege. (Evidence Code section 1119(a)

Section 1119(a) provides “no evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled …” and further, all communications, negotiations, or settlement discussions by and between participants in the course of a mediation shall remain confidential. The statutes unqualifiedly bar disclosure of communications made during mediation absent an express statutory exception. (Foxgate Homeowners’Assn. v Bramalea California, Inc. (2001) 26 Cal.4^th 1)

Plaintiff seized on language in Foxgate that allows a party to report obstructive conduct in mediation to the court. (Foxgate, at p. 17) But what plaintiff attempted to report was not conduct but communications. An example of conduct that was legally disclosed was a party’s failure to attend court-ordered mediation. (Campagnone v Enjoyable Pools & Spas Service & Repairs, Inc. (2008) 163 Cal.App.4^th 566) That court strictly limited its ruling, holding that “reporting anything more may violate the confidentiality rules.” (Campagnone, at p. 572) Plaintiff also argues the conduct was so egregious the confidentiality requirement could not shield it. But in banning any court-created exceptions to the statutory confidentiality protections, the Supreme Court emphasized that the Legislature had weighed the possibility of some unfair results against the strong public policy supporting mediation and come down on the side of mediation. (Foxgate, at p. 17) There  is no exception for “good cause.” (Rojas v Superior Court (2004) 33 Cal.4^th 407)

After disposing of several additional arguments by appellant, the 4^th DCA affirmed the judgment, and granted respondents their costs on appeal.