Order: LOUIS CASTAGNA VS. ASBESTOS DEFENDANTS (B/P)AS REFLECTED ON EXHIBITS et al

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                                1 | PAUL V, LANKFORD (State Bar No. 181506)
PAUL LANNUS (State Bar No. 192551)

2 VAN Diba Bid eee vee LLP ELECTRONICALLY
tt. Diablo Blvd., Suite
3 Walnut Creek CA 94596 sopehr IL ED ala,
4 | Telephone: 925.300.3520 County of San Francisco.
Facsimile: 925.300.3386 JAN 12 2011
5 Clerk of the Court
Attorneys for Defendant BY: ALISON AGBAY
6 | FORD MOTOR COMPANY Deputy Clerk
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 CowuntTY OF SAN FRANCISCO
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b SAMUEL LEAL, ASBESTOS
13 *Plaintiff, BRAYTON GROUP 536
Vv.
14 CASE No. CGC-08-274807
ASBESTOS DEFENDANTS (B¢P),
15
Defendants.
16
17 | LOUIS CASTAGNA, Case No. CGC-07-274230
18 Plaintiff,
DEFENDANT Ford Motor ComPany’s
19 v. Motion JN Limine TO REQUIRE
DISCLOSURE OF SETTLEMENTS
20 | ASBESTOS DEFENDANTS (BP), AND SETTLEMENT-RELATED
AGREEMENTS (INCLUDING
21 Defendants. “AGREEMENTS TO AGREE”) ENTERED
INTO OR INTENDED BETWEEN PARTIES
22 To Tuts ACTION {MEL #32]
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27 * ‘The use of the term “plaintiff” as used herein refers to the plaintiff in a personal injury action and the

decedent in a wrongful death action; and the use of “plaintiff” shall refer to both plaintiff in the singular and plural, as
28 appropriate.
LANKFORD -|-

CRAWFORD
MORENO LLP

ATTORNEVSATLAW A.LANKFORD
CRAWFORD
MORENO LLP

ATTORNEYS ATLAW

A

GARY COATES,
Plaintiff, Case No. CGC-08-274784

v.
ASBESTOS DEFENDANTS (B“P),

Defendants.

CLEM FITZHUGH,
CASE NO. CGC-08-274645
Plaintiff,
Vv.
ASBESTOS DEFENDANTS (B“P),

Defendants.

DEFENDANT FORD MOTOR ComPANY’S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF
SETTLEMENTS AND SETTLEMENT-RELATED AGREEMENTS (INCLUDING “AGREEMENTS TO
AGREE”) ENTERED INTO OR INTENDED BETWEEN PARTIES TO Tas ACTION [MIL #32]eco KD HW

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LANKFORD
CRAWFORD

MORENO LLP
ATTORNEYS AT LAW

The above-named defendant (hereinafter “Defendant”) hereby moves this court for an
order in limine requiring plaintiff to inform all defendants and the court of any settlement
agreements or settlement-related agreements (including so called “agreements to agree”) that

plaintiff has reached or intends to enter into with other defendants in this action.

L
INTRODUCTION

Defendant believes plaintiff and certain named defendants in this action have entered into
or intend to enter into heretofore-undisclosed settlement or settlement-related agreements of
various types. The agreements may include, among others, sliding scale (“Mary Carter”)
agreements and so-called “agreements to agree,” the latter of which have been used in previous
asbestos-related cases in this and other jurisdictions. These agreements may provide for the
settling defendant’s participation at trial in a manner favorable to plaintiff. Alternately, and
typically in the case of “agreements to agree,” plaintiff and certain defendants formally or
informally agree that the agreeing defendant—-a party named and served in the action, who has
answered the complaint—shal! not appear at trial, and that plaintiff will not present evidence
against that defendant at trial. Counsel for these parties then settle the claims after trial has
concluded.

Because such agreements create the opportunity for fraud and collusion, the disclosure to
the court and other defendants is required by law and must be ordered by this court. Equitable
considerations also require such disclosure, which is necessary to guarantee a fair trial to non-
agreeing defendants (i.e., those defendants who have not entered into such agreements and
against whom plaintiff is pressing its claims in bona fide adversarial fashion). Moreover,
disclosure of such agreements to the jury is strongly favored, and is required whenever necessary
to guarantee the right to a fair trial of non-settling defendants.

Therefore, this court should order that plaintiff disclose all settlement and settlement-

related agreements to the court and to defendants before trial; and that all settlement-related

DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SHTTLEMENTS AND SETTLEMENT-RELATED
AGREEMENTS (INCLUDING “AGREEMENTS TO AGREE") ENTERED INTO OR INTENDED BETWEEN PARTIES 10 THIS ACTION
[MIL #82]wv

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MCKENNA LONG &
ALDRIDGE LLP
ATTORNEYS AT LAW
SAN FRANCISCO

agreements be disclosed to the jury to the extent necessary to understand the parties’ actual
interests and/or certain defendants’ absence from trial.
Tl.
ARGUMENT
The California Code of Civil Procedure and case law require that plaintiff disclose to
defendants and the court any settlement agreement or agreements to agree reached or intended
between plaintiff and a defendant. This requirement applies regardless of whether the settling
defendants’ active participation in the trial is anticipated and regardless of whether the agreement
contains sliding scale provisions. Such disclosure is required by law and is necessary to prevent

bias and/or collusion against and/or prejudice to Defendant.

A, UNDER THE CODE OF CIVIL PROCEDURE, SLIDING SCALE SETTLEMENT AGREEMENTS
MusT ALWaYs BE DiscLosED To THE CourT AND PARTIES, AND MUST BE
DISCLOSED To THE JURY WHEN DISCLOSURE IS NECESSARY To AVOID BrAs AND/OR
COLLUSION AND TO MakE CLEAR THE INTERESTS OF THE PARTIES
Cal. Civ. Proc. Code § 877.5 (hereinafter “section 877.5} mandates disclosure of any

sliding scale agreement, and provides that any such agreement entered into without prior

disclosure of the parties’ intentions is ineffective. Alcala Co. v. Superior Court (1996) 49

Cal-App.4th 1308, 1313 [57 Cal.Rptr.2d 349]. Disclosure must include the terms and provisions

of the agreement. Jd. Moreover, section 877.5 provides that when the settling defendant is to

appear as a witness at trial, the existence of the agreement and its terms shall be disclosed to the
jury. Alcala, 49 Cal.App.4th at 1313; Moreno v. Sayre (1984) 162 Cal. App.3d 116 [208 Cal.Rptr.

444].

One purpose of the disclosure requirement is to avoid fraud and collusion in the
presentation of evidence at trial.

The possibility of manipulation of evidence . . . was a matter of
concern prior to the enactment of [§ 877.5] because sliding scale
agreements were often kept secret from both the court and the non-
settling defendant. The California Legislature, in apparent
recognition of this problem, provided for mandatory disclosure . . .
to both the non-settling defendant and the court, and discretionary
disclosure to the jury. City of Los Angeles v. Superior Court (1986)
176 Cal.App.3d 856, 864 [222 CaL-Rptr 562].

DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SETTLEMENTS AND SETTLEMENT-RELATED

AGREEMENTS (INCLUDING "AGREEMENTS TO AGREE") ENTERED INTO OR INTENDED BETWEEN PARTIES TO THIS ACTION
IMiL #32]Bw Nh

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MCKENNA LONG &
ALDRIDGE LLP
ATTORNEYS AT LAW
SAN FRANCISCO

However, the more general purpose of the statute is to “avoid the primary mischief that
the fact finder will not understand the true alignment of the parties.” Alcala, 49 Cal.App.4th at
1317. In other words, the statute should be applied so as to guarantee maximum transparency
regarding the alignment and interests of the . . . parties. Thus, disclosure to the court and to
defendants is required regardless of whether the settling defendant will testify or otherwise
participate at trial. /d. at 1314 (stating the rule as requiring disclosure to the jury only under
particular circumstances, but requiring disclosure to the court and non-settling defendants
regardless of circumstances.)

Moreover, while the statute requires disclosure to the jury when the settling defendant is
expected to testify, nothing in the statute precludes the court from ordering disclosure under any
other circumstances under which the jury’s ignorance of the agreement would unfairly prejudice a
non-settling defendant. Thus, the court should exercise its discretion to disclose the existence of a
sliding-scale agreement anytime such disclosure is necessary to “avoid . .. the primary mischief
that the fact finder will not understand the true alignment of the parties.” fd. at 1317, For
example, the court should order disclosure when necessary to prevent the jury from forming the
impression that plaintiff’s faifure to present a case against the settling defendant is due to a lack of
evidence against the settling defendant.

B. “AGREEMENTS TO AGREE” ARE EFFECTIVELY SLIDING SCALE AGREEMENTS AND
THUS WITHIN THE SCOPE OF SECTION 877.5

The California Code of Civil Procedure defines a sliding scale agreement as one under
which the limitation of liability (.e. the amount of the settlement) depends upon the outcome of
the trial. Cal. Code Civ. Proc. § 877.5(b), Some agreements (so-called “Mary Carter”
agreements) typically include provisions setting the settlement amount in relation to the recovery
against the non-settling defendants. Alcala, 49 Cal.App.4th at 1312. However, section 877.5
should be understood as encompassing agreements without such explicit terms as well, especially
when such an understanding may be implied. While agreements to agree may not contain explicit
terms making the settlement amount dependent upon the plaintiff's recovery from the non-settling

-3-

DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SETTLEMENTS AND SETILEMENT-RELATED
AGREEMENTS (INCLUDING "AGREEMENTS TO AGREE") ENTERED INTO OR INTENDED BETWEEN PARTIES TO THIS ACTION
[MIL #32]28

MCKENNA LONG &
ALDRIDGE LLP
ATTORNEYS AT LAW
SAN FRANCISCO.

defendants, the postponement of agreement on a sum certain until after the conclusion of trial
indicates that such a relationship is contemplated. If this were not the implied understanding of
the parties, there would be no purpose in delayed settlement.

Nothing in the language of section 877.5 restricts its scope lo agreements with explicit
terms covering the amount of the settlement. Rather, the provision that the statute “includes, but
is not limited to, agreements within the scope of [Code of Civil Procedure] Section 877” suggests
that the disclosure requirement is to be broadly construed. Cal. Code Civ. Proc. § 877.5(b).
Therefore, the statute should be interpreted as covering any settlement agreement in which the
amount of the settlement remains undetermined until after trial, regardless of whether the
agreement contains a formula or other terms prescribing the method by which it will be
determined.

Cc DISCLOSURE IS REQUIRED REGARDLESS OF WHETHER THE SETTLING DEFENDANT
WILL APPEAR AT TRIAL AS A LITIGANT OR WITNESS

To foreclose “the primary mischief that the fact finder will not understand the true
alignment of the .. . parties,” disclosure to the court and the parties is always necessary and
required whether or not plaintiff anticipates calling the settling defendant as a witness and
regardless of whether the agreement provides for the settling defendant’s active participation at
trial. Alcala, 49 Cal.App.4th at 1317. Should a non-settling defendant attempt at trial to shift
lability to a settling defendant (as is any defendant’s right) and find the defendant called as a
rebuttal witness, the non-settling defendant deserves to know (and to make clear to the jury) the
actual alignment and interests of the settling defendant. Moreover, even if the settling defendant
is not called to testify, disclosure of the settlement may be the only way to keep the jury from
forming the impression that plaintiff's failure to present a case against the settling defendant is
due to a lack of evidence. Disclosure to the non-settling defendant is necessary so that the latter
may exercise its right to move for disclosure to the jury under the appropriate circumstances.

Finally, disclosure to the non-settling defendant is crucial so that the latter may, if appropriate,

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SETTLEMENTS AND SETTLEMENT-RELATED
AGREEMENTS (INCLUDING “AGREEMENTS TO AGREE") ENTERED INTO OR INTENDED BETWEEN PARTIES TO THIS ACTION
[Mi #32]28

MCKENNA LONG &
ALDRIDGE LLP
ATTORNEYS AT LAW
SAN FRANCISCO

prepare its own case on comparative fault or other issues against the settling defendant, rather

than assume that a case against that defendant be put on by the plaintiff.

D. CASE LAW EXTENDS THE DISCLOSURE REQUIREMENT TO NON-SLIDING
SCALE AGREEMENTS

Plaintiff is also under a duty to disclose non-sliding-scale agreement reached with plaintiff
pursuant to which the defendant remains in the case, Everman y. Superior Court (1992) 8
Cal. App.4th 466, 471, 10 Cal. Rptr.2d 176 (citing Pellet v. Sonotone Corp. (1945) 26 Cal.2d 705,
713 [160 P.2d 783]). Such an agreement has been determined not to be collusive as a matter of
law, but the “settling defendant’s position as a general rule should be revealed to the court and the
jury.” dd, at 471-72, Courts have long recognized that such agreements, even without sliding
scale provisions, threaten a “fraud upon the court” if not disclosed. Pellert, 26 Cal.2d at 713.

Absent specific information to the contrary, it is reasonable for the court, the parties and
the jury to assume that all defendants who proceed to trial—that is, who have been sued, who
have answered, and who have not been dismissed from the action—have not settled with plaintiff.
Under such circumstances it is also reasonable to assume that all no such defendants have not
reached agreements with plaintiff that would alter in degree or character those parties’ respective
adversarial positions. On the other hand, if a settling defendant appears at trial, non-settling
defendants, the court, and when appropriate the jury are entitled to know that the defendant has
entered into agreements potentially affecting its witnesses’ credibility or the arguments of its
counsel. Likewise, if the settling defendant does not appear at trial and plaintiff does not present
evidence or argument against that defendant, the non-settling defendant is entitled to make clear
to the jury why. Obviously, disclosure to the court and the parties is an essential predicate to such
disclosure. Failure to disclose, on the other hands, would operate as a fraud upon the court, non-

settling parties, and the jury.

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SETTLEMENTS AND SETTLEMENT-RELATED
AGREEMENTS (INCLUDING “AGREEMENTS TO AGREE") ENTERED INTO OR INTENDED BETWEEN PARTIES TO THIS ACTION
IMIL #32)YD vw B® Ww

28

MCKENNA LONG &
ALDRIDGE LLP
ATTORNEYS AT LAW
SAN FRANCISCO

E. ENFORCEMENT OF CODE OF CIViL PROCEDURE SECTION 877 AND GENERAL
EQUITABLE CONSIDERATIONS REQUIRE THAT ALL SETTLEMENT AGREEMENTS,
INCLUDING AGREEMENTS TO AGREE, BE DISCLOSED AT LEAST To THE COURT AND
OTHER DEFENDANTS

Cal. Civ. Proc. Code § 877 provides that a settlement agreement between a plaintiff and
any one of multiple alleged tortfeasors shall reduce the claims or judgment against other alleged
tortfeasors in the amount stipulated by or paid in consideration for the release. In order to ensure
that this provision is properly applied, i.e., that settlements are properly credited to the claims or
judgment against non-settling defendants, the court and the parties obviously must be able to
track and account for all settlements. Moreover, when settlement agreements for sums certain are
entered into prior to verdict, non-settling defendants are entitled to introduce the aggregate
amount of settlements for purposes of offset. Steele v. Hash (1963) 212 Cal.App.2d 1, 3-4 [27
Cal.Rptr. 853].

Moreover, in moving an action from verdict to judgment, the court should be able to
ascertain whether and in what manner all outstanding claims have been resolved. This is
particularly critical in view of the court’s duty to ensure proper crediting of setilements to the
judgment as required by section 877. Undisclosed “agreements to agree” render this process
difficult, because they may remain unfulfilled long after a verdict is returned. Moreover, should
the court under those circumstances delay entering judgment and resolving claims for costs in
order to guarantee the finality of its actions (as some courts have), that delay may seriously
prejudice non-settling defendants. For example, while judgments and costs determinations are
delayed, one of several non-settling defendants may file for bankruptcy. With the trial court thus
rendered unable to enter a judgment and/or costs order against the protected bankrupt defendant,
other non-settling defendants would be deprived of any basis for claims for contribution or
equitable indemnity.

This is merely one example of the prejudice, not to mention inefficiency and confusion,
that can result from the use of “agreements to agree,” particularly where the agreements are not
properly monitored by the court. Disclosure of such agreements is thus a prerequisite to proper

oversight. Without it, prejudice, inefficiency and confusion are likely to be compounded.
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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SETTLEMENTS AND SETTLEMENT-RELATED
AGREEMENTS (INCLUDING "AGREEMENTS TO AGREE”) ENTERED INTO OR INTENDED BETWEEN PARTIES TO THIS ACTION
{MIL #32}28

MCKENNA LONG &
ALDRIDGE LLP
ATTORNEYS AY LAW
SAN FRANCISCO

Finally, non-settling defendants are entitled to have all defendants listed on the special
verdict form on which the jury records its findings of comparative fault. Disclosure of those
parties that remain in the case in “agreement to agree” status is necessary to ensure the accuracy
and completeness of the special verdict form in this respect.

For these additional reasons, all “agreements to agree,” along with other sliding scale and
non-sliding scale settlement agreements reached between parties to the action, must be disclosed
to the court and all parties.

F. CALIFORNIA EVIDENCE Cobe SECTION 1152 Does Not BAR THE REQUESTED
DISCLOSURE

Plaintiff may argue that Cal. Evid. Code § 1152 bars disclosure of settlement agreements
to non-settling defendants and to the jury. However, both on its face and as interpreted by case
law, that statute merely bars the introduction into evidence of settlement agreements when offered
to prove a party’s liability; it does not limit the admissibility of such agreements for other
purposes or limit their disclosure. J. Allen Radford Co. v. Superior Court (1989) 216 Cal.App.3d
1418, 1424 [265 Cal.Rptr. 535] (terms of sliding scale agreement must be disclosed to non-
settling defendant to permit the latter to contest motion for confirmation of good faith settlement
under Cal. Cade Civ. Proc. § 877.6); Fletcher v. Western Nat'l Life Ins. Co., 10 Cal.App.3d 376,
396 [89 Cal. Rptr. 78 (1970)]; Steele, 212 Cal_App.2d at 3-4 (evidence of prior settlements
admissible for purpose of reducing recoverable damages). Moreover, courts routinely hold that
settlement agreements are admissible to demonstrate the bias of a witness. See e.g., Moreno v.
Sayre (1984) 162 Cal.App.3d 116 [208 Cal. Rptr. 444].

Because Cal. Evid. Code § 1152 applies only in the limited situation where a party seeks
to introduce a settlement agreement to prove liability, it imposes no limitation on the disclosure
sought herein.

wi.
CONCLUSION

For the reasons stated above, this court should order:

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SETTLEMENTS AND SETTLEMENT-RELATED
AGREEMENTS (INCLUDING “AGREEMENTS TO AGREE") ENTERED INTO OR INTENDED BETWEEN PARTIES TO THIS ACTION
[MIL #32]28

MCKENNA LONG &
ALDRIDGE LLP
ATTORNEYS AT LAW
SAN FRANCISCO

1. that plaintiff disclose all settlement and settlement-related agreements to the court
and to defendants before trial; and

2. that all settlement-related agreements and terms thereof be disclosed to the jury to
the full extent necessary to make clear the parties’ actual interests and/or certain defendants’

absence from trial.

Dated: December 2, 2010 LANKFORD CRAWFORD MORENO LLP

a

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ett Man

PAUL V. LANKFORD
PAUL LANNUS

By:

Attorneys for Defendant
FORD MOTOR COMPANY

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO REQUIRE DISCLOSURE OF SETTLEMENTS AND SETTLEMENT-RELATED
AGREEMENTS (INCLUDING "AGREEMENTS TO AGREE”) ENTERED INTO OR INTENDED BETWEEN PARTIES TO THIS ACTION
[uit #32]