Reynoso et al v. City and County of San Francisco et al
Filing
179
ORDER by Judge Maria-Elena James vacating hearing on Motion to Set Aside;denying 169 Motion to Set Aside. (mejlc3, COURT STAFF) (Filed on 8/16/2016)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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MALAQUIAS REYNOSO, et al.,
Case No. 10-cv-00984-MEJ
Plaintiffs,
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ORDER VACATING HEARING;
DENYING PLAINTIFF'S MOTION TO
SET ASIDE SETTLEMENT AND
DISMISSAL
v.
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CITY AND COUNTY OF SAN
FRANCISCO, et al.,
United States District Court
Northern District of California
Re: Dkt. No. 169
Defendants.
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INTRODUCTION
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In March 2010, plaintiffs Malaquias and Cayenta Reynoso (“Plaintiffs”) initiated an action
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against defendants the City and County of San Francisco (the “City”); the United States; the
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Bureau of Alcohol, Tobacco, and Firearms (“ATF”); and ATF Agent Megan Long (together,
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“Defendants”). See Compl., Dkt. No. 1. In May 2014, the Court dismissed this case after the
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parties settled their dispute and requested the action be dismissed with prejudice. See Dkt. No.
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165. Pursuant to Federal Rule of Civil Procedure 60(b), Plaintiffs now move the Court to set aside
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the settlement and dismissal. See Mot., Dkt. No. 169. The City filed an Opposition (City Opp’n,
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Dkt. No. 176); the United States and Agent Long filed a separate Opposition (Fed. Opp’n, Dkt.
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No. 178). Plaintiffs did not file a reply.
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Pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7-1(b), the Court
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finds this matter suitable for disposition without oral argument and VACATES the September 1,
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2016 hearing. Having considered the parties’ positions, the relevant legal authority, and the record
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in this case, the Court DENIES Plaintiff’s Motion.
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//
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BACKGROUND
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Plaintiffs allege that on June 18, 2009, San Francisco Police Department officers and ATF
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agents unlawfully entered and searched Plaintiffs’ home, caused considerable property damage,
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and seized $200,000 cash. Third Am. Compl. ¶¶ 16, 18, 30, 35, 43, Dkt. No. 57.1
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On January 10, 2014, Plaintiffs appeared before the Honorable Laurel Beeler for a
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settlement conference. See Dkt. No. 162. They were represented by an attorney and were
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provided a certified Spanish interpreter. Hg. Tr. at 1-3, Dkt. No. 175. That day, the parties
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reached a settlement and read the terms of the settlement into the record. On the record, Judge
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Beeler summarized the settlement and asked Plaintiffs if they understood and accepted its terms.
She stated, “The settlement of the case is for $30,000. That $30,000 will go directly to the
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United States District Court
Northern District of California
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[Plaintiffs.]. . . That payment is in return for the dismissal of the case; that is, all claims, all
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defendants, with prejudice.” Id. at 4:7-11. She further explained the written settlement agreement
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would “include[] a release of any and all claims for the subject matter of the case . . . . that were
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brought or could have been brought, arising out of the subject matter – out of the case.” Id. at
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4:12-20. Judge Beeler then specifically asked Plaintiffs, through the interpreter, “[d]o you
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understand the terms of the settlement agreement as I recited them to you, the $30,000 payment in
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return for dismissal of all the claims? Do you understand the settlement?” Id. at 7:13-16. Mr.
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Reynoso expressed disappointment with the settlement amount, and Judge Beeler asked him
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again, “[t]he question is do you understand it? . . . Do you understand the terms?” Id. at 7:19-22.
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Mr. Reynoso indicated he understood. Id. at 7:23. Judge Beeler then asked Mrs. Reynoso if she
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understood, and Mrs. Reynoso indicated she did. Id. at 7:24-25. Judge Beeler asked Plaintiffs if
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they understood that, “if you accept the terms of the settlement, it ends the case and you can’t
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reopen it?” Id. at 8:1-6. Both Plaintiffs indicated they understood. Id. at 8:4-7. Finally, Judge
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Beeler asked Plaintiffs if they accepted the terms of the settlement agreement. Id. at 8:8-17. Mrs.
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This case was originally assigned to the Honorable Susan Illston. A detailed factual background
can be found in Judge Illston’s Order Regarding Defendants’ Motion to Dismiss the Third
Amended Complaint. Dkt. No. 74 at 2-3. After Judge Illston issued that order, the parties
consented to this Court’s jurisdiction (Dkt. No. 97), and the matter was reassigned to the
undersigned.
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Reynoso indicated she did; after reiterating his disappointment with the amount being offered to
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settle his claims, Mr. Reynoso also indicated he accepted the terms. Id.
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The parties then expressed their agreement in a written Stipulation for Compromise
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Settlement and Release (“Stipulation for Settlement”). Stip. for Settlement, Dkt. No. 164. That
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document provides the parties “do hereby compromise each and every claim of any kind, whether
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known or unknown, arising directly or indirectly from the acts or omissions that gave rise to the
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above-captioned action under the terms and conditions set forth in this Agreement.” Id. at 2. It
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states the $30,000 settlement amount “shall be in full settlement and satisfaction of any and all
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claims, demands, rights, and causes of action of whatsoever kind and nature, arising from . . . the
subject matter of this settlement.” Id. It contains a separate release clause wherein Plaintiffs
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United States District Court
Northern District of California
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reiterate the release of all claims relating to the subject matter and also a waiver of California Civil
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Code § 1542. Id. at 3-4. The Stipulation for Settlement further represents that the parties have
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“had the contents of the Agreement fully explained” to them “by counsel, that each party has had
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the opportunity to obtain translation services to ensure proper translation of the contents of this
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agreement and is fully aware of and understands all of the terms of the Agreement and the legal
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consequences thereof.” Id. at 4. Plaintiffs signed the document. Id. at 5. The Court granted the
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Stipulation for Settlement on January 16, 2014, and dismissed the case on May 20, 2014 after the
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parties filed a stipulation of dismissal. Dkt. Nos. 165, 167.
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Throughout the proceedings leading up to the January 2014 settlement conference,
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Plaintiffs’ attorneys repeatedly missed Court-ordered deadlines and failed to respond to Court
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orders. Plaintiffs’ first attorney was suspended from practicing law during his representation of
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Plaintiffs in this matter; he subsequently resigned from the State Bar of California while
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disciplinary charges against him were pending. Mot. at 6; Higginbotham Decl. ¶ 22. Plaintiffs’
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second attorney was sanctioned by this Court for failing to obey Court orders (although the
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sanction was subsequently discharged). Dkt. Nos. 151, 163. The second attorney subsequently
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was disbarred.
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In February 2014, three of the officers who raided Plaintiffs’ home were indicted for
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corruption and conspiracy to commit theft; they either entered into a plea agreement or were
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convicted of several charges. Mot. at 5-6; Higginbotham Decl. ¶¶ 15-18, Dkt. No. 169-1.
LEGAL STANDARD
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Pursuant to Rule 60(b), a party can obtain relief “from a final judgment, order, or
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proceeding” on a number of specified grounds and for “any other reason that justifies relief” (Fed.
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R. Civ. P. 60(b)(6)). A Rule 60(b)(6) motion “must be made within a reasonable time.” Fed. R.
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Civ. P. 60(c)(1).
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However, relief from judgment under Rule 60(b)(6) is only available in “extraordinary
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circumstances.” See Latshaw v. Trainer Wortham & Co., 452 F.3d 1097, 1103 (9th Cir. 2006)
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(Rule 60(b)(6) is “used sparingly as an equitable remedy to prevent manifest injustice and is to be
utilized only where extraordinary circumstances prevented a party from taking timely action to
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United States District Court
Northern District of California
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prevent or correct an erroneous judgment.”) (citations omitted)). The party seeking relief under
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Rule 60(b)(6) bears the burden of demonstrating “both injury and circumstances beyond his
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control that prevented him from proceeding with . . . the action in a proper fashion.” Community
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Dental Servs. v. Tani, 282 F.3d 1164, 1168 (9th Cir. 2002) (“Tani”). Courts have held that only
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“gross negligence” that amounts to “virtual abandonment” by an attorney constitutes
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circumstances that justify setting aside a judgment under Rule 60(b)(6). See Lal v. California, 610
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F.3d 518, 525 (9th Cir. 2010); Latshaw, 452 F.3d at 1103.
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But whereas courts in the Ninth Circuit have relieved parties from judgment where the
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gross negligence of an attorney resulted in a default judgment or dismissal for failure to prosecute,
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they have declined to relieve parties pursuant to Rule 60(b)(6) where the judgment was based on a
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settlement. See Latshaw, 452 F.3d at 1103-04 (“We decline to extend the holding of Tani to the
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context of Rule 68 judgments and therefore conclude that [the attorney’s] gross negligence does
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not provide grounds to vacate the judgment under Rule 60(b)(6).”); see also United States v. Bank
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of New York, 14 F.3d 756, 760 (2d Cir. 1994) (where parties in criminal action “made free,
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bilateral decision to settle” court declined to set aside dismissal under Rule 60(b)(6) because “[a]
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failure to properly estimate the loss or gain from entering a settlement agreement is not an
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extraordinary circumstance that justifies relief under Rule 60(b)(6)” (citation omitted)).2
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DISCUSSION
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Plaintiffs seek relief because, after they entered into the Stipulation for Settlement in
January 2014, three of the officers who allegedly stole their property were indicted on similar
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criminal charges. See Mot. at 3-6. After the Court dismissed this case pursuant to the terms of the
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Stipulation for Settlement, the three officers either pleaded to, or were convicted of, those charges.
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Id. Plaintiffs contend the criminal convictions would have supported their claims in this civil
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case; they further contend they were prevented from using the information because their lawyer
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coerced them into settling after this Court threatened to dismiss the action. Id. at 8-10. Plaintiffs
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argue their Motion, despite being filed more than two years after judgment was entered, is timely
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United States District Court
Northern District of California
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because the delay was due to the incompetence of their prior counsel. Id. at 10-11. Plaintiffs’
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arguments are defeated by the facts and the law.
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A.
Rule 60(b)(6) Does Not Apply To Settlements
Because they voluntarily settled their claims, Plaintiffs cannot invoke Rule 60(b)(6) to
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obtain relief from judgment. While the Ninth Circuit does not favor default judgments and similar
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outcomes that dismiss claims without assessing them on their merits, it encourages voluntary
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settlements. Compare Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986) (“[D]efault
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judgments are ordinarily disfavored. Cases should be decided upon their merits whenever
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reasonably possible”), with United States v. McInnes, 556 F.2d 436, 441 (9th Cir. 1977) (“We are
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committed to the rule that the law favors and encourages compromise settlements.”). The Court
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did not enter default judgment against Plaintiffs or dismiss their case for failure to prosecute; it
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dismissed the case based on the stipulation of the parties, which the parties filed after settling.
The Ninth Circuit has declined to apply Rule 60(b)(6) to set aside judgments entered
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pursuant to a settlement. See Latshaw, 452 F.3d at 1099. For instance, the plaintiff in Latshaw
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Cf. Marcotte v. Burlington N. Santa Fe Rail Corp., 2007 WL 5685130, at *18 (D. N.M. Oct. 11,
2007) (while some Circuits do not impose “a heightened standard” on parties seeking relief from
judgments entered as the result of settlements, all courts agree “that a movant cannot obtain relief
under rule 60(b) because he simply misunderstands or fails to predict the legal consequences of his
deliberate acts” (citation and internal quotation marks omitted)).
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originally felt the settlement offer she received was “grossly insufficient.” Id. But after her
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attorneys told her they would resign if she did not accept the offer, and erroneously told her she
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would be responsible for defendants’ “enormous” attorneys’ fees and costs if the offer exceeded
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her final judgment, she “reluctantly signed” the Rule 68 offer of judgment3 “because [she] felt
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[she] had no choice.” Id. at 1100. The Ninth Circuit emphasized Tani had been decided in the
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context of a default judgment, and observed: “Rule 68 judgments and default judgments are quite
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different. Default judgments are disfavored and appropriate only in unique circumstances. [ ]
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Rule 68 offers and acceptances, however, are actively supported by courts. Indeed, the very
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purpose of Rule 68 is to encourage termination of litigation.” Id. at 1103 (citations omitted). It
therefore declined to extend the holding of Tani to Rule 68 judgments and concluded the
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United States District Court
Northern District of California
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plaintiff’s attorneys’ gross negligence did not provide grounds to vacate that judgment. Id. at
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1104.
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Although Plaintiffs settled their case after attending a court-ordered settlement conference
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rather than by accepting a Rule 68 offer of judgment, the principles animating the Ninth Circuit’s
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decision in Latshaw are equally acceptable to this type of settlement. Settlements are actively
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supported by courts whether they are reached through a Rule 68 offer or a settlement conference.
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See Dispute Resolution Procedures in the Northern District of California, Preface (available on the
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Court’s website at www.cand.uscourts.gov/adrhandbook). The Court accordingly declines to
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apply Rule 60(b)(6) in this case.
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B.
Even if Rule 60(b)(6) applied to a judgment entered pursuant to a settlement, Plaintiffs
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No Extraordinary Circumstances Exist Warranting Relief
have not established “extraordinary circumstances” warranting relief from judgment.
First, Plaintiffs have not demonstrated their attorneys’ negligence amounted to “virtual
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A Rule 68 Offer of Judgment allows a defendant to serve an offer to allow judgment on specified
terms, with costs accrued. Fed. R. Civ. P. 68. The opposing party may accept the offer to settle
the case on those terms, and judgment then will be entered. Fed. R. Civ. P. 68(a). If the opposing
party does not accept the offer, it will be responsible for paying the costs incurred by the defendant
after the offer is made if the judgment the opposing party finally obtains is not more favorable
than the offer. Fed. R. Civ. P. 68(d).
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abandonment.” Lal, 610 F.3d at 525.4 Their attorneys opposed three motions to dismiss and filed
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several amended complaints; proceeded to address the merits of the case after partially succeeding
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in opposing a third motion to dismiss; conducted discovery; briefed multiple summary judgment
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motions; attended several settlement conferences; and finalized the settlement terms that formed
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the basis of the Stipulated Dismissal. While the representation was by no means exemplary and
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drew the Court’s attention at several points, it does not amount to the negligence courts have
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found sufficient to warrant relief under Rule 60(b)(6). Cf. Tani, 282 F.3d at 1171 (granting relief
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from default judgment where client “receiv[ed] practically no representation at all” because
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attorney failed to sign stipulation to extend time to file an answer; timely file answer; serve copy
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of answer on plaintiff and contact plaintiff to conduct settlement discussions despite court orders;
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United States District Court
Northern District of California
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oppose motion to strike answer; and attend hearings); Lal, 610 F.3d at 525 (granting relief from
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dismissal based on failure to prosecute where attorney (1) despite court orders, failed to make
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initial disclosures; meet and confer or participate in joint case management conference; and attend
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hearings, and (2) told client case was moving forward even after it had been dismissed and lied to
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client by telling her discovery and motion practice were proceeding). Plaintiffs’ attorneys’
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negligence was not such that the Court dismissed the case; it did not rise to the level of “gross
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negligence” sufficient to warrant relief here.
Second, Plaintiffs’ contention they settled for $30,000 because of “[t]he threat of dismissal
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for failure to prosecute . . . issued by the Court” (Mot. at 8), does not alter the Court’s analysis.
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Prior to the January 10, 2014 settlement conference, Judge Beeler issued an order warning
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Plaintiffs and their counsel “that a continued failure to comply with the courts orders or appear at
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hearings (including the settlement conferences) may be grounds for monetary or other appropriate
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sanctions, including terminating sanctions” and requiring counsel to “inform Plaintiffs of the
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sanctions that this continued conduct risks, including possible monetary sanctions and, ultimately,
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Because Plaintiffs are “presumed to have voluntarily chosen the[ir] lawyer as [their]
representative and agent, [they] ordinarily cannot later avoid accountability for negligent acts or
omissions of [their] counsel . . . . a client is ordinarily chargeable with his counsel’s negligent
acts.” Tani, 282 F.3d at 1168.
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a case-dispositive sanction that would result in the dismissal of Plaintiffs case for failure to
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prosecute.” Dkt. No. 160. There was no “threat of dismissal” pending at the time the settlement
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conference took place—only a warning to Plaintiffs and their counsel that they could face some
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type of sanctions if they failed to comply with court orders and appear at all hearings. Plaintiffs
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and their counsel appeared at the settlement conference as ordered; thus no sanctions would issue.
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Third, contrary to Plaintiffs contention that their former counsel “coerced [Plaintiffs] into
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settling the matter” (see Mot. at 8), it does not appear this was in fact the case. The only basis for
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this assertion is their current attorney’s representation, made on information and belief, that
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Plaintiffs’ second attorney “used the threat of sanctions and dismissal to unduly influence[]
Plaintiffs into settlement.” Higginbotham Decl. ¶ 14. But when Judge Beeler summarized the
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United States District Court
Northern District of California
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terms of the settlement on January 10, 2014, Mrs. Reynoso confirmed she understood and
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accepted the terms of the settlement; Mr. Reynoso twice expressed his disappointment with the
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settlement amount, but confirmed he understood the terms—including his release of claims against
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Defendants—and confirmed he accepted those terms. There is no evidence Plaintiffs were not
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free to reject the settlement terms, secure a new attorney, and continue the prosecution of the
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action. Plaintiffs’ unsupported assertion they felt coerced is insufficient to challenge the
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settlement. See, e.g., McCormick v. Brzezinski, 2010 WL 1463176, at *4-5 (E.D. Mich. Apr. 13,
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2010) (rejecting plaintiff’s argument she was “coerced” into settling and only did so under duress
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where plaintiff offered no facts showing duress or coercion: “Plaintiff, in the court’s opinion,
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suffers from ‘buyer’s remorse’ regarding the terms she agreed to during the settlement
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conference.”)
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Finally, even if they felt coerced to settle the matter in the manner they describe, as
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explained above, the Ninth Circuit in Latshaw held similar circumstances did not constitute gross
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negligence in the context of a Rule 68 judgment.
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While Plaintiffs may have felt buyers’ remorse after dismissing the case, especially when
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the officers who raided their homes were indicted on charges similar to those Plaintiffs alleged in
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their Complaint, “[a] failure to properly estimate the loss or gain from entering a settlement
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agreement is not an extraordinary circumstance that justifies relief under Rule 60(b)(6).” Bank of
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New York, 14 F.3d at 760; see also Latshaw, 452 F.3d at 1101 (“[m]isunderstanding an offer’s
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terms is not the same as misunderstanding factors to be weighed in deciding to accept the offer,
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and the plaintiff understood the settlement terms when she signed the offer.”).
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C.
Plaintiffs’ Motion Is Untimely
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To be timely, Plaintiffs were required to file this motion “within a reasonable time.” Fed.
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R. Civ. P. 60(c)(1). Reasonableness is a fact-dependent analysis, and courts evaluate a variety of
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factors, including “‘the reason for delay, the practical ability of the litigant to learn earlier of the
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grounds relied upon, and prejudice to the other parties.’” Lemoge v. United States, 587 F.3d 1188,
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1196-97 (9th Cir. 2009) (quoting Ashford v. Steuart, 657 F.2d 1053, 1055 (9th Cir. 1981)).
Plaintiffs signed the Stipulation for Settlement on January 10, 2014. Dkt. No. 164 at 6. The
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United States District Court
Northern District of California
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parties submitted a stipulation of dismissal on May 20, 2014, which the Court granted the same
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day. Dkt. Nos. 167-68. Plaintiffs did not file this Motion until July 13, 2016, approximately 27
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months after the dismissal was entered.
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Plaintiffs fail to show an excusable reason for the delay. The reasons they provide—that
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former counsel failed to respond to their attempts to have him “pursue” the case after it was
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dismissed and to their “numerous . . . request[s to] set[] aside the settlement and dismissal” and
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that current counsel has struggled to rebuild their case because they were not able to obtain their
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case files—are unpersuasive. See Mot. at 10-33; Higginbotham Decl. ¶¶ 25-29. Even if they
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diligently attempted to convince their second attorney to pursue the matter, nothing prevented
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Plaintiffs from seeking new counsel to help them do so when their second attorney failed to
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respond to them. They cannot demonstrate that circumstances beyond their control prevented
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them from protecting their interests for 27 months. Cf. Tani, 282 F.3d at 1168.
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Plaintiffs also fail to show they lacked the ability to learn earlier of the grounds on which
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they base their Motion. Plaintiffs argue they are entitled to relief because the officers who raided
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their homes were indicted and convicted of charges similar to the claims Plaintiffs asserted against
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them. Without addressing whether this factual development would constitute grounds for relief
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from judgment, the Court finds Plaintiffs fail to establish they lacked the ability to act upon these
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grounds in a timely fashion. The indictments against the officers were returned in February 2014,
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and Mrs. Reynoso even testified in the criminal proceedings in November 2014. See
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Higginbotham Decl. ¶¶ 15-21; United States of America v. Furminger et al., Case No. 14-cr-00102
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CRB, Dkt. No. 145 (Nov. 14, 2014 trial minutes showing Mrs. Cayetana Reynoso appeared as
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witness).5 At that point, Plaintiffs knew or should have known of the criminal charges against the
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officers they sued in this action. They fail to offer a valid excuse for waiting another 20 months
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before filing this Motion.
In light of the length and circumstances of the delay, the Court finds the 2.5 years that have
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elapsed since the case was settled, and the more than 2 years that have elapsed since it was
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dismissed, are not reasonable. See e.g., In re Hammer, 940 F.2d 524, 526 (9th Cir. 1991) (court’s
finding that unexcused 2-year delay in bringing Rule 60(b)(6) motion was unreasonable was not
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United States District Court
Northern District of California
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an abuse of discretion); Morse–Starrett Prods. Co. v. Steccone, 205 F.2d 244, 249 (9th Cir. 1953)
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(court could not find motion filed 22 months after entry of judgment was made within reasonable
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time where movant did not offer sufficient explanation for delay); Hogan v. Robinson, 2009 WL
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1085478, at *4 (E.D. Cal. April 22, 2009) (motion filed 18 months after entry of judgment and 2
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years after plaintiffs learned their counsel was unable to represent them was untimely; plaintiffs
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could and did learn of grounds for relief but still failed to act in timely manner); Swait v. Evans,
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2008 WL 4330291, at *5–6 (C.D. Cal. Sept. 22, 2008) (failure to proffer legally valid explanation
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for 2-year delay made motion untimely).6
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The Court grants the Federal Defendants’ request to take judicial notice of the records in the
criminal case. See Fed. Opp’n at 10 n.2; Fed. R. Evid. 201.
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It appears Plaintiffs argue the Lal Court granted relief from judgment where more than two years
had elapsed after dismissal. See Opp’n at 10. That is incorrect: the district court dismissed Lal’s
case in February 2007; she discovered this development in October 2007, spent the next few
months looking for an attorney without the cooperation of her original attorney, and managed to
file her Rule 60(b)(6) motion in January 2008 – approximately 1 year after the dismissal. See Lal,
610 F.3d at 522-23. The district court denied Lal’s Rule 30(b)(6) motion because the delay in
bringing the motion substantially prejudiced defendants. The Ninth Circuit reversed, finding
whatever deterioration in memory occurred in the ten months between the time defendants
discovered the case was dismissed and the time Lal filed her Rule 60(b)(6) motion did not
constitute sufficient prejudice to deny the motion. Id. at 526-27. The short delay, combined with
the “wealth of evidence” in the form of witness interviews conducted at the time of the shooting,
the internal investigation of the shooting, the recorded statements of the officers involved in the
shooting, and the written contemporaneous statements of the defendants, convinced the Ninth
Circuit the evidence in the case had not been compromised by the delay in bringing the motion.
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CONCLUSION
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As explained above, the Court concludes that Rule 60(b)(6) does not provide Plaintiffs
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relief from a judgment entered pursuant to the parties’ settlement of their claims. Accordingly, the
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Court DENIES Plaintiffs’ Motion to Set Aside the Judgment.
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IT IS SO ORDERED.
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Dated: August 16, 2016
______________________________________
MARIA-ELENA JAMES
United States Magistrate Judge
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United States District Court
Northern District of California
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Plaintiffs’ argument that United States v. Sparks, 685 F.2d 1128, 1130 (9th Cir. 1982), supports
their case (Opp’n at 10) is also unavailing. In Sparks, the Ninth Circuit declined to consider the
merits of the Rule 60(b)(6) motion filed 14 months after dismissal, but noted the government
could have been more diligent in prosecuting the matter, and remanded the case because the
district court erroneously denied the motion based on an inapplicable statute of limitations.
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