Milliner v. Mut. Sec., Inc.

CHARLOTTE B. MILLINER, et al., Plaintiffs, v. MUTUAL SECURITIES, INC., Defendant.

Case No. 15-cv-03354-DMR

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

July 8, 2019

ORDER ON DEFENDANT'S MOTION TO ENFORCE SETTLEMENT AGREEMENT AND STIPULATED PROTECTIVE ORDER

***REDACTED VERSION***

Re: Dkt. No. 176

Following a settlement conference before the undersigned, Plaintiffs Charlotte B. Milliner and Joann Brem executed a written settlement agreement with Defendant Mutual Securities, Inc. ("MSI") on June 1, 2018. The parties subsequently consented to have this court conduct all further proceedings pursuant to 28 U.S.C. § 636(c). [Docket Nos. 167, 168.] MSI now moves for an order enforcing the settlement agreement and the stipulated protective order entered in this case, arguing that Plaintiffs and their counsel have breached them. [Docket No. 176.] This matter is appropriate for resolution without oral argument. Civ. L.R. 7-1(b). Having carefully considered the parties' submissions, the motion is granted in part and denied in part, and partially held in abeyance.

I. ADMINISTRATIVE MOTION TO SEAL

MSI moves to seal the settlement agreement at issue in its entirety, as well as the portions of its motion quoting the settlement agreement. [See Docket Nos. 173, 185.] Given the particular circumstances of this case, where MSI argues that Plaintiffs and their counsel have breached the settlement agreement's confidentiality provision, good cause exists to permit filing the actual agreement and certain references to it under seal. See Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1179-80 (9th Cir. 2006) ("good cause" standard applies to requests to seal records attached to non-dispositive motions); Phillips ex rel. Estates of Byrd v. General Motors Corp., 307 F.3d 1206, 1212 (9th Cir. 2002) (noting that courts have granted protective orders to protect confidential settlement agreements). For the same reason, the court redacts the specific terms of the settlement agreement that appear in this order. MSI's administrative motion to file under seal is granted, and MSI is granted leave to file the following filings under seal: Exhibit 2 to the April 5, 2019 Fredricks declaration (Docket No. 173-5, ECF pp. 19-23); Exhibit 7 to the Gilotti statement of claim, attached as Exhibit 3 to the Fredricks declaration (Docket No 173-5, ECF pp. 149-153); and portions of MSI's motion (Docket No. 173-3), as follows: 2:3-4, 3:7-8, 3:18-20, 4:8-13, and 5:24-26.

II. BACKGROUND

Milliner and Brem filed this putative class action against MSI on July 21, 2015, alleging claims stemming from MSI's brokerage agreement with Plaintiffs.¹ See Compl. ¶ 2. The undersigned conducted a settlement conference on June 1, 2018 which resulted in a full resolution of Plaintiffs' individual claims. [Docket No. 166.] Milliner, Brem, and MSI executed a settlement agreement the same day. Fredricks Decl., Apr. 5, 2019, ¶ 3, Ex. 2 (Settlement Agreement). On June 5, 2018, with the parties' consent pursuant to 28 U.S.C. § 636(c), the matter was reassigned to this court for all purposes. [Docket Nos. 167-169.] The case was dismissed on September 11, 2018. [Docket No. 172.]

In relevant part, the settlement agreement provides for [Redacted]

The settlement agreement included a confidentiality provision, as follows:

[Redacted]

Settlement Agreement ¶ 11.

The settlement agreement also provides that [Redacted] Id. at ¶ 9.

On February 5, 2019, Plaintiffs' counsel David Sturgeon-Garcia filed a statement of claim with FINRA against MSI and five individuals on behalf of a different client, Vincent F. Gilotti. Fredricks Decl. ¶ 4, Ex. 3 (Gilotti claim). Gilotti's FINRA claim includes the history of this litigation. It notes that Milliner and Brem settled their individual claims against MSI and dismissed the class claims without prejudice. In support of the statement that "any and all claims held by putative class members, like Mr. Gilotti, were preserved," Gilotti cites the settlement agreement and attached a complete copy as an exhibit to his claim. Gilotti claim 9, Ex. 7. Additional exhibits to Gilotti's claim include portions of transcripts of depositions taken in this case as well as what MSI describes as "documents . . . produced in response to a subpoena during the Milliner litigation, and which were marked as confidential." See Gilotti claim Exs. 2, 5, 6, 7; Fredricks Decl. ¶ 6.²

MSI now moves to enforce the settlement agreement, as well as the parties' stipulated protective order which was entered on January 31, 2016. [See Docket No. 23 (Protective Order).] It contends that Plaintiffs and/or their counsel have violated the terms of the settlement agreement as follows: 1) Sturgeon-Garcia attached the settlement agreement along with confidential documents and deposition transcripts produced and/or used in this case and marked as confidential to the Gilotti claim in violation of the settlement agreement's confidentiality provision; and 2) the settlement agreement requires Milliner to dismiss her FINRA statement of claim but to date she has not done so. MSI further argues that Sturgeon-Garcia violated the protective order by attaching as exhibits to the Gilotti claim documents and deposition transcripts used in this litigation and marked as confidential. MSI asks the court to order Plaintiffs and Sturgeon-Garcia to pay MSI its attorneys' fees and costs incurred in enforcing the settlement agreement.

III. LEGAL STANDARD

A. Jurisdiction to Enforce the Settlement Agreement

The parties do not dispute that the court has jurisdiction to enforce the settlement agreement. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380-81 (1994) (explaining that a court has ancillary jurisdiction to enforce a settlement agreement when the parties agree to continuing or retention jurisdiction); Docket No. 166.

A "motion to enforce [a] settlement agreement essentially is an action to specifically enforce a contract," and "[a]n action for specific performance without a claim for damages is purely equitable and historically has always been tried to the court." Adams v. Johns-Manville Corp., 876 F.2d 702, 709 (9th Cir. 1989) (citation and internal quotations marks omitted). Thus, "the court may hear evidence and make factual determinations." Fair Hous. Council of Cent. Cal., Inc. v. Tylar Prop. Mgmt. Co., 975 F. Supp. 2d 1115, 1118 (E.D. Cal. 2012) (citing Stewart v. M.D.F., Inc., 83 F.3d 247, 251 (8th Cir. 1996)). A court may order compliance with a settlement agreement in light of evidence of a party's non-compliance. See, e.g., Fisher v. Biozone Pharm., Inc., No. 12-CV-03716-LB, 2017 WL 1097198, at *1 (N.D. Cal. Mar. 23, 2017) (prohibiting the plaintiff from "making any further disparaging comments about the defendants" in violation of the settlement agreement's non-disparagement term and ordering the plaintiff to fully comply with the"settlement agreement's non-disparagement term").

"The interpretation of a settlement agreement is governed by principles of state contract law." Botefur v. City of Eagle Point, Or., 7 F.3d 152, 156 (9th Cir. 1993) (citing Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1990)). "This is so even where a federal cause of action is 'settled' or 'released.'" Id. (citing United Commercial Ins. Serv., Inc. v. Paymaster Corp., 962 F.2d 853, 856 (9th Cir. 1992)). Here, California contract law governs the analysis because the parties litigated and settled the case in this state. "Under California law, the intent of the parties determines the meaning of the contract. The relevant intent is 'objective'—that is, the intent manifested in the agreement and by surrounding conduct—rather than the subjective beliefs of the parties." United Commercial Ins. Serv, 962 F.2d at 856 (citations omitted). "The mutual intention of the parties is determined by examining factors including the words used in the agreement, the surrounding circumstances under which the parties negotiated or entered into the contract, and the subsequent conduct of the parties." Ambat v. City & Cty. of San Francisco, No. C 07-03622 SI, 2011 WL 2118576, at *2 (N.D. Cal. May 27, 2011) (citing Morey v. Vannucci, 64 Cal. App. 4th 904, 912 (Ct. App. 1998); Hernandez v. Badger Constr. Equip. Co., 28 Cal. App. 4th 1791, 1814 (Ct. App. 1994)).

B. Jurisdiction to Enforce the Protective Order

"It is well established that a federal court may consider collateral issues after an action is no longer pending," Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990), and may assert ancillary jurisdiction "to manage its proceedings, vindicate its authority, and effectuate its decrees." Kokkonen, 511 U.S. at 380. Although ancillary jurisdiction may not "be used as a basis for adjudicating post-dismissal disputes involving the merits of an action if the final order fails to expressly reserve jurisdiction," the court may exercise jurisdiction over collateral disputes regarding compliance with protective orders. Colaprico v. Sun Microsys., Inc., No. 90-20610 SW, 1994 WL 514029, at *2 (N.D. Cal. Aug. 22, 2014) (finding party in civil contempt of protective order after final judgment entered).

IV. DISCUSSION

A. Alleged Violations of the Settlement Agreement

1. Disclosure of the Settlement Agreement

MSI argues that Plaintiffs and Sturgeon-Garcia are in violation of the confidentiality provision of the settlement agreement based on the fact that Sturgeon-Garcia attached a copy of the agreement as an exhibit to the Gilotti claim. According to MSI, the exceptions in the confidentiality provision that permit disclosure of the agreement do not apply here.

In opposition, Plaintiffs note that there is "no evidence that Ms. Milliner or Ms. Brem disclosed anything to anyone." Opp'n 1. They do not dispute that Sturgeon-Garcia attached the settlement agreement to the Gilotti claim but argue that his actions cannot not be imputed to Plaintiffs. Id. at 2. They further argue that Sturgeon-Garcia is not bound by the settlement...