Commercial Defendant Sanctioned for Fruitless Settlement Negotiation

Commercial Defendant Sanctioned for Fruitless Settlement Negotiation

A federal magistrate judge in Pittsburgh has imposed sanctions on a commercial defendant after a fruitless settlement negotiation.

Because Safety-Kleen has a policy of refraining from settling cases until the close of discovery, but it participated in a settlement conference before that time anyway, U.S. Magistrate Judge Maureen P. Kelly of the Western District of Pennsylvania granted the plaintiffs’ motion for sanctions. She ordered the company to pay the attorney fees, costs and travel-related expenses that the plaintiffs paid to participate in the settlement conference in January.
”Safety-Kleen did not participate in the mediation process in good faith,” Kelly said, making clear in a footnote that the “sanctions are imposed solely based on defendant’s refusal to participate in good faith, not based on defendant’s refusal to settle.”

Safety-Kleen “had an obligation to be forthright and notify the court and plaintiffs that it had a ‘standard policy’ to wait until after the close of discovery to make any offer of settlement,” Kelly said. “The failure of Safety-Kleen to notify the court that a mediation would be a futile act wasted precious judicial resources and it caused Mrs. Grigoryants to miss work, leave her ailing husband and child and travel to Pittsburgh—incurring substantial expenses and attorney fees.”

The suit was filed by Ruben Grigoryants and his wife, Mariana Grigoryants, in 2011 in the Erie County Court of Common Pleas and Safety-Kleen removed it to federal court later that year on diversity-jurisdiction grounds.

Safety-Kleen, which recycles and distributes cleaning solvents, is a Wisconsin corporation with its principal place of business in Plano, Texas, according to court documents.

Ruben Grigoryants, who is now terminally ill, alleged that his contact with Safety-Kleen’s 105 solvent while he worked at Erie Specialty Products from 1994 to 1996 caused him to develop myelofibrosis and myelodysplastic syndrome. Both of those diseases affect the bone marrow.

Shortly after the case was removed, Grigoryants’ lawyer notified the defense that he wanted to schedule a videotape deposition of Grigoryants for use at trial since he was “gravely ill,” according to Kelly’s opinion. The plaintiffs then gave their initial disclosures, which included a disk with medical records on it, pictures of Grigoryants, a day-in-the-life video of Grigoryants, names of nine of his doctors, and pathology slides from Memorial Sloan Kettering Cancer Center, New York University School of Medicine and Hoboken University Medical Center.

Discovery ensued through 2012 and 2013, according to the opinion. After the judge initially assigned to the case resigned in August 2013, it was reassigned to U.S. District Chief Judge Joy Flowers Conti of the Western District of Pennsylvania, who referred the case to U.S. District Judge Mark R. Hornak for a settlement conference after she had held a telephone status conference with the lawyers.

Safety-Kleen “had multiple opportunities prior to the settlement conference to inform Judge Hornak and plaintiffs’ counsel that it was defendant’s ‘normal policy’ to wait until after the close of discovery to make any settlement offer,” Kelly said.

“Specifically, defendant could have disclosed this litigation policy to the court and plaintiffs during the initial pre-mediation conference call on Oct. 28, 2013, but defendant did not. Similarly, defendant could have disclosed this policy to the court and plaintiffs during the final pre-mediation conference call on Jan. 8, 2014, but defendant did not. In fact, at no time between the referral of the case to mediation before Judge Hornak on Oct. 8, 2013, until the mediation on Jan. 14, 2014, did defendant ever disclose, or even suggest, that it would not respond to a settlement demand by plaintiffs until after the close of discovery,” Kelly said.

In advance of the settlement conference, as instructed by Hornak, the plaintiffs had sent a settlement demand letter to the defense. Although Hornak had ordered the defense to send a settlement offer to the plaintiffs, they didn’t do so.

The defense said Hornak had lifted that requirement because of weather issues, but the plaintiffs contest that, according to Kelly’s opinion.

The defense argued “that because it was represented at the settlement conference by a party representative, insurer representative, national counsel and local counsel that it ‘attended’ in good faith,” Kelly said.

But she wasn’t convinced.

“This argument is without merit,” Kelly said. “Merely sending a representative to a settlement conference does not establish that a party has fulfilled its obligation to participate in good faith.”

Wesley S. Alost of Jones Carr McGoldrick in Dallas represented Safety-Kleen and declined to comment.

Andrew J. Stern of Kline & Specter in Philadelphia represented the plaintiffs and couldn’t be reached for comment.

Saranac Hale Spencer can be contacted at 215-557-2449 or sspencer@alm.com. Follow her on Twitter @SSpencerTLI.

(Copies of the 14-page opinion in Grigoryants v. Safety-Kleen, PICS No. 14-0855, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.)

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