Free Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Case No.: 01-cv-01807-MSK-MJW BANK ONE, NA, (Successor to Bank One, Colorado, N.A.) and BANK ONE TRUST COMPANY, N.A., as Trustee of the Frank G. Jamison Marital Trust and the Frank G. Jamison Family Trust, Plaintiffs, v. C.V.Y. CORPORATION, d/b/a Your Valet Cleaners and JOHNNY ON THE SPOT, INC. Defendants. _____________________________________________________________________ BOULDER CLEANERS, INC. and JOHN'S CLEANERS, INC. Cross-Plaintiffs, v. C.V.Y. CORPORATION, d/b/a Your Valet Cleaners, Cross-Defendant.

RESPONSE OPPOSING JOINT MOTION TO FILE "EXHIBIT 1" TO THE JOINT MOTION FOR APPROVAL OF THE SETTLEMENT AGREEMENT WITH CONTRIBUTION PROTECTION UNDER SEAL PURSUANT TO D.C.COLO.L.CIV.R. 7.2 _____________________________________________________________________

Cross-Plaintiffs Boulder Cleaners, Inc. and John's Cleaners, Inc., by and through their undersigned counsel, file this Response Opposing Joint Motion to File "Exhibit 1" to the Joint Motion for Approval of the Settlement Agreement with Contribution Protection Under Seal Pursuant to D.C.Colo.L.Civ.R. 7.2.

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INTRODUCTION Boulder Cleaners and John's Cleaners (collectively "BCI/JCI") have a cross-claim pending in this case against CVY Corporation ("CVY") for breach of a September 27, 1991 (effective September 30, 1991) Agreement to defend and indemnify Boulder Cleaners with respect to Plaintiffs' claims in this case.1 After Boulder Cleaners settled with Plaintiffs in 2002, litigation of the cross-claim was stayed following a Law and Motion Hearing on April 14, 2005, pending the outcome of Plaintiffs' claims against CVY and Johnny on the Spot, Inc. ("JOS"). Plaintiffs and CVY/JOS have now settled and seek to have the Court accept their Settlement Agreement under seal ­ to the exclusion of the public and BCI/JCI -- and to approve it without BCI/JCI ever having reviewed its contents. As addressed in BCI/JCI's Response and Objection to Joint Motion for Approval of Settlement Agreement with Contribution Protection (filed concurrently), CVY's counsel has stated that he will likely assert that the contribution bar precludes BCI/JCI's defense and indemnity cross-claim. Thus, BCI/JCI cannot adequately protect their cross -claim for CVY's breach of the agreement to defend and indemnify without review of the Settlement Agreement.2 The parties to the Joint Motion have offered no legal support whatsoever for keeping the Settlement Agreement from BCI/JCI or the public at large. In fact, when considering the legal requirements for filing under seal (conspicuously absent from the motion), it is clear that the parties cannot meet the necessary burden of proof. Moreover,
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BCI/JCI also have a law suit pending in the State Court against CVY's officers and owners for claims related to the breach of this same agreement. The arguments set forth herein apply equally to protecting those claims. In fact, BCI/JCI have been told that, upon being advised of the confidential settlement at the final pre-trial conference, the Court itself noted that BCI/JCI and its counsel would certainly want access to the Settlement Agreement. BCI/JCI have also been advised that CVY/JOS's counsel agreed, and stated to the Court that BCI/JCI would be provided access under a protective order.

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CERCLA favors having settlements in the public record and subject to public comment. Despite the fatal flaws in the parties' Joint Motion, BCI/JCI has offered to enter into a reasonable protective order to keep the Settlement Agreement confidential. CVY/JOS has made the terms of their proposed protective order far too onerous and one-sided for BCI/JCI to be able to agree. Thus, as discussed in more detail below, BCI/JCI objects to the Court accepting the Settlement Agreement under seal, and asks that the Joint Motion be denied. ARGUMENT A. The Parties Have Provided No Valid Reason to Keep the Settlement Agreement Confidential from BCI/JCI. The parties have not offered any valid reason to keep the Settlement Agreement confidential from BCI/JCI. When BCI/JCI settled with the Plaintiffs in 2002, their

Settlement Agreement was filed with the Court and CVY/JOS were allowed full and complete access to the document (Doc. # 173). In fact, CVY/JOS raised strident

arguments as to the Court's approval of the contribution bar and had their day in Court on that issue before the Court approved the settlement (Doc. # 176). Indeed, CVY/JOS engaged the Court in very extended litigation arguing in partial reliance on their review of BCI/JCI's settlement agreement, that their own cross-claims for contractual indemnification against BCI/JCI sounded in contract and not contribution and were not barred. (Doc. #'s 215, 230, 276 & 290)3. Now, CVY/JOS mysteriously seeks to deny BCI/JCI that same

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The Court acknowledged that the cross-claims asserted by CVY/JOS were indemnification claims as distinct from contribution claims but were moot because CVY could only seek indemnification to the extent it was found liable for damages caused by BCI/JCI and the Court's earlier "proportionate fault" ruling insulated CVY from liability. (Doc. # 236, 351 & 458).

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opportunity.4 Their position is not only untenable and inequitable, it speaks volumes about the reasons BCI/JCI need to see the Settlement Agreement in order to protect their crossclaim. BCI/JCI has offered to enter into a reasonable protective order under which it would agree to keep the Settlement Agreement confidential. This is a practical solution that would allow the parties to file the Settlement Agreement under seal (BCI/JCI would likely have no objection if allowed its own access to the Settlement Agreement) while granting BCI/JCI the access they need. It would also address the problem of BCI/JCI needing to object to the Settlement Agreement to protect their cross-claim -- with no idea of what is in the Settlement Agreement. If BCI/JCI were allowed to review the Settlement Agreement, they would be able to make their objections to the settlement, if any, more focused and precise, vastly simplifying the Court's inquiry into whether to approve the Settlement Agreement. The current process of "shooting in the dark" makes the job of the Court and the parties much more difficult and imprecise. In spite of the obvious reasonableness of this solution, CVY/JOS has made the terms of their proposed protective order so onerous and one-sided that BCI/JCI has been unable to agree. In particular, CVY/JOS seeks to have BCI/JCI waive rights with respect to the Settlement Agreement before BCI/JCI have even had the opportunity to review it and to force BCI/JCI to argue in the abstract about potential use of the Settlement Agreement. This unfair and unreasonable choice puts BCI/JCI in a worse position than

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It should be noted that, by seeking access to the Settlement Agreement, BCI/JCI does not anticipate objecting to the settlement between Plaintiffs and CVY/JOS, or to the contribution bar per se. As stated elsewhere, BCI/JCI simply seeks to protect the full viability of its cross-claim against CVY by ensuring there is nothing in the Settlement Agreement that could negatively impact that claim.

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simply objecting to the confidentiality of the Settlement Agreement. This is particularly true when, as discussed below, the parties have utterly failed to meet their burden of proof for filing the Settlement Agreement under seal. B. There is No Legal or Factual Support for Allowing the Settlement Agreement to Be Filed Under Seal. "The starting point in considering a motion to seal court records is a strong presumption in favor of public access to judicial proceedings." EEOC v. National Children's Center, Inc., 98 F.3d 1406, 1409 (D.C. Cir. 1996) (internal quotation marks omitted); see also Mann v. Boatright, 477 F.3d 1140, 1149 (10th Cir. 2007) ("Courts have long recognized a right of common-law right of access to judicial records."). "The presumption of access ... can be rebutted if countervailing interests heavily outweigh the public interests in access." Boatright, 477 F.3d at 1149 (internal quotation marks omitted). The party seeking to overcome the presumption of public access bears the burden of showing a significant interest that outweighs the presumption. Id. Plaintiffs and CVY/JOS fail entirely to discuss any of the necessary legal and factual bases for prevailing on a motion to file under seal. As a result, their motion should be denied outright. Even if the Court considers their motion in light of this failure, Plaintiffs and CVY/JOS have not offered any compelling reasons for keeping the Settlement Agreement out of the public eye (and the eyes of BCI/JCI). The most they state in their Motion is "The Settlement Agreement contains various terms and conditions that Plaintiffs and Settling Defendants wish to keep confidential including the settlement amount." Motion at 2. This is hardly a showing of a significant interest outweighing the presumption of public access. 5

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In fact, the Tenth Circuit has rejected that a parties' mere "privacy concern with respect to . . . information is sufficiently critical to outweigh the strong presumption in favor of public access to judicial records." Boatright, 477 F.3d at 1149 (upholding District Court's denial of motion to seal on basis of privacy concerns). In sum, the parties have failed to meet their burden of showing any countervailing interests that "heavily outweigh" the presumption of public access. Thus, their Motion to File the Settlement Agreement Under Seal should be denied. C. The General Policy of CERCLA Is For Settlements to Be of Public Record. The general policy of CERCLA is for settlements to be of public record. In

particular, when the EPA settles with private parties, such settlements must be published in the Federal Register and subjected to a thirty-day public comment period. See 42 U.S.C. § 9622(i) (before becoming final, settlements with federal government under CERCLA must be published in Federal Register and subject to 30-day public comment period). When such settlements fail to comply with the publication and public comment requirements of Section 122(i), the settling party is not entitled to contribution protection under section 113(f)(2). See United States v. Alcan Aluminum Corp., 990 F.2d 711, 725 (2nd Cir. 1993) (only when procedures of publication and public comment are followed is a party entitled to contribution protection). Here, the Settlement Agreement resolves Plaintiffs' CERCLA claim against CVY/JOS, among other claims. As a result of the settlement, CVY/JOS seek contribution protection under CERCLA section 113(f)(2). In order for CVY/JOS to take advantage of CERCLA's contribution bar, the Plaintiffs and CVY/JOS should be prohibited from sealing

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their Settlement Agreement from outside review. As likely to be raised by CVY/JOS, there are limited CERCLA cases in which courts have agreed that individual settlement amounts and allocation formulas need not be disclosed in settlement agreements. See, e.g., United States v. Kramer, 19 F. Supp.2d 273 (D.N.J. 1998); United States v. Gencorp, Inc., 935 F. Supp. 928 (N.D. Ohio 1996). These cases do not change the analysis here because they do not support keeping the Settlement Agreement entirely secret; they are simply akin to not requiring CVY and JOS to disclose how much each contributed to the total settlement amount and how such contributions were decided. Moreover, the Courts' concerns in those cases make them entirely distinguishable. The objections to non-disclosure were raised by non-settling parties, who worried that the settling parties were paying less than their fair share, potentially leaving the non-settlers to pay more than their fair share. The Courts found that this is the intended result of CERCLA's encouragement of early settlement, and that to allow non-settling parties to try their contribution cases in the context of approval of a Settlement Agreement would be an end run around the avoidance of litigation early settlements are meant to promote. Those concerns are not at issue here since (1) BCI/JCI are not non-settling parties ­ they, in fact, settled years before CVY/JOS; (2) BCI/JCI do not foresee challenging the settlement amount or allocation; and (3) BCI/JCI do not seek to try their cross-claim in the context of the fairness determination; they simply seek to protect these claims.5
CVY/JOS may also attempt to rely on New York v. Solvent Chemical Co, Inc., 214 F.R.D. 106 (W.D.N.Y. 2003). There, the Court denied a parties' later discovery request for copious information about previously approved settlement agreements. The Court found that information about settlement amounts was irrelevant when the only remaining determination was the parties' equitable shares (not settlement amounts) under Section 113(f)(2) and that other information was protected by the attorney/client privilege. Again, the case is distinguishable because a nonsettling party sought the agreements and privileged information in order to argue about contribution and equitable
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D. If the Court Grants the Motion, CVY Should Be Forever Barred from Using Any Settlement Agreement Against BCI/JCI. If the Court grants the parties' motion and allows the Settlement Agreement to be kept forever secret from BCI/JCI, CVY (and its shareholders) should be forever barred from using the Settlement Agreement, Contribution Bar and any Orders entered pursuant thereto, in any way, offensively or defensively, against BCI/JCI. Likewise, CVY should be forever barred from using the BCI/JCI Settlement Agreement in any way, offensively or defensively, against BCI/JCI. This is the only way to remedy the inequity created by the fact that CVY was allowed full and complete access to the BCI/JCI Settlement Agreement (and its day in Court on the agreement),while BCI/JCI has been denied the same opportunity. In short, it is the only way to level the playing field. CONCLUSION CVY/JOS and Plaintiffs seek to forever deny BCI/JCI access to their Settlement Agreement with Contribution Protection. Without reviewing the Settlement Agreement, Boulder Cleaners is unable to determine whether it might unfairly impact BCI/JCI's crossclaim against CVY for contractual defense and indemnity. The parties to the motion have failed to offer any valid reason to deny BCI/JCI access to the Settlement Agreement. In addition, they have failed to meet their burden for filing the Settlement Agreement under seal and to overcome CERCLA's policy in favor of public settlements. In spite of these fatal defects, BCI/JCI has offered to enter into a reasonable protective order. CVY/JOS have, for all practical purposes, refused to accept
shares. Here, BCI/JCI is not a non-settling party, does not intend to argue about the fairness of CVY/JOS's equitable shares, and does not seek privileged information.

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this reasonable solution. CVY/JOS's position is not only without factual and legal support, it is unfair and inequitable as well. Thus, the parties' Joint Motion to File the Settlement Agreement Under Seal should be denied. In the event the Court grants the motion, BCI/JCI respectfully ask the Court to clarify in its Order that CVY (and its shareholders) are forever barred from using their Settlement Agreement, Contribution Bar, and Orders entered pursuant thereto, and the BCI/JCI Settlement Agreement, against BCI/JCI in any way6. DATED this 2nd day of October, 2007. Respectfully submitted, s/ Scott Jurdem Scott Jurdem, No. 7840 BUCHANAN, JURDEM & CEDERBERG, P.C. Eighteenth Street Atrium 1621 18th Street, Suite 260 Denver, Colorado 80202 Telephone: (303) 297-2277 Facsimile: (303) 297-2233 E-Mail: [email protected] [email protected] ATTORNEYS FOR CROSS-PLAINTIFFS BOULDER CLEANERS, INC. & JOHN'S CLEANERS, INC. CERTIFICATE OF SERVICE I hereby certify that on October 2, 2007, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Max K. Jones , Jr
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Any such Order should state" "This Order does not preclude and is not intended to impact or impair the BCI/JCI cross-claim for defense and indemnification under the September 27, 1991 Agreement effective September 30, 1991, as asserted herein or in the State Court matter pending in Denver District Court, BCI/JCI v. John J. Yelenick, et al., Case # 2003 - CV - 0215."

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[email protected],[email protected] Scott Jurdem [email protected],[email protected] C. Michael Montgomery [email protected],[email protected],[email protected] Jonathan William Rauchway [email protected],[email protected] Laura J. Riese [email protected],[email protected]

s/ Susan M. Avery Susan M. Avery BUCHANAN, JURDEM & CEDERBERG , P.C. 1621 18th Street, Suite 260 Denver, CO 80202 Telephone: (303) 297-2277 Facsimile: (303) 297-2233 E-Mail: [email protected]

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