Oberlin College offered only a small fraction of ultimate verdict to settle Gibson’s Bakery lawsuit

Oberlin College offered only a small fraction of ultimate verdict to settle Gibson’s Bakery lawsuit

One of the big questions in the Gibson’s Bakery v. Oberlin College case is why it didn’t settle. Based on recent court filings, we have a glimpse at the settlement process, and how it failed.

Currently the judgment for the plaintiffs amounts to almost $32 million in damages (including attorney’s fees) and defendants were required to post a $36 million bond to secure the judgment pending appeal. The trial court recently denied the defense request for a new trial. An appeal is expected, so it’s not over until it’s over.

That judgment resulted from two verdicts: $11 million compensatory damages rendered on June 7, 2019, and $33 million in punitive damages rendered on June 13, 2019, after a separate punitive damages trial. The combined $44 million was reduced by the Court under Ohio’s tort caps to just over $25 million. The Court also awarded over $6.5 million in legal fees and costs against defendants on top of the damages.

On appeal, defendants will seek to have the entire judgment vacated or reduced. The Gibsons have indicated they will seek to have the full $44 million verdicts restored, arguing the tort caps as applied in this case violate the Ohio constitution.

Tone-Deaf Defense Strategy, From Start to Finish

The defense strategy did not make sense to me from the start — it’s seemed divorced from the reality of the publicly reported events and was completely tone-deaf.

I wrote on December 13, 2017, when defendants filed their Answer to the Complaint, Oberlin College lashes out at Gibson’s Bakery, portrays itself as victim:

Perhaps equally surprising was that Oberlin and Raimondo include an allegation in their court filings that didn’t need to be in the papers, but must be a signal as to the defense strategy. That allegation is that Oberlin and Raimondo merely were looking out for the safety of students after the students were assaulted by Allyn Gibson….

A similar line of attack is taken by Oberlin and Raimondo on page 2 of the Memorandum of Law supporting the Partial Motion to Dismiss ….

Thus, Oberlin and Raimondo seek to portray the College as the victim in this scenario, including the confessed shoplifters. I can’t imagine, based on what is publicly available, this will work.

Moreover, the boycotts and protests against Gibson organized by students, and allegedly encouraged and coordinate with Oberlin administrators, were not primarily about a supposed assault on a student. Certainly, that was part of the mix, but the primary attack on Gibson’s was and still is that it allegedly engaged in racial profiling and unfairly targeted three black students with false claims of shoplifting. The guilty pleas put the lie to that line of protest, yet it it the defense laid out for Oberlin and Raimondo in their court filings. The Answer being a pleading of Oberlin and Raimondo, constitutes admissions that can be used against them. Unless discovery turns up something beyond what’s publicly known, Gibson’s lawyers should have a field day cross-examining Oberlin witnesses about the language quoted above.

The demeaning and insulting attitude towards the Gibsons would only worsen as the litigation progressed into trial. The trial defense was tone-deaf, something I mentioned numerous times, “from the start of this case I have questioned the aggressive and demeaning attacks on the Gibsons as a defense strategy,” and “I’m still shaking my head at the tone-deafness of the defense in belittling this family business.”

The defense even called an expert at trial to value the 5th-generation business, which at the time was supporting three generations of Gibsons and several non-family employees, at a mere $35,000, about the cost of a single semester at Oberlin College. After the compensatory verdict, Oberlin College’s general counsel made a bizarre attack on the jurors., After the punitive verdict, Oberlin College launched an intense public relations campaign led by president Carmen Twilley Ambar, vowing to fight the verdicts, denying any responsibility, and (falsely) claiming that the college was held liable for student speech rather than the conduct of its employees.

At every step of the way, from the day of the protests to post-trial publicity, Oberlin College has never publicly acknowledged it did anything wrong, legally or otherwise.

Settlement Failure Reflected Oberlin College Attitude Towards Case

Given Oberlin College’s attitude, the suspicion must arise that it never was serious about settling the case, that there was no ‘adult’ in the room insisting on a sober reflection both of what had happened and the exposure. But perhaps plaintiffs were asking too much, perhaps plaintiffs demanded an unrealistic amount.

Until now, we have not had much, if any, information about settlement offers and responses. Recent court filings, however, do provide some information.

As noted in an earlier post, the Court denied plaintiffs’ request for prejudgment interest. Prejudgment interest is available in Ohio upon a showing of lack of good faith in settlement efforts.

The following court filings are relevant, and quoted in parts:

Motion for Prejudgment Interest (pdf.)
Supplement to Motion for Prejudgment Interest (pdf.)
Defense Opposition to the Motion for Prejudgment Interest (pdf.)
Plaintiff’s Evidentiary Submission (pdf.)
Defendants’ Evidentiary Submission (pdf.)

Please note that evidence as to the mediation the parties held was submitted under seal, and are not publicly available. Mediation is a formal settlement conference run by a neutral mediator. Normally what happens in mediation cannot be used at trial, but this was a post-trial assessment as to alleged bad faith, so apparently the parties decided that filing materials under seal was permitted.

The Court’s Order Denying Prejudgment Interest (pdf.) held in pertinent part (emphasis added):

This case has been pending since November of 2017, and the Court has been highly involved in nearly every phase of the litigation, including presiding over several in-person pretrials, a lengthy final pretrial, and ultimately the six-week trial that concluded this case. Through this involvement, the Court frequently interacted with the parties’ respective counsel, and was thoroughly familiar with their positions and strategies as they evolved throughout the litigation. Ultimately, the parties were unable to reach a resolution. But, from the Court’s perspective, this was not a product of the Defendants’ bad faith, as contemplated by Ohio Revised Code § 1343.03, it was simply a case where the parties’ dispute of the issues and application of the law required a trial of those issues. The correspondence that makes up nearly all of the parties’ evidentiary materials is consistent with that finding and with the Court’s observation above. Accordingly, and as stated above, Plaintiffs’ Motion for Prejudgment Interest is denied.

As the court reflects, the failure to settle in itself does not mean bad faith in a legal sense. But it may, however, still reflect a lack of reality and poor judgment, which seems to be the case here.

In the Gibson’s Evidentiary submission to the Court, the Gibson’s lawyers lay out the time-table and dollar amounts of the settlement discussions and amounts. Here is an excerpt, sub-headings by me, indented quotes from the Gibsons’ court filing:

Pre-Litigation

Before Plaintiffs initiated this litigation with the filing of their Complaint, Plaintiffs issued a settlement letter opining that a jury verdict expectancy in this case could approach $30 million. Defendants scoffed at this evaluation of jury verdict potential, included it as an exhibit to several briefs filed with this Court, and even attempted to use it as evidence during trial. (See, April 30, 2019 Tr. Trans., pp. 49-54). However, Plaintiffs’ pre-trial jury verdict expectancy approximation was inherently reasonable considering the jury awarded in excess of $44 million at trial and the final judgment was over $32 million including attorneys’ fees. Still, despite the reasonableness of this evaluation of verdict potential, Defendants made no response to the offer.

Pre-Mediation

… on May 15, 2018, Plaintiffs’ Attorney Lee Plakas informed Defendants’ Attorney Ron Holman that Plaintiffs would agree to an early mediation so long as Defendants came into the mediation agreeing to a settlement bracket of between $5 million and $15 million. Again, considering the jury verdict and final judgment, this suggested bracket was highly reasonable. On May 24, 2019, Defendants rejected this mediation proposal out of hand in a letter from their counsel:

Mediation

Again, almost all information as to what went on at the mediation was filed under seal, but this statement appears in the Gibsons’ evidentiary submission:

In January of 2019, the parties engaged in two days of private mediation, during which Plaintiffs moved and worked to find common ground. The parties continued to engage with mediator Jerry Weiss through the spring of 2019, but no ground was gained.

Just Prior to Trial

… When the parties arrived at the Court on April 16, 2019 for the final pre-trial, the Court offered as much of its time as necessary to attempt to reach a settlement for this case. Each of the parties encouraged the Court’s efforts and accepted the Court’s offer to explore the potential settlement. During this time, the Court worked with the parties to try and encourage a resolution. Remarkably, during this final pre-trial process, at least one of Defendants’ insurance adjusters left without seeking the Court’s permission.

Further, Defendants only offered a conditional $3 .125 million at the end of two days of these discussions with the Court, conditioned on Oberlin College Board’s approval of contributing $1 million as part of the package of $3 .125 million. As noted in Section C below, Plaintiffs believe relevant discovery, which Defendants have refused, would answer the interesting question of whether the Oberlin Board was ever presented with the proposal to join with the insurance companies in offering a settlement and contributing $1 million to said package….

In their opposition to the motion for prejudgment interest, defendants described the judge’s involvement as follows:

 …. In fact, for two days in April 2019, the Court was intimately involved-and was almost successful-in effecting a settlement between the parties. In analyzing Plaintiffs’ Motion, the Court should take into consideration Defendants’ good faith efforts to settle with Plaintiffs during those two days. Even outside of those two days, however, Defendants continuously pushed for a resolution of this dispute, including via a two-day mediation and through continued efforts with the enlisted private mediator.

During Trial – Prior to Compensatory Verdict

On June 2, 2019, before the jury issued its verdicts during the compensatory phase, Plaintiffs issued a settlement offer to Defendants. 7 This highly reasonable settlement offer included the following terms:
• Payment of $13.5 million by Defendants;
• A IO-year contract between Oberlin College and Gibson’s Bakery;
• A joint statement to be signed by all parties discussing the lack of any evidence regarding racism by Plaintiffs; and
• Voluntary dismissal with prejudice of all claims by Plaintiffs.
(See, Ex. 3, pp. 1-2).

Defendants rejected this offer out of hand and failed to counter:

During Trial – After Compensatory Verdict

After the jury’s compensatory verdict in excess of $11 million, Plaintiffs again contacted Defendants in an attempt to settle this matter prior to the punitive phase. On June 9, 2019, Plaintiffs issued a settlement communication with the following terms:

• Payment by Defendants of $16 million;
• A contract between Gibson’s Bakery and Oberlin College for the provision of baked goods for 15 years; and
• The voluntary dismissal of all claims with prejudice by Plaintiffs.
(Ex. 5, pp. 1-2).9

Defendants responded to this communication on June 11, 201910 by offering approximately $4.6 million, which represented Defendants’ incorrect calculation of the compensatory damages after application of the damages cap. 11

Again, wishing to resolve this case, on June 11, 2019 Plaintiffs responded with a substantially reduced settlement offer following the following terms:

• Payment by Defendants. in the amount of Fifteen :Million Dollars ($15.000.000.00) , within thirty (30) days of acceptance;
• Plaintiffs’ voluntary dismissal of all claims against Defendants with prejudice; and
• The Court shall retain jurisdiction to enforce the terms of the settlement agreement.

During Gibsons’ Counsel’s Closing Argument on Punitive Damages

… Defendants submitted their last offer on June 13, 2019 at 10:47 AM, while Plaintiffs’ counsel, Attorney Lee Plakas, was actually
resenting his closing argument on punitive damages. 13 Defendants conditioned that offer on it being accepted before the jury began deliberations on punitive damages:

Defendants Oberlin College and Meredith Raimondo reject the settlement offer presented in your correspondence dated June 11, 2019. Defendants respond with a counteroffer of $4,674,500-the maximum amount Plaintiffs are entitled to recover in this matter pursuant to the statutory cap on non-economic damages under R.C. 2315.18(8). Defendants’ counteroffer requires Plaintiffs’ stipulation to a Judgment Notwithstanding the Verdict regarding all verdicts against Dr. Meredith Raimondo in her individual capacity, and Plaintiffs’ voluntary dismissal of Dr. Raimondo from this matter entirely. This offer expires when the jury retires to deliberate after the punitive damages phase of this matter.

(Ex. 9,p.1). 14

Thus, in order to evaluate and respond to this communication, Plaintiffs’ counsel would have needed to check his email, stop in the middle of closing arguments, then provide a response to Defendants.

Defense Response

The defense opposition to the motion for prejudgment interest does not substantially dispute this timeline, but does vigorously dispute the implication that defendants did not carefully analyze the risks or make a good faith attempt to settle. Instead, the defense argues that it saw the case and the fair value of settlement very differently than plaintiffs.

…  Plaintiffs also make no argument in their Motion that Defendants failed to rationally evaluate their risk and potential liability. Nor could Plaintiffs establish the lack of a rational evaluation of Defendants’ risk and potential liability. To be sure, Defendants’ evaluation reflected in part their good faith belief that they have not engaged in any tortious conduct for which they can be properly held liable. Nonetheless, through written discovery, depositions, and pre-trial and trial proceedings, Defendants continued to evaluate their risk and potential liability by assessing the weight of their case on legal and factual grounds. In fact, Defendants’ multiple settlement offers evidence Defendants’ rational evaluation of their risk and liability in this action.

In particular, Defendants relied on longstanding legal precedent when evaluating their risk and potential liability. For instance, throughout this litigation, Defendants reasonably contended that they were not liable to Plaintiffs and, importantly, that there was no legal basis upon which this case could proceed to trial, including as to the three claims that the jury ultimately considered. See Defs.’ Motions for Summary Judgment, filed Mar. 1, 2019; Defs.’ Motion for Judgment Notwithstanding the Verdict, filed Aug. 14, 2019. However, once the Court permitted some of Plaintiffs’ claims to proceed to trial, (see April 22, 2019 Entry and Ruling on Defendants’ Motions for Summary Judgment), Defendants reasonably contended that Plaintiffs had no legal basis for the amount of damages they sought. Instead, Defendants believed that any settlement amount should be limited to the actual, provable harm that Plaintiffs may have suffered.

Profound Misjudgment

The court found that the defense did not engage in bad faith in failing to settle. But it’s clear the defense misjudged the case. That misjudgment permeated the treatment of the Gibsons from the day of the protest to the present.

Oberlin College is convinced it did nothing wrong. The failure of settlement reflected that approach.

Oberlin College now puts its hopes on appeals court and state supreme court justices. Yet the appeal is not without risk, as the Gibsons will seek to have the full $44 million original verdicts restored.

We’ll find out in a year or two if Oberlin College again has misjudged the case. But in the meantime, the stench of how the Gibsons were mistreated continues to hover over the college.

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