Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-00688/USCOURTS-cand-3_13-cv-00688-12/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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Case No. 13-cv-0688 MMC (NC) ORDER ENFORCING SETTLEMENT 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

DANIEL PIZZA, 

 Plaintiff, 

 v. 

FINANCIAL INDUSTRY REGULATORY 

AUTHORITY, INC. 

Defendant. 

Case No. 13-cv-0688 MMC (NC)

ORDER ENFORCING 

SETTLEMENT AGREEMENT 

TEMPORARILY UNDER SEAL 

 Plaintiff Daniel Pizza seeks to enforce the terms of a settlement agreement that 

resolved an employment dispute with his former employer, FINRA. The Court finds that 

FINRA has not complied with the payment term of the settlement and orders FINRA to 

remedy the deficiency by March 27, 2015. 

I. BACKGROUND 

On August 20, 2014, five days before the scheduled trial, the parties settled their 

dispute in a confidential settlement. The trial judge, Senior District Court Judge Maxine M. 

Chesney, promptly dismissed the case. Dkt. No. 87. 

Under the terms of the settlement agreement, the parties consented to the jurisdiction 

of the undersigned magistrate judge (the “settlement judge”) for purposes of settlement 

enforcement. In December 2014, the parties submitted their present dispute, held a joint 

Case 3:13-cv-00688-MMC Document 91 Filed 03/19/15 Page 1 of 5
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Case No. 13-cv-0688 MMC (NC) ORDER ENFORCING SETTLEMENT 2 

call with the settlement judge, and submitted competing letter briefs. The settlement 

agreement, the briefs, and subsequent ex parte emails received from Mr. Pizza will be filed 

under seal. This order resolves the dispute. 

The disputed term is the payment term: “Defendant pay $53,000 to plaintiff, through 

counsel, within 28 days.” The settlement agreement is silent as to the tax consequences of 

the settlement payment. It is also silent as to how the money might be allocated among 

different disputed claims (such as attorneys’ fees, costs, wages, non-wages). And it is silent 

as to whether the parties contemplated any tax withholding from the payment. 

It is undisputed that FINRA did not pay the settlement amount to Pizza within 28 

days of the settlement. Rather, on December 3, 2014, FINRA paid Pizza an amount less 

than the settlement amount [$38,348.75], after making payroll deductions, including 

withholding income taxes [total of deductions = $14,651.25]. Pizza asserts that these 

deductions breached the settlement agreement. 

FINRA, on the other hand, asserts that under federal tax laws it must treat the 

settlement payment as wages and make appropriate withholdings. FINRA asserts that it 

complied with the settlement agreement in that its gross payment (payment plus 

withholdings) is the settlement amount. FINRA contends that the settlement agreement 

should not be interpreted in a way that would cause it to violate tax regulations. 

II. ANALYSIS 

A. Applicable Law 

Settlement agreements are designed to end litigation, not create it. In re City 

Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994). The Court therefore “has power 

to summarily enforce on motion a settlement agreement entered into by the litigants while 

the litigation is pending before it.” Id. (citations omitted). A motion to enforce a settlement 

agreement “essentially is an action to specifically enforce a contract.” Adams v. JohnsManville Corp., 876 F.2d 702, 709 (9th Cir. 1989). Generally speaking, the Court’s 

enforcement powers include authority to award damages and specific performance. T.N.T. 

Marketing, Inc. v. Agresti, 796 F.2d 276, 278 (9th Cir. 1986). 

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Case No. 13-cv-0688 MMC (NC) ORDER ENFORCING SETTLEMENT 3 

A preliminary question is which law applies to enforce the settlement. The 

agreement is silent on this subject. Because the parties entered into the settlement in 

California and much of the performance will be in California, the Court will apply 

California substantive law. Cal. Civ. Code § 1646. 

Under California law, the elements of a breach of contract are: “(1) the existence of 

the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s 

breach, and (4) the resulting damages to the plaintiff.” Universal Green Solutions, LLC v. 

VII Pac Shores Investors, LLC, No. 12-cv-5613 RMW, 2014 U.S. Dist. LEXIS 67215, *5 

(N.D. Cal. May 15, 2014). “The fundamental goal of contractual interpretation is to give 

effect to the mutual intention of the parties.” Id. (citations omitted). “Such intent is to be 

inferred, if possible, solely from the written provisions of the contract.” Id. (citations 

omitted). “If contractual language is clear and explicit, it governs.” Id. (citations omitted). 

B. Analysis of Settlement Agreement 

In order to best effectuate the intention of the parties in settling the case, the Court 

aims to give both parties the benefit of their bargain. See Facebook., Inc. v. Pacific 

Northwest Software, Inc., 640 F.3d 1034, 1038 (9th Cir. 2011) (enforcing settlement 

agreement). Here, FINRA promised to pay a specific amount of money to Pizza and Pizza 

expected to be paid that specific amount of money. FINRA would like to add certain tax 

regulations and interpretations into the settlement terms, but those regulations and 

interpretations were not part of the deal. The Court therefore orders FINRA to pay Pizza 

$14,651.25 (the amount withheld from the initial settlement payment) by March 27, 2015, 

so that the total amount paid will be the settlement amount, $53,000. FINRA also must 

provide timely and accurate amendment of any information it supplied to tax authorities. 

It is not correct, as FINRA now asserts, that Pizza is seeking a “tax free” payment. 

To be clear, the Court is not ordering that the settlement amount will be “tax free.” Pizza 

and FINRA each have tax obligations that may arise from the settlement payment. The IRS 

is not a party to this case and the Court is not ruling on how it may treat this settlement from 

a tax perspective. 

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Case No. 13-cv-0688 MMC (NC) ORDER ENFORCING SETTLEMENT 4 

III. TEMPORARILY UNDER SEAL 

There is a presumption of public access to judicial records and documents. Nixon v. 

Warner Commc’ns, Inc., 435 U.S. 589, 597 (1978). Therefore, a party must normally 

demonstrate “compelling reasons” to seal judicial records attached to a dispositive motion. 

Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1179 (9th Cir. 2006). When a party 

seeks to seal documents attached to a non-dispositive motion, a showing of “good cause” 

under Federal Rule of Civil Procedure 26(c) is sufficient. Id. at 1179-80; see also Fed. R. 

Civ. P. 26(c). “[T]he party seeking protection bears the burden of showing specific 

prejudice or harm will result,” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 

F.3d 1206, 1210-11 (9th Cir. 2002), and that party must make a “particularized showing . . . 

with respect to any individual document,” San Jose Mercury News, Inc. v. U.S. Dist. Court, 

N. Dist. (San Jose), 187 F.3d 1096, 1103 (9th Cir. 1999). “Broad allegations of harm, 

unsubstantiated by specific examples or articulated reasoning” are insufficient. Beckman 

Indus., Inc. v. In’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). Requests to file under seal 

must be “narrowly tailored,” and “[a] sealing order may issue only upon a request that 

establishes that the document, or portions thereof, are privileged, protectable as a trade 

secret or otherwise entitled to protection under the law.” Civil L.R. 79-5(b).

In this case, the settlement agreement is confidential and the parties may prefer that 

this order discussing the settlement terms remain under seal. Given the presumption of 

public access, however, the Court intends to make this order public, but will redact the 

settlement amount and amount due. The Court has addressed the parties’ interest in 

confidentiality by narrowly discussing the particular provisions of the settlement and 

redacting the settlement amount. The Court will also permit the parties a narrow window 

(by March 25, 2015, noon) in which to file a motion to seal all or part of this order. This 

order will be filed under seal and will remain under seal until at least March 25 at noon, or 

until further order of the Court. 

 

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