A court-approved agreement settling disability discrimination allegations did not extend to a related workers' compensation claim, a California appeals court has ruled. 

Because the workers’ compensation claim must be approved by the California Workers' Compensation Appeal Board, the 2nd District Court of Appeal concluded the settlement worked out at the trial court level should have been conditional on the WCAB approval. 

However, the appeals court decided that the trial court judgment impliedly decreed that: 

•           The terms of the settlement encompass the settlement of both the disability discrimination and the workers’ compensation claims. 

•           The validity of the settlement is conditional on the WCAB’s approval of the settlement of the workers’ compensation claim. 

The appeals court affirmed the judgment but said, “If the WCAB does not grant its approval, the settlement agreement shall be of no force or effect.” 

Plaintiff Wendy Steller took a leave of absence under workers’ compensation because of her “bad back.”  She sued her employer, Sears Roebuck & Co., in the Santa Barbara County Superior Court when it allegedly failed to reinstate her with reasonable accommodation for her back problems after her leave expired and she returned to work. 

According to the opinion, at the time she filed her lawsuit alleging disability discrimination, she was also pursuing a workers’ compensation action against Sears. 

The parties agreed to settle, but Sears made its offer in the civil suit and did not mention the workers’ compensation action, the opinion said.  The provisions of the offer included a payment of $95,000 to Steller as satisfaction of “all claims and causes of action related to her employment.”  

Although the offer required Steller to dismiss the disability discrimination lawsuit, it did not mention the workers’ compensation action or its case number. 

At a mandatory settlement conference in the Superior Court, the parties disagreed as to whether the settlement included the workers’ compensation claim.  The trial judge concluded that on the basis of the language of the agreement alone, the settlement applied to both actions. 

Steller appealed from the judgment enforcing the agreement, arguing that the workers’ compensation action required WCAB approval before that claim could be settled and, therefore, the settlement only applied to her civil action. 

The appeals court panel partially agreed with her reasoning and faulted the trial judge for failing to consider extrinsic evidence of the parties’ intent, given the ambiguity of the agreement. 

The panel concluded that where parties seek to settle both a civil action and a related workers’ compensation claim at a superior court conference, it must be conditional on WCAB approval.  

“This is a practical and workable solution to the procedural difficulty presented,” the panel said.     

In addition, the panel said the amount and allocation of attorney fees in the workers’ compensation action is up to the WCAB. 

Steller v. Sears, Roebuck & Co., No. B219935, 2010 WL 4010602 (Cal. Ct. App., 2d Dist., Div. 6 Oct. 14, 2010).