The point that bothers me about this settlement is precisely that it's a settlement, not a judgment after appeal. Unless the facts show its liability is sole and definite, California public entities should vigorously defend themselves to the extent of the Government Code and other applicable laws.
When presented with liability claims, Californa public entities typically attempt to dispose of improperly reported claims statutorially (see Government Code sections 810-996.6 ). Assuming a proper report, the investigation and evidence should reveal whether a settlement or a defense is warranted. With respect to the subject case, on February 27, 2007, Rachanee Srisavasdi of The Orange County Register, in part, wrote, "In the lawsuit, the women allege the city maintained a dangerous roadway. Prior to the suit, the city rejected a $10 million claim from each woman for damages. Ed Richards, an attorney for Dana Point, said the condition of the roadway was not a factor in the crash. 'The sole cause of this crash was Mr. Bradshaw,' he said." ( see http://www.ocregister.com/ocregister/news/local/article_1590055.php ).
From what I know (and, granted, it's only what has been in the papers), lessons can be learned from this settlement as follows:
Lesson 1. If you believe you have liability, negotiate a reasonable settlement at the earliest time feasible. (Many insurance companies like to delay payments in order to reduce the present value of the ultimate payment. But, a good negotiator will already factor the time value of money into his or her offer.) If Dana Point had believed it had liability (and, at least, it appears one of its attorneys did not), this claim apparently could have settled earlier for $30 million less that it did.
Lesson 2. If you believe you have no liability, defend yourself in court (and if you lose and continue to believe your intial assessment, seriously consider appealing). These victims' injuries were unfortunate and grievous, but was it the taxpayers' responsibility to indemnify for the act of a (multiply convicted) drunk driver? (Although one might argue the settlement was largely paid by the excess insurers of a public entity pool, ultimately this money will be repaid by all California public entities purchasing future excess liability coverage at prices adjusted to account for this settlement--and all of the perceived future settlements and judgments adjusted to this new benchmark.)
Lesson 3. If you ever have a potential outlier settlement, attempt to negotiate a non-disclosure for the portion covered by commercial insurers if this can be crafted to comply with the CA Public Records Act..
Lesson 4. If you're stuck with a large settlement or judgment, subrogate against others that bear responsibility. In this case, the driver and the designers of the bike lane were more responsible than the city. For example, a 1996 report "Trail Intersection Design Guidelines" by the University of North Carolina Highway Safety Research Center and based on U.S. and European data, recommends grade separations or signals when the 85th percentile speed exceeds 40 mph on a four lane roadway having a traffic volume over 20,000 AADT. In the portion of PCH where the claim occurred, the AADT ranges between 30,000 and 43,500.
As established in Li v Yellow Cab Co. (1975), California is a pure comparative fault state, but this settlement was joint and several liability in extremis.