Settlement That Voids Jury Verdict OKd : Litigation: Rancher to collect $3 million instead of $7 million awarded in libel trial. State Supreme Court says the accord satisfies all parties and avoids costly appeals.

The California Supreme Court cleared the way Thursday for a Chico rancher to collect $3 million from the University of California, settling a long-running court battle over a libelous report issued by three UC veterinarians.

The high court ruled that cattle rancher George Neary and the university can reach an out-of-court settlement and officially set aside a jury’s verdict that the university falsely blamed Neary for the death of 500 of his cattle.

The decision should make it easier in the future for opposing sides to settle lawsuits that have been decided by juries but are headed for costly and extended appeals in the higher courts.

Neary, who was awarded $7 million by a jury after he sued, contends that the cattle were killed when state authorities treated them with a pesticide to rid them of scabies mites.

To avoid further litigation in the 13-year-old case, both sides agreed to a settlement that would disregard the jury verdict, give Neary $3 million and clear the names of the three UC veterinarians.

A state appeal court, however, blocked the settlement, ruling that the jury’s decision was sound and that overturning it without a showing of legal error would “undermine the integrity of the entire judicial process.”

The Supreme Court, in its ruling, concluded that reversal of a jury verdict to facilitate a settlement should be permitted unless there were “extraordinary circumstances that warrant an exception.”

“We hold that, when the parties to an action agree to settle their dispute and as part of their settlement stipulate to a reversal of the trial court judgment, the Court of Appeal should grant their request,” the court said in an opinion signed by five of the seven justices.

The case arose after Neary bought 848 pregnant heifers in Oregon in 1978 and took them to his ranch near Chico. Concerned that the herd might be infected with scabies mites, state agricultural officials treated the cattle with the pesticide Toxaphene.

The next year, 95 of the heifers and more than 400 newborn calves died. Three veterinarians from UC Davis investigated the case and concluded in a written report that the deaths were caused by Neary’s negligence in caring for the herd.

An Alameda court jury found in 1988 that the university and its veterinarians had libeled Neary in the widely circulated report. In refusing to vacate the jury’s verdict, the appellate court ruled that it served as a public commentary on the activities of government officials.

The Supreme Court countered that the settlement will save the taxpayers $4 million by reducing Neary’s award. “We think it fanciful to embrace the assumption that the public is willing to pay $4 million for a ‘commentary,’ ” the court concluded.

In a rebuke of the lower court, the justices wrote, “The integrity of the judicial process will be maintained, indeed enhanced by facilitating an efficient and fair settlement.”

Justice Stanley Mosk voted with the majority but said in a separate opinion that the court’s new standard is too broad and that reversals of jury verdicts should be decided on a case-by-case basis.

Justice Joyce Luther Kennard dissented, arguing that overturning valid jury decisions simply because one side insists on it as a condition of settlement undermines the judicial system.

“To casually discard a presumptively correct trial court judgment, without any showing of legal error, cannot help but demoralize trial judges and jurors,” she wrote. “If this court by its actions shows little regard for the work of trial courts, we can hardly expect the public to hold them in high esteem.”