"I no longer want an apology from him because it is not sincere, I now want his resignation," said Lydia Guzman.
Arpaio admitted he did not give over all required information in the racial profiling case against him, and admitted he did not stop the immigration raids.
His lawyers want to settle the contempt case by creating a $350,000 fund paid for by the county, to compensate victims.
The lawyers also proposed having the Sheriff and Chief Deputy Jerry Sheridan personally give $100,000 to a charity that works with hispanics.
But the Federal Judge in court said he wants more, for Arpaio to have "skin in the game," and for the $100,000 to come from Arpaio's pocket, not his supporters.
"I think we have a long way to go before we get to the bottom of their wrongdoing, and a remedy that protects the plaintiffs in this case," said Cecilia Wong with the ACLU.
"I'm very encourage that the court heard what Chief Deputy Sheridan and Arpaio had to say, and that there proposal, and their admissions are a good faith proposal that merits consideration," said Arpaio's attorney Tom Liddy.
Arpaio has a hearing scheduled for April where he and the others could be called to testify.
The settlement may be a way to avoid that, another hearing is scheduled for next Friday.