Fitzgerald v. Papa Murphy's International, LLC ( 2019 )

1 || Craig M. Murphy, Esq. California Bar No. 314526 2 || craig@nvpilaw.com MURPHY & MURPHY LAW OFFICES 3 114482 Market Street, Ste 407 Ventura, CA 93003 4 || (805) 330-3393 (702) 369-9630 Fax 5 Attorneys for Plaintiff 6 UNITED STATES DISTRICT COURT 7 FOR THE EASTERN DISTRICT OF CALIFORNIA 8 g ||| TAYLOR FITZGERALD, individually and Case No.: 18-cv-01214-JAM-DB as Parent and Guardian of R.B., a Minor 10 ||| Child, 11 Plaintiffs, V. 12 PAPA MURPHY’S INTERNATIONAL, ORDER GRANTING EX-PARTE . 13 ||| LLC, a Foreign Corporation d/b/a PAPA PETITION FOR COMPROMISE OF MURPHY’S TAKE N BAKE; DOES 1 MINOR'S CLAIM 14 ||| through 10, inclusive, and ROE ENTITIES 1 through 10, inclusive, 2 IS Defendants. og & $8 16 {| —o—- . ee Hearing Date: 17 ||| PAPA MURPHY’S INTERNATIONAL, Hearing Time: LLC, 18 . oe Third-Party Plaintiff, 19 v. 20 CH ROBINSON COMPANY, et al., 21 Third-Party Defendant. 22 23 This matter comes before the Court on Plaintiff's Ex-Parte Petition for Compromise of 24 |} Minor’s Claim. [Doc. No. 41] Based upon the Court's review of the papers, 25 hearine-hetteon——QDA7—_ 3940 Fay, and for the reasons set forth below, the Court 26 || GRANTS the petition. 27 | /// 28 || /// 1 I. 2 BACKGROUND 3 Petitioner is the natural parent and guardian of R.B., a minor. RB. is 8 years old, 4 ||having been born on June 26, 2011. As of May 8, 2018, federal, state and local health officials 5 || attributed a multi-state outbreak of Escherichia coli O157:H7 to romaine lettuce from Yuma, 6 || Arizona. [Doc. No. 4, p. 11]. On or about April 10, 2018, R.B. consumed romaine lettuce from 7 |\the Yuma, Arizona growing region in a salad at the Papa Murphy’s restaurant located at 4819 8 Granite Drive, Rocklin, California 95677. The romaine lettuce was contaminated by F. coli 9 || O157:H7 bacteria, leading to R.B.’s E. coli O157:H7 infection and related injuries. [Doc. No. 4, p. 10 || 13]. R.B. began feeling ill around April 12, 2018. He experienced fevers, agonizing abdominal 11 || cramps, and bloody diarrhea, culminating in his admittance to Sutter General Sacramento on March 12 || 14, 2018. [Doc. No. 4, p. 13]. R.B. tested positive for FE. coli O157:H7. [Doc. No. 4, p. 13]. R.B. Bo 13 ||remained hospitalized until April 30, 2018. During his hospitalization, he developed HUS, and 14 || required four blood transfusions. Jd. Defendants produced, distributed, and sold the contaminated 15 || food product that injured R.B., and caused his E. coli 0157:H7 infection. The Defendants are, 3 16 || therefore, manufacturers, distributors, and sellers of an adulterated food product, and the adulterated 17 || food product reached R.B. without substantial change from the condition in which it was sold by the 18 || Defendants. [Doc. No. 4, p. 13]. 19 Prior to the filing of Plaintiffs’ Complaint and First Amended Complaint in this matter, the 20 || parties had engaged in extensive settlement negotiations and attempts to settle the Plaintiffs’ claims. 21 || The Complaint and First Amended Complaint were filed when the settlement negotiations were at 22 ||an impasse. After the filing of the First Amended Complaint, the parties resumed settlement 23 || negotiations. In an attempt to foster settlement negotiations and to avoid litigation costs and 24 || expenses, the parties agreed to dismiss the case without prejudice. [Doc. No. 37]. On September 25 || 12, 2018, the Court entered an Order dismissing the case per the parties’ Stipulation. [Doc. No. 38]. 26 The parties thereafter continued pursuing this case and eventually agreed to settle Plaintiffs’ 27 || claims as a result of a private mediation. On November 14, 2019 Plaintiffs filed an Ex-Parte 28 || Petition to re-open this case to allow them to file an Ex-Parte Petition to Compromise Minor’s 1 Claim. [Doc. No. 39]. On November 15, 2019, this Court entered an Order re-opening this case 2 || [Doc. No. 40] to allow Plaintiffs to file their Ex-Parte Petition for Compromise of Minor’s Claim. 3 ||[Doc. No. 41]. The parties agreed to settle Plaintiffs’ claims for $525,000.00. Plaintiffs requested 4 || that a Structured Settlement be established for the deposit and safe-keeping of settlement funds. 5 || The Structured Settlement will allow for the best compounding of the settlement funds until R.B. 6 || reaches the age of 18, and further provides for the periodic payment of the funds after R.B. reaches 7 || 18 to further ensure he maximizes the benefits of this settlement once he reaches the age of 8 || majority. Plaintiffs therefore sought the Court’s approval of the settlement and the establishment of 9 || the Structured Settlement annuity payable to R.B. the minor herein. 10 II. 11 DISCUSSION 12 It is well-settled that district courts have a special duty to safeguard the interests of minor Bo 13 || children in the context of settlements proposed in civil lawsuits or claims for damages. Robidoux v. 14 || Rosengren, 638 F.3d 1177, 1181 (9th Cir. 2011); see also Fed. R. Civ. P. 17(c)(2) (district courts 15 ||"must appoint a guardian ad litem-or issue another appropriate order-to protect a minor or 3 16 || incompetent person who is unrepresented in an action.") "This special duty requires a district court 17 || to ‘conduct its own inquiry to determine whether the settlement serves the best interest of the 18 || minor." Robidoux, 638 F.3d at 1181 (quoting Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir. 19 |} 1978)). See also Salmeron v. United States, 724 F.2d 1357, 1363 (9th Cir. 1983) (holding that "a 20 || court must independently investigate and evaluate any compromise or settlement of a minor's claims 21 || to assure itself that the minor's interests are protected, even if the settlement has been recommended 22 || or negotiated by the minor's parent or guardian ad litem"). 23 In evaluating the propriety of a proposed settlement of a minor’s claim and "in considering 24 || the fairness of a minor's state law settlement, federal courts generally require that claims by minors . 25 |}. . be settled in accordance with the applicable state law." Lobaton v. City of San Diego, Case No. 26 || 3:15-cv-1416-GPC-DHB, 2017 WL 2610038, at *2 (June 16, 2017) (internal quotation marks and 27 || citation omitted). California law requires court approval of a settlement for a minor and attorney's 28 || fees to represent a minor. CAL. PROB. CODE § 3601; CAL FAM. CODE § 6602. The court is 1 || tasked with evaluating the reasonableness of the settlement and determining whether the 2 || compromise is in the best interest of the minor before approving a settlement. Espericueta v. 3 || Shewry, 164 Cal. App. 4th 615, 617 (2008). Furthermore, California Probate Code Section 3601 4 || authorizes the court approving a compromise of a minor's disputed claim to "make a further order 5 || authorizing and directing that reasonable expenses, medical or otherwise[,] . . . costs, and attorney's 6 || fees, as the court shall approve and allow therein, shall be paid from the money or other property to 7 || be paid or delivered for the benefit of the minor. CAL. PROB. CODE§ 3601 (a). The statute 8 ||"bestows broad power on the court to authorize payment from the settlement - to say who and what 9 || will be paid from the minor's money - as well as direct certain individuals to pay it." Goldberg v. 10 || Superior Court, 23 Cal. App. 4th 1378, 1382 (1994). 11 However, following the Ninth Circuit's decision in Robidoux, district courts have been split 12 || on whether or not to apply Robidoux when evaluating the propriety of a settlement of a minor's state Ro 13 || law claims. See Lobaton, 2017 WL 2610038, at *2; see also id. at n. 1 (collecting district court 14 || cases). The Robdioux court provided that in cases involving the settlement of a minor's federal 15 || claims, district courts should "limit the scope of their review to the question of whether the net 16 || amount distributed to each minor plaintiff is fair, in light of the facts of the case, the minor's specific 17 || claim, and recovery in similar cases." Robdioux, 638 F.3d at 1181. Here, the instant case was filed 18 || in this Court on the basis of diversity of citizenship. Thus, the court should apply California law and 19 || focus on whether "the compromise is sufficient to provide for the minor's injuries, care and 20 || treatment.” Goldberg, 23 Cal. App. 4th at 1382. As a guide, the court may consider the guidelines 21 || set forth in Robidoux because they provide a "framework for evaluating the reasonableness and 22 || fairness of Plaintiff's settlement." Lobaton, 2017 WL 2610038, at *2. 23 The court finds that the proposed settlement of R.B.’s claims is fair, reasonable and in the 24 || best interest of R.B. The proposed settlement would result in a total payment of $525,000.00 to 25 || R.B. The proposed settlement provides that $131,250.00.00 of the proceeds would be paid to 26 || R.B.’s counsel and that $8,567.45 would be reimbursed to counsel as and for costs incurred in this 27 || matter. The proposed settlement further provides that Plaintiff, Taylor Fitzgerald, R.B.’s mother, be 28 || reimbursed $8,558.53 in lost wages due to missed work while caring for R.B. and seeing to his 1 || medical care and treatment, and repaid $895.00 in out-of-pocket expenses incurred for the care and 2 || treatment of R.B. The proposed settlement further provides that R.B.’s healthcare insurance 3 || provider’s lien of $21,493.86 be repaid. Thus, R.B., the minor, would receive a net payment of 4 || $354,235.16, which shall be deposited into a structured settlement annuity with Pacific Life & 5 || Annuity Services, Inc. [Doc. No. 41-6, pp. 1-7; and Doc. No. 41-8, p. 2]. 6 The claims in this matter have been ongoing since May 2018. Plaintiffs’ counsel pursued 7 || claims against the named Defendants in this matter. Prior to the filing of the Complaint in this 8 || matter, the parties had engaged in extensive settlement negotiations and attempts to settle the 9 || Plaintiffs’ claims. [Doc. No. 41, p. 3]. The Complaint was filed when the settlement negotiations 10 || were at an impasse. The parties continued to engage in settlement discussions and the case was 11 || voluntarily dismissed by the parties without prejudice. [Doc. No. 37]. Since the voluntary 12 || dismissal, the parties resumed settlement negotiations and they have reached the settlement Ro 13 || proposed to this court through private mediation. 14 THE COURT FINDS that the proposed settlement allows for certainty in the resolution of : 15 || R.B.’s claims and avoids the uncertainty and expense of trial. Plaintiffs’ counsel has extensive 5 3 16 || experience in the area of food borne illness cases, and has reached similar, if not lesser results for 17 || clients in other matters of a similar nature throughout the country. Accordingly, the court finds that 18 || the proposed settlement in fair, reasonable and in the best interest of R.B. 19 THE COURT FURTHER FINDS that the method of disbursement of the settlement 20 || proceeds is fair, reasonable and in compliance with applicable law. Under California Probate Code 21 || §3600 et. seq. various alternatives are available for holding the funds of a settlement of a minor or 22 || incompetent, one such alternative is a structured settlement annuity. The California Code provides 23 || that upon petition by the guardian on behalf of the minor child or incompetent, the funds may be 24 || deposited in an insured account or a deferred annuity subject to withdrawal only upon Court Order. 25 || See CAL. PROB. CODE § 3602(c)(1). The settlement comports with this provision by providing 26 || that the balance of the settlement be placed in a structured settlement annuity with Pacific Life and 27 || Annuity Services, Inc., which will be disbursed pursuant to the terms and conditions of the annuity 28 || commencing when the minor reaches the age of eighteen. Specifically: 1 $32,000.00 payable semi-annually, guaranteed for five years, beginning on 06/21/2029, with the last guaranteed payment on 12/21/2033; 2 $500.00 payable monthly, guaranteed for five years, beginning on 06/21/2029, with 3 the last guaranteed payment on 05/21/2034; and $144,937.87 paid as a lump sum 06/21/2036, guaranteed. ‘ [Doc. No. 41-8, p. 2] 5 6 fl. ATTORNEY’S FEES AND COSTS 8 Attorneys' fees and costs are typically controlled by statute, local rule or local custom. 9 || Generally, fees in minor’s cases have historically been limited to 25% of the gross recovery. In 10 || California, courts are required to approve the attorneys’ fees to be paid for representation of a minor. 11 || See CAL. PROB. CODE § 2601; Cal. Rule of Ct. 7.955. To determine whether the fee is reasonable 12 || courts consider a myriad of factors including: the amount of the fee in proportion to the value of the eo 13 services performed; the novelty and difficulty of the questions involved and skills required; the 3 14 || amount involved and the results obtained; and the experience and ability of the attorney. Cal. Rule 15 || of Ct. 7.955(b). In instances where a contingency fee has been proposed "most courts require a : 5 16 || Showing of 'good cause’ to award more that 25% of any recovery" whereas a greater reward is "rare 17 || and justified only when counsel proves that he or she provided extraordinary services." Schwall v. 18 || Meadow Wood Apts., No. CIV. S-07-0014 LKK, 2008 WL 552432, at *1-2 (E.D. Cal. Feb. 27, 19 || 2008) (quoting 2 Weil & Brown, Cal. Practice Guide: Civ. Proc. Before Trial §§ 12:576-12:577, 12- 909 || 17 (2007)). 1 Plaintiffs’ counsel seeks $131,250.00.00 in attorney's fees, a sum that represents 25 percent 22 || of the gross settlement. Petitioner's counsel further requested the reimbursement of $8,567.45 in 23 || costs incurred in this matter. 24 THE COURT FINDS that in consideration of the duration of this case, the amount of work 25 || performed by Plaintiffs’ counsel, and that the fee request's adherence to the 25 percent limit 26 || historically applied, the amount of attorney's fees is reasonable and does not suggest that the 27 || settlement was unfair. Likewise, the amount of costs requested is fair and reasonable in light of the 2g || work performed and the amount of the settlement obtained. 1 IV. 2 || WAGE LOSS, OUT-OF-POCKET EXPENSES AND HEALTHCARE INSURANCE LIEN 3 Plaintiffs request that Plaintiff, Taylor Fitzgerald, be reimbursed her lost wages and out-of- 4 || pocket expenses incurred during R.B.’s hospitalization and course of treatment. [Doc. No. 41, p. 6; 5 || p. 7; Doc. No. 41-4, p. 2; Doc. No. 41-5, pp. 2-8]. Plaintiff, Taylor Fitzgerald request repayment of 6 || her lost wages in the amount of $8,558.53, and $895.00 in out-of-pocket expenses. 7 THE COURT FINDS that Plaintiff, Taylor Fitzgerald’s request is fair, reasonable and 8 || properly supported. 9 Plaintiffs request that the medical healthcare insurance lien for R.B.’s treatment be 10 || reimbursed pursuant to the terms of the healthcare insurance contract. The healthcare insurance lien 11 is $21,493.86. 12 THE COURT FINDS that the repayment of the healthcare insurance lien is fair and Bo 13 || reasonable given the course of R.B.’s treatment and the total amount of his medical bills. 3 14 V. Soa = 15 ORDER 3 : 16 After reviewing the Petition for Compromise of Minor's Claim, the Court finds that the 17 || proposed settlement of R.B.'s claims in the amount of $525,000.00 fair and reasonable in light of 18 || the minor's claims and the recovery in similar cases. 19 Accordingly, the Court ORDERS as follows: 20 || The settlement funds should be disbursed as follows: 21 (1) Attorney's fees in the total amount of $131,250.00 shall be paid to the law firm of Marler 22 || Clark, Plaintiffs’ counsel; $8,567.45 shall be disbursed for costs incurred, this sum is also payable 23 || to Plaintiffs’ attorneys, Marler Clark. 24 (2) Plaintiff, Taylor Fitzgerald shall be paid $8,558.53 as and for lost wages, and $895.00 as 25 |! and for her out-of-pocket expenses. 26 (3) The healthcare insurance lien shall be paid $21,493.86 as and for the full and final 27 || payment of its lien. 28 (4) R.B.'s net recovery of $354,235.16 shall be deposited into the Pacific Life and Annuity 1 |j Services, Inc. structured settlement annuity. [Doc. No. 41-6, pp. 1-7; and Doc. No. 41-8, p. 2]. The 2 || funds will be held there until R.B. reaches the age of majority, eighteen. Until that time, no withdrawals of principal or interest may be made from the annuity account without a certified copy 4 of a written order under this case name and number, signed by a judge of this Court. Upon R.B. 5 reaching 18 years of age, payments shall be made in accordance with the terms of the annuity as 7 follows: 8 $32,000.00 payable semi-annually, guaranteed for five years, beginning on 06/21/2029, with the last guaranteed payment on 12/21/2033; 9 $500.00 payable monthly, guaranteed for five years, beginning on 06/21/2029, with the last guaranteed payment on 05/21/2034; and 10 $144,937.87 paid as a lump sum 06/21/2036, guaranteed. 11 [Doc. No. 41-8, p. 2]. 12 IT IS SO ORDERED. eo 13 Dated this 25) day of November, 2019. 14 $88 15 hi > 3% 16 —— ee U States District Court Judge 17 18 || Submitted by: 19 | MURPHY & MURPHY LAW OFFICES 0) 7 OY 21 A YT CraigMurphy, Esq. / 22 |! California Bat No. 344526 73 4482 Market Stre¢t, Ste 407, Ventura, CA 93098 24 || (805) 330-3393 Phone (702) 369-9630 Fax 25 || Attorneys for Plaintiffs 26 27 28