Shears v. United States of America ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 H.S., a minor, by and through his mother Case No.: 3:17-cv-02418-BTM-KSC and natural guardian, SAMANTHA 12 PARDE, ORDER APPROVING MINOR’S 13 COMPROMISE Plaintiff, 14 v. [Doc. No. 86] 15 UNITED STATES OF AMERICA, and 16 DOES 1 through 10, inclusive, 17 Defendants. 18 19 20 Before the Court is the parties’ Amended Joint Petition and Stipulation for Approval 21 of Minor’s Compromise and Release of Federal Tort Claims Act Claims Pursuant to 28 22 U.S.C. § 2677 (the “Petition” or “Pet.”). Doc. No. 86. Attached as exhibits to the Petition 23 are the Stipulation for Compromise Settlement and Release of Federal Tort Claims Act 24 Claims Pursuant To 28 U.S.C. § 2677 (the “Stipulation”) and the Irrevocable Reversionary 25 Inter Vivos Grantor Medical Care Trust for the Benefit of [Plaintiff] (the “Reversionary 26 Trust”). See Doc. Nos. 86-1, 86-2. Pursuant to Civil Local Rule 17.1(a), the parties seek 27 the Court’s approval of a proposed settlement of plaintiff’s claims (the “Settlement”). On 28 October 14, 2020, the District Court, Honorable Barry Ted Moskowitz, referred the 1 Petition to the undersigned. Doc. No. 81. Having reviewed the Petition and the supporting 2 documents and being fully informed as to their contents, and for the reasons set forth below, 3 the Court GRANTS the Petition. 4 I. BACKGROUND 5 A. Summary of Plaintiff’s Claims 6 On December 6, 2015, plaintiff H.S. (“plaintiff”), then five years old, attended an 7 event at the Kearney Mesa Armory in San Diego for National Guard members and their 8 families. Pet. at 2. During the event, plaintiff fell from a bounce house onto a concrete 9 floor. Id. He sustained serious injuries, including a skull fracture, traumatic brain injury, 10 subdural hematoma, and three spinal fractures. Id. at 2-3. Due to his injuries, plaintiff 11 required and will continue to require medical care and monitoring, speech therapy, physical 12 therapy, and occupational therapy. Id. at 3-4; see also Doc. No. 1 at 7, 12, 14. 13 B. Procedural History 14 On December 1, 2017, plaintiff, through his mother and guardian ad litem, filed suit 15 under the Federal Tort Claims Act (“FTCA”) against the United States (“defendant”). See 16 generally id. Plaintiff stated a cause of action for premises liability against defendant. Id. 17 at 14. In May 2019, the parties each filed for summary judgment. See Doc. Nos. 44, 45. 18 In August 2019, the District Court denied both motions. See Doc. No. 57. A final pretrial 19 conference was set for July 15, 2020. Doc. No. 60. 20 On October 30, 2019, plaintiff filed an amended complaint, adding a claim for 21 negligence against defendant. Doc. No. 66. On March 5, 2020, the parties advised the 22 Court that they had scheduled a private mediation and requested that the pretrial schedule 23 be continued. Doc. No. 72. Thereafter, the parties advised the Court that the matter had 24 settled during the mediation. See Doc. Nos. 76, 79. The parties’ Petition followed.1 25 26 27 1 The parties initially filed the Petition under seal. See Doc. Nos. 82, 84. However, upon review of the parties’ papers, it appeared that an express term of the parties’ agreement is that the Settlement shall be 28 1 II. LEGAL STANDARDS 2 District Courts have a duty to safeguard the interests of minors in litigation. 3 Salmeron v. United States, 724 F.2d 1357, 1363 (9th Cir. 1983); see also Fed. R. Civ. P. 4 17(c) (requiring district courts to “appoint a guardian ad litem…to protect a minor or 5 incompetent person who is unrepresented in an action”). Where the parties settle an action 6 involving a minor litigant, the Court must “‘conduct its own inquiry to determine whether 7 the settlement serves the best interest of the minor.’” Robidoux v. Rosengren, 638 F.3d 8 1177, 1181 (9th Cir. 2011) (quoting Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir. 9 1978)); see also CivLR 17.1(a) (providing that “[n]o action by or on behalf of a minor or 10 incompetent will be settled, compromised, voluntarily discontinued, dismissed or 11 terminated without court order or judgment.”). The Court must conduct this inquiry “even 12 if the settlement has been recommended or negotiated by the minor’s parent or guardian 13 ad litem.” Salmeron, 724 F.2d at 1363. 14 In the Ninth Circuit, courts reviewing the settlement of a minor’s federal claim 15 should “limit the scope of their review to the question whether the net amount distributed 16 to each minor plaintiff in the settlement is fair and reasonable, in light of the facts of the 17 case, the minor’s specific claim, and recovery in similar cases.” Robidoux, 638 F.3d at 18 1181–82. Courts should also “evaluate the fairness of each minor plaintiff’s net recovery 19 without regard to the proportion of the total settlement value designated for adult co- 20 plaintiffs or plaintiffs’ counsel—whose interests the district court has no special duty to 21 safeguard.” Id. at 1182 (citing Dacanay, 573 F.2d at 1078). “So long as the net recovery to 22 each minor plaintiff is fair and reasonable in light of their claims and average recovery in 23 similar cases, the district court should approve the settlement as proposed by the parties.” 24 Robidoux, 638 F.3d at 1182. 25 26 27 in the parties’ moving papers. On December 3, 2020, the parties filed an amended Petition to correct these 28 1 The Robidoux court limited its decision to “cases involving the settlement of a 2 minor’s federal claims.” Id. at 1181 (emphasis added). Because FTCA claims are 3 governed by substantive state law, approval of their settlement may be governed by state 4 law rather than limited by Robidoux. See A.M.L. v. Cernaianu, No. LA-CV12-06082-JAK- 5 RZx, 2014 WL 12588992, at *3 (C.D. Cal. Apr. 1, 2014) (collecting cases). Under 6 California state law, the court is tasked with evaluating the reasonableness of the settlement 7 and determining whether the compromise is in the best interest of the minor, with “broad 8 power” “to say who and what will be paid from the minor’s money—as well as direct 9 certain individuals to pay it.” See Espericueta v. Shewry, 164 Cal. App. 4th 615, 619–20, 10 79 Cal.Rptr.3d 517 (2008); Goldberg v. Superior Court, 23 Cal. App. 4th 1378, 1382, 28 11 Cal.Rptr.2d 613 (1994). 12 In this case, however, the Court need not decide whether Robidoux or state rules 13 apply, because the outcome under either is the same. See A.M.L., 2014 WL 12588992, at 14 *3 (finding it unnecessary for the court to resolve whether Robidoux or state rules applied 15 to the approval of a minor’s compromise in a case involving state tort law claims under the 16 FTCA, where the proposed settlement would satisfy both standards); see also R.N. v. 17 United States, No. 17cv1583-L-BGS, 2019 WL 6724338, at *2 n.2 (S.D. Cal. Dec. 11, 18 2019) (same); Estate of Alvarado v. Tackett, No. 13cv1202-LL, 2019 WL 4573714, at *3 19 (S.D. Cal. Sept. 20, 2019) (same). 20 III. DISCUSSION 21 A. The Proposed Settlement 22 The complete and precise terms and conditions of the Settlement are set forth in the 23 Petition, and the Stipulation and Reversionary Trust, both of which were attached to the 24 Petition. See Doc. Nos. 86-1 and 86-2. In summary, plaintiff agrees to release his claims 25 against defendant in exchange for gross consideration of $3,000,000.00, the entirety of 26 which is for the benefit of plaintiff. Pet. at 4, 5. The gross settlement amount will be 27 allocated as follows: 28 / / 1 P Ina sy te re u mor e nt Amount Use of Funds 2 3 Annuity Contract $1,250,000 Yearly payments of $25,000 to plaintiff beginning on 5/18/2029 and 4 continuing for five years certain 5 Monthly payments of $4,110 to 6 plaintiff beginning on 5/18/2033 and continuing for plaintiff’s life and for 35 7 years certain 8 Campbell, Yost, Clare $1,150,000 Payment of attorneys’ fees and costs in 9 and Norell, P.C. Trust total amount of $854,098.48 10 Account $290,000 to be placed in a settlement 11 trust for plaintiff to provide for his needs on a flexible basis 12 13 Irrevocable $300,000 Medical care and related expenses Reversionary Medical 14 Care Trust 15 Installment Refund $300,000 Medical care and related expenses 16 Annuity 17 18 TOTAL $3,000,000 19 20 See id. at 4-6; see also Doc. Nos. 86-1 and 86-2. After deducting counsel’s fees and 21 expenses (addressed below), plaintiff’s net recovery is $2,145,901.52. 22 This action was commenced in 2017, and the parties’ claims and defenses have been 23 thoroughly investigated and developed through the course of the litigation. The Settlement 24 was reached as the parties prepared for trial, after the conclusion of discovery and 25 unsuccessful attempts at summary judgment by both sides, and through arms-length 26 negotiations facilitated by a private mediator. The Settlement avoids the risks and expenses 27 of a jury trial, compensates plaintiff for his past injuries and anticipated future needs, and 28 is structured to provide both flexibility and certainty going forward. Furthermore, although 1 the parties do not identify any other cases involving circumstances similar to those alleged 2 in plaintiff’s complaint, the Court has independently surveyed recent settlements in 3 California and the Ninth Circuit in cases involving minors who suffered traumatic brain 4 injuries and/or spinal fractures due to negligence or allegedly dangerous conditions, and 5 finds the Settlement to be within the average amount recovered.2 Accordingly, upon 6 consideration of the facts of the case, plaintiff’s claims, and recoveries in similar actions, 7 the Court concludes that the Settlement is fair and reasonable, and in plaintiff’s best 8 interest. 9 B. Attorneys’ Fees and Litigation Costs 10 In addition to assessing whether the Settlement is fair and reasonable, the Court must 11 also approve the attorney’s fees and costs to be paid for representation of a minor. See Cal. 12 Prob. Code. § 2601. Where counsel represents a minor on a contingency fee basis, 13 attorneys’ fees are generally limited to 25% of the gross recovery. See Doe v. Lincoln 14 Military Property Mgmt. LP, No. 3:20-cv-00224-GPC-AHG, 2020 WL 5810168, at *3 15 (S.D. Cal. Sept. 30, 2020). And, as the parties correctly note, counsel’s fees are “capped” 16 at 25% of the settlement amount under the FTCA. Pet. at 4; accord 28 U.S.C. § 2678. 17 Plaintiff’s counsel request $750,000 in fees – exactly 25% of the gross settlement 18 amount. Pet. at 4. In assessing whether this fee is reasonable, the Court may consider, 19 inter alia, the time and labor expended, the results obtained, counsel’s skill and the value 20 of counsel’s services, and any applicable statutory requirements. See Cal. R. Ct. 7.955. 21 Here, the litigation has been pending for nearly three years, during which plaintiff’s counsel 22 – experienced personal injury lawyers – completed extensive fact and expert discovery, 23 pursued and resisted summary judgment, and prepared the case for trial. The requested 24 25 26 2 See, e.g., Y.L. v. Pepsico, Inc., 2018 WL 4096620 (Cal. Sup. Ct. 2018) ($2.4 million); J.M.M. v. Cty. of Los Angeles, 2017 WL 6496962 (C.D.Cal. 2017) ($3.9 million); A.P. v. Nitto Tire U.S.A., Inc., 2016 WL 27 891441 (Cal. Sup. Ct. 2016) ($3.4 million); Owen v. City and Cty. of San Francisco, 2016 WL 4494669 (Cal. Sup. Ct. 2016) ($2.25 million); S.M. v. Archdiocese of Los Angeles, 2015 WL 4736266 (Cal. Sup. 28 1 fees are permitted under the FTCA. 28 U.S.C. § 2678. The Court also notes that counsel’s 2 fee request is a term of the Settlement, indicating plaintiff’s consent to the requested fee. 3 See Cal. R. Ct. 7.955 (identifying client’s consent to fee as one factor for the Court’s 4 consideration). The Court finds that under these circumstances, the requested attorneys’ 5 fees are fair and reasonable. 6 Plaintiff’s counsel also seeks reimbursement of $104,098.48 for costs incurred in the 7 litigation. These costs include, inter alia, legal research expenses, expert witness fees, 8 court fees, and payments made for court reporting services. Pet. at 4-5. Again, considering 9 the history of the litigation and the significant discovery and motion practice by the parties, 10 the Court finds that the costs incurred by plaintiff’s counsel are reasonable and fair under 11 the circumstances. See Hernandez v. United States, No. 3:19-cv-1457-AHG, 2020 WL 12 6044079, at *5 (S.D. Cal. Oct. 13, 2020) (finding expenses reasonable where parties settled 13 three months before the pretrial conference and after seven months of discovery). 14 ORDER 15 For the foregoing reasons, and being fully informed of the specifics of the full and 16 final terms and conditions of the Settlement, including the necessity of the approval by the 17 Attorney General of the United States and that the payment of the settlement is subject to 18 funding pursuant to 42 U.S.C. § 233(k), the Court finds that the proposed Settlement 19 (including the complete release of all claims by plaintiff against the United States, the 20 United States Army, and the National Guard) is fair and reasonable and in plaintiff’s best 21 interests, and accordingly GRANTS the Petition. The Court further ORDERS as follows: 22 1. The Court approves the Settlement and all its terms and conditions, the 23 complete and precise terms of which are set forth in the Stipulation for 24 Minor’s Compromise and Release of Federal Tort Claims Act Claims 25 Pursuant to 28 U.S.C. § 2677 (the “Stipulation”) and the Irrevocable 26 Reversionary Inter Vivos Grantor Medical Care Trust for the Benefit of 27 [Plaintiff], a minor (the “Reversionary Trust”), attached as Exhibits A and B 28 to the Petition (see Doc. Nos. 86-1 and 86-2); and 1 2. Pursuant to the Stipulation, defendant shall pay $3,000,000.00 (the 2 “Settlement Amount’) in exchange for the full release of all claims arising 3 from the subject matter of this action, which amount shall be deposited and 4 distributed according to the terms and conditions of the Stipulation; and 5 3. Plaintiff's counsel’s request for attorneys’ fees not to exceed $750,000 and 6 reasonable costs of $104,098.48, to be paid from the Settlement Amount in 7 accordance with the terms of the Stipulation, is GRANTED; and 8 4. Samantha Parde, as plaintiffs guardian ad litem and on his behalf, is 9 authorized and required to execute the Stipulation, the Reversionary Trust, 10 and any other documents that are necessary to consummate the Settlement, 11 and to provide any information and documentation necessary for the purchase 12 of annuity contracts and the establishment of the Reversionary Trust; and 13 5. Upon final execution of the Stipulation and the Reversionary Trust and 14 pursuant to the terms and conditions set forth therein, and no later than March 15 4, 2021, the parties shall file a joint motion to dismiss this Action with 16 prejudice; and 17 6. Counsel for the parties are hereby ordered to attend a telephonic Settlement 18 Disposition Conference on March 5, 2021 at 9:30 a.m. Counsel shall call the 19 Court’s conference line (1-877-873-8017) and dial access code 2924630 to 20 join the conference. If the parties’ Joint motion for dismissal with prejudice 21 is filed by March 4, 2021, the Court will take the Settlement Disposition 22 Conference off calendar. 23 || IT ISSO ORDERED. 24 ||Dated: December 4, 2020 lj □□□ 25 WU LA _———_ 6 Hori. Karen S. Crawford United States Magistrate Judge 27 28