Padilla v. Beard et al

Filing 299

ORDER signed by District Judge Kimberly J. Mueller on 12/5/2017 ORDERING the court finds the proposed settlement and special needs trust serve the best interests of the plaintiff. It therefore GRANTS the motion to approve settlement and establ ish a special needs trust. To effect this order, defendants are directed to immediately deposit funds, in the amount of plaintiff's share of the settlement proceeds, $496,031.81, in the court's deposit fund. Plaintiff's c ounsel is directed to promptly file with the court a notice confirming the identity of the trustee for the special needs trust and the trustee's address for the purposes of disbursement of plaintiff's share of the proceeds. Upon review a nd receipt of the notice, the court will provide further direction to the Clerk's Office. The court APPROVES and directs defendants to make payment of $453,968.19 to plaintiff's counsel as "Hadsell Stormer & Renick LLP General Account," with payment made in accordance with the parties' settlement agreement attached hereto and incorporated herein as Exhibit A. (cc Financial) (Attachments: # 1 Attachment A) (Becknal, R)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11

JERMAINE PADILLA,

12

Plaintiff,

13
14

No. 2:14-cv-01118-KJM-CKD

v.

ORDER

JEFFREY BEARD, et al.

15

Defendants.

16
17
Jermaine Padilla, a mentally ill plaintiff for whom the court has appointed a
18
guardian ad litem, brought this action against several prison employees for alleged mistreatment
19
while plaintiff was incarcerated in Corcoran State Prison. Compl., ECF No. 1. After five days of
20
jury trial, the parties reached a settlement agreement. Mot. 3, ECF No. 290. Plaintiff now moves
21
to approve the settlement and establish a special needs trust in order to maintain Padilla’s
22
eligibility for public benefits. Id. at 1. Defendants do not oppose the motion. Defs.’ Statement of
23
Non-Opp’n, ECF No. 294. The court heard argument on the motion on November 3, 2017, and
24
requested a focused supplemental brief following, which plaintiff has filed. See Suppl. Br., ECF
25
No. 298. Having reviewed all of the briefing, considered the arguments at hearing, and good
26
cause appearing, the court GRANTS plaintiff’s motion for the reasons explained below.
27
/////
28
1

1

I.

2

BACKGROUND
Plaintiff Jermaine Padilla “has been diagnosed with schizophrenia, paranoid type,

3

and has a history of mental illness, including, at times, hospitalization.” Mot. 1. Plaintiff

4

receives Medi-Cal and Social Security Disability Insurance (SSDI) based on his psychiatric

5

disability. Id. Cynthia Gonzalez was appointed to serve as guardian ad litem for plaintiff on

6

January 27, 2017. ECF No. 186.

7

Plaintiff filed his action in this court alleging defendants “denied him adequate and

8

necessary medical and mental health treatment, were deliberately indifferent to his serious mental

9

health needs, failed to protect him from harm, and subjected him to excessive force in violation of

10

the Eighth Amendment during his incarceration in Corcoran State Prison in 2012.” Mot. 2.

11

Plaintiff additionally alleged discrimination in violation of the Americans with Disabilities Act on

12

the basis of his mental disability. Id.

13

After a series of motions to dismiss, summary judgment motions and settlement

14

conferences, a jury trial commenced on April 17, 2017. ECF No. 273. As noted, the parties

15

agreed to settle the case on April 25, 2017, day six of trial. ECF No. 283. On September 15,

16

2017, plaintiff filed this motion referencing Local Rule 202(b), and on October 20, 2017,

17

defendants filed their statement of non-opposition. Mot; Statement of Non-Opp’n.

18

II.

19

LEGAL STANDARD
Under Federal Rule of Civil Procedure 17, district courts have a duty to protect the

20

interests of litigants who are minors or incompetent. A district court “must appoint a guardian ad

21

litem—or issue another appropriate order—to protect a minor or incompetent person who is

22

unrepresented in an action.” Fed. R. Civ. P. 17(c). This special duty also requires a district court,

23

in the event of a settlement, to “conduct its own inquiry to determine whether the settlement

24

serves the best interests of the [plaintiff].” Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir.

25

1978); see also E.D. Cal. R. 202(b) (“No claim by or against a minor or incompetent person may

26

be settled or compromised absent an order by the Court approving the settlement or

27

compromise.”).

28

/////
2

1

The Ninth Circuit has further instructed district courts to “limit the scope of their

2

review to the question whether the net amount distributed to each [] plaintiff in the settlement is

3

fair and reasonable, in light of the facts of the case, the [plaintiff]’s specific claim, and recovery

4

in similar cases.” Robidoux v. Rosengren, 638 F.3d 1177, 1181 (9th Cir. 2011); see also Smith v.

5

City of Stockton, 185 F.Supp.3d 1242, 1243–44 (E.D. Cal. 2016) (applying the Robidoux standard

6

in case in which plaintiff was an incompetent individual, not a minor). This fairness

7

determination is made “without regard to the proportion of the total settlement value designated

8

for . . . plaintiff’s counsel.” Id. at 1182.

9

III.

10

ANALYSIS
A.

11

Fair and Reasonable
Under the terms of the settlement agreement, defendants agreed to pay plaintiff

12

$950,000. The payment does not include exemplary or punitive damages or pre-judgement or

13

post-judgement interest. Each party agreed to pay its attorney’s fees and costs. Plaintiff’s counsel

14

will receive 40 percent of the award ($380,000), which plaintiff asserts is standard in civil rights

15

cases. Mot. at 5; Decl. of Lori Rifkin 4, ECF No. 290-4.1 Plaintiff’s counsel also will “receive

16

$73,968.19 in reimbursement for the costs [p]laintiff’s attorneys advanced to fund the litigation.”

17

Mot. at 6; Decl. at 4. These costs were incurred in the form of two experts’ fees for which

18

plaintiff was not billed. Mot. at 6; Decl. at 4. Plaintiff’s guardian ad litem seeks no

19

compensation for the significant amount of time she has expended in performing her appointed

20

role. Mot. at 8; Decl. at 4–5. After reimbursing his attorney $453,968.19 in contingency fees

21

and litigations costs, plaintiff will receive $496,031.812.

22

After reviewing the facts of the case and plaintiff’s specific claims, the court finds

23

the proposed settlement is fair and reasonable. Under Robidoux, this court must consider

24

“recovery in similar cases.” 638 F.3d at 1182. Here, the court has reviewed Smith, in which the

25
26
27

1

Page number citations are to those appearing at the bottom of the page of a party’s filing,
unless otherwise noted.
2

$950,000 – (.40 X 950,000) – $73,968.19 = $496,031.81.

28
3

1

court surveyed other cases and approved a $280,000 gross settlement with a 40 percent

2

contingency fee and litigation costs subtracted from plaintiff’s total recovery. In Smith, plaintiff,

3

“a developmentally delayed adult,” was allegedly unlawfully tackled, restrained and arrested by a

4

police officer and attacked by a police dog. 185 F.Supp.3d at 1243. The parties settled the case

5

after mediating with the assistance of a former judge of the court. Id. at 1244. They filed notice

6

of settlement within two months after the complaint was filed. See Notice of Settlement, Smith v.

7

City of Stockton, Case No. 15-cv-2511 MCE AC (E.D. Cal. Jan. 28, 2016) (following filing of

8

complaint on Dec. 2, 2015). Taking into account that the plaintiff in Smith avoided the time and

9

costs of preparing for and initiating trial, Smith is sufficiently analogous to support the court’s

10

determination that the settlement in this case is fair and reasonable.

11

B.

Preservation of Eligibility for Need-Based Benefits

12

An additional consideration in this case relates to plaintiff’s receipt of needs-based

13

benefits in the form of Medi-Cal and his eligibility to receive SSI. Plaintiff, through his guardian

14

ad litem, has filed a separate petition to create a special needs trust. “Because SSI and Medi-Cal

15

are ‘needs-based,’ outright distribution of assets to [plaintiff] or a conservatorship estate will

16

result in his losing eligibility for this vital public benefit unless the assets are directed to a

17

qualifying special needs trust.” Pet. to Establish Special Needs Trust, ECF No. 290-2. In light of

18

his mental illness, plaintiff has been unable to hold employment and therefore has been dependent

19

on his benefit payments. Decl. of Cynthia Gonzalez 4, ECF No. 295. Plaintiff’s guardian has

20

expressed concern that plaintiff will lose his benefits if he receives his settlement fund in one

21

lump sum. Id. at 5. Plaintiff and his mother reportedly have expressed their desire for plaintiff to

22

receive the settlement as a lump sum. See id. at 1. Having carefully considered this request, the

23

court has determined the interests of justice support relying on plaintiff’s guardian ad litem as his

24

appointed representative; her request serves the plaintiff’s best interests, all things considered. Id.

25

Accordingly, the court finds good cause to allow plaintiff’s net settlement proceeds to be

26

distributed to a special needs trust to preserve his eligibility for SSI and Medi-Cal benefits.

27

/////

28

/////
4

1

IV.

CONCLUSION

2

As set forth above, the court finds the proposed settlement and special needs trust

3

serve the best interests of the plaintiff. It therefore GRANTS the motion to approve settlement

4

and establish a special needs trust.

5

To effect this order, defendants are directed to immediately deposit funds, in the

6

amount of plaintiff’s share of the settlement proceeds, $496,031.81, in the court’s deposit fund.

7

Plaintiff’s counsel is directed to promptly file with the court a notice confirming

8

the identity of the trustee for the special needs trust and the trustee’s address for the purposes of

9

disbursement of plaintiff’s share of the proceeds. Upon review and receipt of the notice, the court

10

will provide further direction to the Clerk’s Office.

11

The court APPROVES and directs defendants to make payment of $453,968.19 to

12

plaintiff’s counsel as “Hadsell Stormer & Renick LLP General Account,” with payment made in

13

accordance with the parties’ settlement agreement attached hereto and incorporated herein as

14

Exhibit A.

15
16

IT IS SO ORDERED.
DATED: December 5, 2017.

17
18

UNITED STATES DISTRICT JUDGE

19
20
21
22
23
24
25
26
27
28
5