Wormuth et al v. Lammersville Union School District et al

Filing 212

ORDER signed by District Judge Kimberly J. Mueller on 5/24/18 GRANTING 208 Motion for Approval of Settlement. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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ADRIANNA WORMUTH, SCOTT
WORMUTH and H.W., a minor, by and
through his guardians ad litem
ADRIANNA WORMUTH and SCOTT
WORMUTH,

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ORDER

Plaintiffs,

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No. 2:15-cv-01572-KJM-EFB

v.
LAMMERSVILLE UNION SCHOOL
DISTRICT, JAMES YEAGER, DAWN
IBBS, TERESA HAUN, KIRK
NICHOLAS, and KHUSHWINDER GILL,
and DOES 1-30,

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Defendants.

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Plaintiff H.W., a five-year old boy with a speech impediment and special

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education needs, claims he was bullied and harassed at school. His parents, on his behalf, sued

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the school district and several individual district employees, citing their inaction as a violation of

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H.W.’s state and federal civil rights. First Am. Compl. (“FAC”), ECF No. 14. The parties

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settled, and plaintiffs now move for an order approving the proposed settlement and settlement

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trust. Mot., ECF No. 208. The court held a hearing on this unopposed motion on May 18, 2018.

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ECF No. 211. As explained below, the court GRANTS the motion.

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I.

BACKGROUND

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H.W. and another five-year-old child, A.S., were classmates in a transitional

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kindergarten class at Altamont School. Ian Hansen Decl., ECF No. 208, ¶ 3. The amended

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complaint, filed on December 22, 2015, alleges A.S. physically, emotionally, and sexually abused

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H.W. throughout the first six weeks of the school year. Id. ¶¶ 3, 7; see also First Am. Compl.

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(“FAC”), ECF No. 14, ¶¶ 18-26. H.W.’s teacher reported the abuse to the school principal, yet

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A.S. was allowed to remain in the class and his behavior escalated: A.S. habitually kicked and

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spat on H.W.; made fun of H.W.’s teeth; pushed H.W. off a play structure; kicked H.W. in the

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head; threw H.W.’s lunch over a fence; and inappropriately touched H.W. in the school bathroom.

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See FAC ¶¶ 18-20.

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H.W. alleges he now fears going to school and that the trauma caused post-

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traumatic stress disorder (“PTSD”), for which he required counseling. Hansen Decl. ¶¶ 7, 11. He

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also alleges this trauma will likely affect his future relationships. Id. Defendants dispute the

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nature and extent of the alleged harm. Id. ¶ 12.

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H.W., through his parents, sued the Lammersville Union School District and

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several school officials for not preventing the bullying. Id. ¶ 4. Although the complaint never

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named A.S. or A.S.’s parents (collectively “Singhs”) as defendants, the District named them in a

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third-party complaint. See id. ¶ 5; see also ECF No. 20 (third party complaint filed Jan. 26,

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2016).

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H.W. and the Singhs previously reached a settlement, which the court approved in

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October 2017. Hansen Decl. ¶¶ 13-15; Oct. 11, 2017 Order, ECF No. 150 (granting Singhs’

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motion for Determination of Good Faith Settlement). The Singhs agreed to pay H.W. $40,600 in

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exchange for a general release and mutual cost waiver. Hansen Decl. ¶ 13. In March 2018, H.W.

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and the District defendants engaged in private mediation, which led to a $600,000.00 settlement

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agreement. Id. ¶ 16. The parties now seek the court’s approval of a proposed settlement that

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combines these sums and resolves all claims between H.W., the District defendants and the

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Singhs. Id. ¶ 6. If this motion is approved, and after deducting costs and fees, H.W. would

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receive a net recovery of $381,660.20, to be deposited into a settlement trust. Id. ¶ 22.
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II.

LEGAL STANDARD

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District courts have a duty to protect the interests of minor or incompetent

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litigants. See Fed. R. Civ. P. 17(c)(2). This special duty requires a district court to “conduct its

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own inquiry to determine whether the settlement serves the best interests of the minor.”

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Robidoux v. Rosengren, 638 F.3d 1177, 1181 (9th Cir. 2011) (quoting Dacanay v. Mendoza, 573

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F.2d 1075, 1080 (9th Cir. 1978)); see also E.D. Cal. L. R. 202(b) (“No claim by or against a

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minor or incompetent person may be settled or compromised absent an order by the Court

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approving the settlement or compromise.”). Specifically, district courts must assess whether the

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“net amount distributed to each minor plaintiff in the settlement is fair and reasonable, in light of

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the facts of the case, the minor’s specific claim, and recovery in similar cases.” Robidoux, 638

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F.3d at 1181-82. This fairness evaluation focuses only on what the minor plaintiff receives,

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without regard to what adult plaintiffs and attorneys might receive. Id. at 1182.

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III.

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DISCUSSION
A.

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Fair and Reasonable
The proposed settlement sum here is fair and reasonable. Defendants together

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agree to pay H.W. $640,600, with the District defendants paying $600,000 and the Singhs paying

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$40,600. Hansen Decl. ¶¶ 15, 19. The litigation costs incurred in this case total $ 98,789.80,

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which the parties agree to deduct from H.W.’s gross recovery. Id. ¶ 20. H.W. also agrees to pay

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his attorneys 25 percent of his gross recovery, or $160,150.00. Id. ¶ 21. If approved, H.W.

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would receive $381,660.20. Id. ¶ 22. Adriana Wormuth, on H.W.’s behalf, declares this

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proposed settlement is reasonable and in H.W.’s best interest. Wormuth Decl., ECF No. 208 at

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11.

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The facts of this case confirm the proposed settlement is fair and reasonable.

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Throughout litigation, defendants have consistently disputed H.W.’s claimed emotional and

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psychological damages. Hansen Decl. ¶ 12. Defendants also contend their expert witnesses

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would refute the claimed damages. Id. ¶ 30. Because H.W.’s communication challenges

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preclude him from testifying on his own behalf, his case depends largely on expert testimony.

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This settlement would thus avoid plaintiff’s potential difficulties of proof and avoid the costs

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inherent in expert-heavy litigation.

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Recovery in similar cases confirms the sum is reasonable. See Robidoux, 638 F.3d

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at 1182. H.W.’s net settlement sum is on par with several cases in the Eastern District. For

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instance, in Brooks v. Fresno Unified School District, the court approved a minor student’s

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$303,000 total net settlement of civil rights claims against his teacher. See No. CV11500673-

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WBS-BAM, 2015 WL 9304862, at *1 (E.D. Cal. Dec. 22, 2015). There, a teacher allegedly

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locked the six-year-old special needs child in a cage repeatedly without justification, and school

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administrators knew about it. Id. at *2. And in Hugunin v. Rocklin City School District, three

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minor plaintiffs alleged their teacher had abused them and the court approved net settlement sums

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of $202,677.95, $329,731.46 and $322,321.57. See Case No. 2:15-cv-MCE-DB, ECF Nos. 160-

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62.

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H.W.’s settlement sum also is higher than several similar cases in this district.

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See, e.g, D.C. ex rel. T.C. v. Oakdale Joint Unified Sch. Dist., Civ. No. 1:11-01112 SAB, 2013

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WL 275271, at *1 (E.D. Cal. Jan. 23, 2013) (approving $30,000 net settlement based on

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allegations the school “failed to provide proper programs, services and activities” to a child with a

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disability and “used restraints and other punishments on” the child); D.K. ex rel. G.M. v. Solano

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Cnty. Office of Educ., Civ. No. 2:08-00534 MCE DAD, ECF Nos. 69, 141 (E.D. Cal. Dec. 21,

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2011) (approving $200,000 net settlement based on allegations of frequent physical abuse); T.B.

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v. Chico Unified Sch. Dist., Civ. No. 2:07-00926 GEB CMK, 2010 WL 1032669, at *2 (E.D. Cal.

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Mar. 19, 2010) (approving $16,500 net settlement based on allegations of “unnecessary force”

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against minor student).

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Having examined the net recoveries in the cases listed above, the court finds

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H.W.’s net settlement of $381,660.20 is fair and reasonable. The motion for approval of the

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settlement agreement is GRANTED.

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B.

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Settlement Trust
Plaintiffs request that these settlement proceeds be placed into a court-established

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trust1 in H.W.’s name. Plaintiffs have filed a proposed trust drafted by the Dale Law Firm, an

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estate planning firm with expertise in managing and administering court-ordered settlement trusts.

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Proposed Trust, Ex. A, ECF No. 208-1. The firm charges $3,000 for this work, which the parties

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agree to deduct from H.W’s net proceeds. Hansen Decl. ¶ 26. Under the draft trust, H.W.’s

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parents will serve as initial trustees. Id. ¶ 23. After paying the Dale Law Firm’s fee, all trust

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funds will go towards purchasing a home in which H.W. will live. Id. ¶ 25. The parties therefore

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request that the court waive two trustee requirements. First, the parties ask the court to waive the

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requirement that the Trustees secure and post a bond, reasoning that because real estate cannot be

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readily misappropriated, the bonds are unnecessary, and because there will be no liquid assets in

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the Trust, the bond premiums would be difficult to pay. Id. Second, the parties ask that the court

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waive the requirement for the Trustees to file periodic accounts with the supervising court, unless

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the Trust’s real property is sold and converted to cash or other financial investments. Id.

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Having discussed the trust with counsel at hearing, including its terms, the plans

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for purchase of real estate, and the parties’ requested waivers, the court finds the proposed

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settlement trust serves H.W.’s best interests. Accordingly, the motion to establish the proposed

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trust is GRANTED.

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IV.

CONCLUSION

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The court GRANTS the motion; APPROVES the proposed settlement;
ESTABLISHES the proposed settlement trust; and ORDERS as follows:
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H.W.’s guardians ad litem, Adrianna and Scott Wormuth, shall serve as the initial
Trustees of the H.W. Settlement Trust;

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The requirements typically imposed on Trustees of posting a bond and providing

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periodic accounts to the court are waived so long as the only asset of the Trust is

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real property;

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Plaintiff’s counsel clarified at hearing that the request is for a “settlement trust” not a
“special needs trust,” and noted that the filing’s reference to the latter was in error.
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3.

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Court of the State of California, San Joaquin County;
4.

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Venue for ongoing oversight of the special needs trust shall lie with the Superior

$98,789.80 of the settlement proceeds shall be deducted for litigation costs, as
agreed by the parties;

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$160,150.00 of the settlement proceeds shall be distributed as agreed by the parties

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to the Kraeber Law Office, the Law Offices of Peter Alfert, PC, and the Law

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Offices of Todd Boley for their representation of H.W. in this action;

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6.

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Adrianna and Scott Wormuth shall deposit the remaining $381,660.20 into the
H.W. Settlement Trust

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a. $3,000 of this sum shall be paid to the Dale Law Firm for preparing the trust;

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b. The remaining $ 378,660.20 is to be used to purchase residential real estate for

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H.W.’s benefit, and an ownership interest proportional to the contribution of

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the Trust shall be held in the name of the H.W. Settlement Trust;

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7.

The payments specified in 4, 5 and 6(a) above must be made within 30 days;

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8.

The parties shall file a stipulated dismissal under Federal Rule of Civil Procedure

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41(a)(1)(A)(ii) within 30 days.
IT IS SO ORDERED
This resolves ECF No. 208.

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DATED: May 24, 2018.

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UNITED STATES DISTRICT JUDGE

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