Deruyver et al v. Omni La Costa Resort & Spa, LLC et al

Filing 168

REPORT AND RECOMMENDATION to Approve Minors' Compromise re 164 . Signed by Magistrate Judge Andrew G. Schopler on 1/15/20.(sxa)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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H.D., et al.,

Case No.: 17-cv-0516-H-AGS
Plaintiffs,

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v.

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REPORT AND RECOMMENDATION
TO APPROVE MINORS’
COMPROMISE (ECF No. 164)

OMNI LA COSTA RESORT & SPA,
LLC,

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Defendant.

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Christopher DeRuyver, plaintiff and guardian ad litem for minor plaintiffs H.D.,

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N.D., and Z.D., seeks an order approving a proposed settlement of the minors’ claims

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against defendant. Because the settlement serves the minors’ best interests, the Court

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recommends that the motion be granted.

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BACKGROUND

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This suit arises from allegations of negligence on the part of defendant, a hotel in

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Carlsbad, California. While H.D. was seated in a high chair at defendant’s Bistro 65

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restaurant, an Omni employee placed a carafe of hot coffee on the table. (ECF No. 164,

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at 2.) The coffee spilled, resulting in burns to H.D.’s left fingers, torso, and upper thighs.

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(Id.)

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This case went to trial, and plaintiffs secured a total judgment of $6,028,400.92.

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(Id. at 4.) Defendant then appealed, and the parties reached a settlement while participating
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in the Ninth Circuit’s mediation program. (Id.) The settlement agreement was provided to

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the Court, along with the total settlement amount, the amounts paid to the non-minor

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plaintiffs, and the amount paid to plaintiffs’ attorney. The net settlement amount, after costs

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and fees, is $4,041,437.17. (Id. at 9.) H.D. will receive $3,493,583.61, N.D. $85,147.82,

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and Z.D. $68,948.97. (Id.) These amounts reflect the proportions of the overall settlement

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amount that were originally approved by a jury at trial. (See ECF No. 167, at 5.) Christopher

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DeRuyver has been appointed conservator regarding any proceeds from the settlement.

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(ECF No. 164, at 9.) He will invest those proceeds as ordered by the Washtenaw County,

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Michigan Probate Court, and that court will retain jurisdiction over the matter until each of

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the minors reaches the age of majority. (Id. at 8-9.)

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DISCUSSION
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Review of Settlement

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Under this court’s Local Rules, “[n]o action by or on behalf of a minor” may be

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settled “without court order or judgment.” S.D. Cal. Local R. 17.1(a). “All settlements and

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compromises must be reviewed by a magistrate judge before any order of approval will

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issue.” Id. A district court in this Circuit must consider “whether the net amount distributed

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to each minor plaintiff is fair and reasonable, in light of the facts of the case, the minor’s

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specific claim, and recovery in similar cases.” Robidoux v. Rosengren, 638 F.3d 1177, 1182

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(9th Cir. 2011).

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But the Ninth Circuit limited this holding to a minor’s federal claims, and did “not

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express a view on the proper approach for a federal court to use when sitting in diversity

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and approving the settlement of a minor’s state law claims.” Id. at 1179 n. 2. Because this

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case involves only state negligence claims, this Court “will continue to follow the practice

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of district courts in this Circuit and apply California law” to evaluate the settlement.

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Primerica Life Ins. Co. v. Cassie, No. CIV 2:12-1570 WBS GGH, 2013 WL 1705033,

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at *1 (E.D. Cal. Apr. 19, 2013).

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Regardless of whether the Ninth Circuit or California standard applies, this court
finds the settlement and attorney’s fees to be fair and in the minors’ best interests.
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A. Settlement Amount

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California law requires a Court to approve the settlement of a claim involving a

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minor. Cal. Civ. Proc. Code § 372; Cal. Prob. Code §§ 3500, 3600, 3601. This is in keeping

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with the “special duty” of district courts in this Circuit to “safeguard the interests of

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litigants who are minors.” Robidoux v. Rosengren, 638 F.3d 1177, 1181 (9th Cir. 2011). In

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the settlement context, that duty requires the court to “conduct its own inquiry to determine

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whether the settlement serves the best interests of the minor.” Id. (citations omitted).

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Having reviewed the complaint and been privy to the parties’ briefing and

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discussions at the Early Neutral Evaluation and Mandatory Settlement Conference, the

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Court is intimately familiar with this case’s facts and legal issues. With that experience in

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mind, the Court recognizes that litigation is always uncertain and concludes that the

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proposed settlement is fair, reasonable, and in the minors’ best interests.

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Moreover, the minors’ recovery in this case is reasonable in light of those approved

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in similar cases. See, e.g., A. M. L., et al. v. Mirela Cernaianu, M.D., et al.,

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No. LA CV12-06082 JAK (RZx), 2014 WL 12588992, at *2, 5 (C.D. Cal. Apr. 1, 2014)

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(approving a medical negligence settlement for $1,161,587.32 where the minor sustained

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permanent brain injuries during birth,); Sykes v. Shea, et al., No. 16-2851 WBS GGH, 2018

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WL 2335774, at *1-2 (E.D. Cal. May 23, 2018) (approving a negligence settlement for

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$87,500, where the minor sustained injuries in a car crash); E. J. v. United States,

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No. 13-cv-1923 NC, 2014 WL 988893, at *1-2 (N.D. Cal. Mar. 10, 2014) (approving a

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negligence settlement for $32,505.47, where the minor was injured at a child care facility).

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Because the amount of the settlement is close to the jury’s original award, and based

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on a comparison of similar cases, this Court finds the settlement amount for each minor

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plaintiff to be fair and in their best interest.

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B. Review of Attorney’s Fees

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California requires that a court approve not only the settlement itself, but also any

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agreed-upon attorney’s fees. See Cal. Prob. Code §§ 3500, 3600, 3601; Delaware Life Ins.

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Co. v. Moore, No. 18cv944-L (MSB), 2019 WL 762655, at *4 (S.D. Cal. Feb. 21, 2019).
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When evaluating the reasonableness of an attorney’s fees, California courts consider “the

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type and difficulty of the matter, counsel’s skill vis-à-vis the skill required to handle the

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case, counsel’s age and experience, the time and attention counsel gave to the case, and the

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outcome.” Padilla v. McClellan, 93 Cal. App. 4th 1100, 1107 (4th Dist. 2001). A court

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must use a “reasonable fee standard” when approving attorney’s fees to be payable from a

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minor’s settlement. Cal. R. of Court 7.955. California courts have generally held that a

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contingency fee of up to 25% in a minor’s case is reasonable. See Schwall v. Meadow Wood

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Apartments, No. CIV. S-07-0014 LKK, 2008 WL 552432, at *1-2 (E.D. Cal.

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Feb. 27, 2008); 2 Weil & Brown, Cal. Practice Guide, Civil Procedure Before Trial (2007)

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Settlement Procedures, ¶¶ 12:576-12:577.

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Plaintiffs contracted for a 25% contingency fee in this case. (ECF No. 164, at 7.)

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Plaintiffs’ counsel litigated this case for over two years, achieving a unanimous verdict and

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a judgment of just over $6 million at trial. (Id. at 3-4.) Even after defendant filed a notice

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of appeal, plaintiffs’ counsel continued to participate in post-trial negotiations, settling for

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a final amount of $5.8 million. Due to the result achieved, effort expended, and the fact

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that counsel’s fees will be taken in proportion to each plaintiff’s award (see id. at 7), this

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Court finds that the attorney’s fees in this case are reasonable.

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II.

Applicability of Michigan Court Rule 2.420

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But while the parties agree on the dollar amounts, Omni objects to approval of the

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settlement at this time. (ECF No. 166, at 2.) Omni argues that Christopher DeRuyver

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cannot seek this Court’s blessing in his role as guardian ad litem while he is also a plaintiff

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in the case. (ECF No. 166, at 3-4.) According to Omni, Michigan law requires that an

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independent guardian ad litem be appointed for purposes of this minors’ compromise.

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(See id. at 3.) And because the plaintiffs are Michigan residents, Omni explains, Michigan

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court rules apply. (Id.) Omni rests its argument on Michigan Court Rule 2.420, which sets

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out procedural requirements for settlements involving minors, including the appointment

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of an independent guardian ad litem. (See id.)

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But the Michigan Court Rules, by their own terms, apply only to cases in “courts
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established by the constitution and laws of the State of Michigan[.]” Mich. Court R. 2.001.

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This case was not brought in a Michigan court and does not involve Michigan law.

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This Court knows of no California law or Ninth Circuit precedent that requires the

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appointment of an independent guardian ad litem purely for purposes of approving the

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settlement. Defendant points to no authority to the contrary.

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What the Ninth Circuit does require is that this Court “independently investigate and

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evaluate” any minor’s compromise, “even if the settlement has been recommended or

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negotiated by the minor’s parent or guardian ad litem.” Salmeron v. United States,

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724 F.2d 1357, 1363 (9th Cir. 1983). This Court has done so and finds the settlement terms

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to be in the minors’ best interest. Because Michigan’s court rules are clear, and because

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this court is not required to give weight to Christopher DeRuyver’s approval of the

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settlement, appointment of an independent guardian ad litem would serve no purpose other

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than to create unnecessary delay.

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Accordingly, the Court recommends:

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1. The motion to approve the settlement be granted.

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2. The compromise and settlement of the claims of the minors H.D., N.D., and Z.D. be

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approved as fair and reasonable and in the best interests of the minor plaintiffs.

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3. The attorney’s fees and costs sought by plaintiffs’ counsel be approved as

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reasonable.
4. The disposition of the proceeds for each minor be as ordered by the Washtenaw

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County Probate Court.

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Any objections to this report and recommendation are due by January 29, 2020.

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See 28 U.S.C. § 636(b)(1). A party may respond to any such objection within 14 days of

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being served with it. See Fed. R. Civ. P. 72(b)(2).

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Dated: January 15, 2020

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