Fitzgerald v. Papa Murphy's International, LLC

Opinion

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 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. 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. 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 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