1 2 3 4 5 UNITED STATES DISTRICT COURT 6 SOUTHERN DISTRICT OF CALIFORNIA 7 8 MILA SHEN, by and through her Case No.: 3:19-cv-00349-BEN-BGS guardian ad litem Peggy Shen Brewster; 9 EDWIN SHEN, an individual; JOYCE ORDER: 10 SHEN, an individual; ZOE SHEN and VESPER SHEN, by and through their (1) ADOPTING MAGISTRATE 11 guardian ad litem Peggy Shen Brewster, JUDGE’S REPORT AND 12 RECOMMENDATION; and Plaintiffs,
13 v. (2) GRANTING THE PETITIONS 14 FOR MINORS COMPROMISE CLUB MED SAS, a corporation; CLUB
15 MED SALES, INC.; CLUB MED [Doc. Nos. 40 and 41] MANAGEMENT SERVICES, INC.; and 16 DOES 1 to 50, 17 Defendants. 18
19 I. INTRODUCTION 20 Before the Court are the petitions of guardian ad litem Erik Brewster to approve 21 the compromise of the pending action on behalf of minor Plaintiffs Mila Shen, Zoe Shen, 22 and Vesper Shen (“minor Plaintiffs”). (Doc. No. 40.) United States Magistrate Judge 23 Bernard G. Skomal filed a Report and Recommendation recommending the petitions be 24 granted. (Doc. No. 41.) Based on the Court’s review of the moving papers, the law, and 25 for the reasons set forth below, the Court ADOPTS the Magistrate Judge’s Report and 26 Recommendation and GRANTS the Petitions. 27 /// 28 /// 1 II. BACKGROUND 2 On August 8, 2018, minor Plaintiffs Mila, Zoe, and Vesper Shen, together with 3 their parents, Plaintiffs Edwin and Joyce Shen, attended a performance at the Club Med 4 Hotel in Tomamu Hokkaido, Japan.1 (Doc. No. 41 at 2.) At the performance, General 5 manager Merlin Chelliah gathered the children to the front of the stage to have them 6 partake in a sake barrel breaking ceremony. Id. During the ceremony, Ms. Chelliah’s 7 wooden mallet slipped out of her hand and hit Mila in the center of her forehead. Id. She 8 suffered a nondisplaced frontal skull fracture and today has a prominent scar across her 9 forehead. Id. She received emergency treatment, imaging, a neurological examination, 10 plastic surgery, and therapy for emotional trauma. Id. Mila was seven years old at the 11 time of the injury. Id. Her parents and sisters Zoe and Vesper witnessed Mila’s injury 12 causing them emotional distress. Id. 13 This action was initially filed in California Superior Court but was subsequently 14 removed to this Court on February 20, 2019. Id. The Plaintiff’s Complaint alleges 15 claims of negligence, negligent infliction of emotional distress, and negligent 16 misrepresentation. Id. The Defendants filed motions to dismiss for lack of personal 17 jurisdiction. Id. Magistrate Judge Skomal held an Early Neutral Evaluation and Case 18 Management Conference on September 4, 2019. Id. The case did not settle, and a 19 scheduling order was issued. Id. On September 30, 2019, Plaintiffs filed their opposition 20 to Defendants’ Motion to Dismiss. Id. On October 18, 2019, the parties filed a joint 21 notice of settlement. Id. Thereafter, on November 1, 2019, guardian ad litem Erik 22 Brewster filed petitions for approval of the minor's compromise of claims as to Mila, 23 Zoe, and Vesper Shen.2 Id. On December 19, 2019, Magistrate Judge Skomal issued a 24 25 26 1 Plaintiffs Mila Shen, Zoe Shen, and Vesper Shen are minors appearing by and 27 through their court appointed guardian ad litem, Erik Brewster. (Doc. No. 40 at 2.) 2 The individual Petitions for Mila, Zoe, and Vesper Shen were attached to the 28 1 Report and Recommendation recommending the Petitions be granted as to all three minor 2 Plaintiffs. (Doc. No. 41.) Since then, the parties filed a Joint Waiver of the Fourteen Day 3 Objection Period for Approval of Minors’ Compromise on December 27, 2019. (Doc. 4 No. 42.) 5 III. DISCUSSION 6 District courts have a special duty, derived from Federal Rule of Civil Procedure 7 17(c), “to safeguard the interests of litigants who are minors.” Robidoux v. Rosengren, 8 638 F.3d 1177, 1181 (9th Cir. 2011). In the context of proposed settlements in suits 9 involving minor plaintiffs, this special duty requires a district court to “conduct its own 10 inquiry to determine whether the settlement serves the best interests of the minor.” 11 Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir. 1978); see also Salmeron v. United 12 States, 724 F.2d 1357, 1363 (9th Cir. 1983) (holding that “a court must independently 13 investigate and evaluate any compromise or settlement of a minor’s claims to assure itself 14 that the minor’s interests are protected, even if the settlement has been recommended or 15 negotiated by the minor’s parent or guardian ad litem”). 16 The Ninth Circuit has also made clear that, in cases involving the settlement of 17 federal claims, district courts should “limit the scope of their review to the question 18 whether the net amount distributed to each minor plaintiff in the settlement is fair and 19 reasonable in light of the facts of the case, the minor’s specific claim, and recovery in 20 similar cases,” and should “evaluate the fairness of each minor plaintiff’s net recovery 21 without regard to the proportion of the total settlement value designated for the adult co- 22 plaintiffs or plaintiffs’ counsel – whose interests the district court has no special duty to 23 safeguard.” Robidoux, 638 F.3d at 1181-82 (citing Dacany, 573 F.2d at 1078). “So long 24 as the net recovery to each minor plaintiff is fair and reasonable in light of their claims 25 and average recovery in similar cases, the district court should approve the settlement as 26 proposed by the parties.” Id. at 1182. 27 Considering the Petitions along with the Declarations filed in support of each, the 28 Court agrees with Magistrate Judge Skomal’s conclusion that a gross settlement sum of 1 $500,000 is reasonable in light of the facts of this case, the causes of action brought, and 2 recoveries received by similarly situated plaintiffs. 3 Here, the proposed settlement will result in payment (after attorney’s fees and 4 costs) of $299,707.18 to Mila, $45,091 to Zoe, and $45,091 to Vesper.3 (Doc. No. 41 at 5 5.) Upon receipt of payment, the funds will be deposited into separate settlement annuity 6 accounts set up for each of the minor Plaintiffs.4 Id. Under this arrangement, when the 7 minor Plaintiff turns eighteen (18) years of age, she will receive one disbursement 8 payment a year, for four years, from her individual annuity account.5 Id. The Court 9 agrees with Magistrate Judge Skomal’s assessment that the proposed methods of 10 disbursement are “fair, reasonable, and within the bounds of applicable law” as to each of 11 the minor Plaintiffs.6 Id. at 6. 12 The Court also finds that the amount deducted from the total recovery for 13 attorney’s fees is reasonable. Attorney’s fees and costs are typically controlled by 14 statute, local rule, or local custom. Generally, fees in minors’ cases historically have 15 been limited to twenty-five percent (25%) of the gross recovery. Napier by & through 16 Quiroz v. San Diego Cty., No. 3:15-cv-00581-CAB-KSC, 2017 WL 5759803, at *3 (S.D. 17 Cal. Nov. 28, 2017. To determine whether the fee is reasonable courts consider a myriad 18 of factors including the amount of the fee in proportion to the value of the services 19
20 21 3 The minors’ parents are not taking any settlement funds and Plaintiffs’ counsel reduced their fee from 33 1/3% to 20% to ensure adequate compensation for Mila. (Doc. 22 No. 41 at 5.) 23 4 The annuities will be purchased through Sage Settlement Consulting using rates from Pacific Life Insurance Company.
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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 SOUTHERN DISTRICT OF CALIFORNIA 7 8 MILA SHEN, by and through her Case No.: 3:19-cv-00349-BEN-BGS guardian ad litem Peggy Shen Brewster; 9 EDWIN SHEN, an individual; JOYCE ORDER: 10 SHEN, an individual; ZOE SHEN and VESPER SHEN, by and through their (1) ADOPTING MAGISTRATE 11 guardian ad litem Peggy Shen Brewster, JUDGE’S REPORT AND 12 RECOMMENDATION; and Plaintiffs,
13 v. (2) GRANTING THE PETITIONS 14 FOR MINORS COMPROMISE CLUB MED SAS, a corporation; CLUB
15 MED SALES, INC.; CLUB MED [Doc. Nos. 40 and 41] MANAGEMENT SERVICES, INC.; and 16 DOES 1 to 50, 17 Defendants. 18
19 I. INTRODUCTION 20 Before the Court are the petitions of guardian ad litem Erik Brewster to approve 21 the compromise of the pending action on behalf of minor Plaintiffs Mila Shen, Zoe Shen, 22 and Vesper Shen (“minor Plaintiffs”). (Doc. No. 40.) United States Magistrate Judge 23 Bernard G. Skomal filed a Report and Recommendation recommending the petitions be 24 granted. (Doc. No. 41.) Based on the Court’s review of the moving papers, the law, and 25 for the reasons set forth below, the Court ADOPTS the Magistrate Judge’s Report and 26 Recommendation and GRANTS the Petitions. 27 /// 28 /// 1 II. BACKGROUND 2 On August 8, 2018, minor Plaintiffs Mila, Zoe, and Vesper Shen, together with 3 their parents, Plaintiffs Edwin and Joyce Shen, attended a performance at the Club Med 4 Hotel in Tomamu Hokkaido, Japan.1 (Doc. No. 41 at 2.) At the performance, General 5 manager Merlin Chelliah gathered the children to the front of the stage to have them 6 partake in a sake barrel breaking ceremony. Id. During the ceremony, Ms. Chelliah’s 7 wooden mallet slipped out of her hand and hit Mila in the center of her forehead. Id. She 8 suffered a nondisplaced frontal skull fracture and today has a prominent scar across her 9 forehead. Id. She received emergency treatment, imaging, a neurological examination, 10 plastic surgery, and therapy for emotional trauma. Id. Mila was seven years old at the 11 time of the injury. Id. Her parents and sisters Zoe and Vesper witnessed Mila’s injury 12 causing them emotional distress. Id. 13 This action was initially filed in California Superior Court but was subsequently 14 removed to this Court on February 20, 2019. Id. The Plaintiff’s Complaint alleges 15 claims of negligence, negligent infliction of emotional distress, and negligent 16 misrepresentation. Id. The Defendants filed motions to dismiss for lack of personal 17 jurisdiction. Id. Magistrate Judge Skomal held an Early Neutral Evaluation and Case 18 Management Conference on September 4, 2019. Id. The case did not settle, and a 19 scheduling order was issued. Id. On September 30, 2019, Plaintiffs filed their opposition 20 to Defendants’ Motion to Dismiss. Id. On October 18, 2019, the parties filed a joint 21 notice of settlement. Id. Thereafter, on November 1, 2019, guardian ad litem Erik 22 Brewster filed petitions for approval of the minor's compromise of claims as to Mila, 23 Zoe, and Vesper Shen.2 Id. On December 19, 2019, Magistrate Judge Skomal issued a 24 25 26 1 Plaintiffs Mila Shen, Zoe Shen, and Vesper Shen are minors appearing by and 27 through their court appointed guardian ad litem, Erik Brewster. (Doc. No. 40 at 2.) 2 The individual Petitions for Mila, Zoe, and Vesper Shen were attached to the 28 1 Report and Recommendation recommending the Petitions be granted as to all three minor 2 Plaintiffs. (Doc. No. 41.) Since then, the parties filed a Joint Waiver of the Fourteen Day 3 Objection Period for Approval of Minors’ Compromise on December 27, 2019. (Doc. 4 No. 42.) 5 III. DISCUSSION 6 District courts have a special duty, derived from Federal Rule of Civil Procedure 7 17(c), “to safeguard the interests of litigants who are minors.” Robidoux v. Rosengren, 8 638 F.3d 1177, 1181 (9th Cir. 2011). In the context of proposed settlements in suits 9 involving minor plaintiffs, this special duty requires a district court to “conduct its own 10 inquiry to determine whether the settlement serves the best interests of the minor.” 11 Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir. 1978); see also Salmeron v. United 12 States, 724 F.2d 1357, 1363 (9th Cir. 1983) (holding that “a court must independently 13 investigate and evaluate any compromise or settlement of a minor’s claims to assure itself 14 that the minor’s interests are protected, even if the settlement has been recommended or 15 negotiated by the minor’s parent or guardian ad litem”). 16 The Ninth Circuit has also made clear that, in cases involving the settlement of 17 federal claims, district courts should “limit the scope of their review to the question 18 whether the net amount distributed to each minor plaintiff in the settlement is fair and 19 reasonable in light of the facts of the case, the minor’s specific claim, and recovery in 20 similar cases,” and should “evaluate the fairness of each minor plaintiff’s net recovery 21 without regard to the proportion of the total settlement value designated for the adult co- 22 plaintiffs or plaintiffs’ counsel – whose interests the district court has no special duty to 23 safeguard.” Robidoux, 638 F.3d at 1181-82 (citing Dacany, 573 F.2d at 1078). “So long 24 as the net recovery to each minor plaintiff is fair and reasonable in light of their claims 25 and average recovery in similar cases, the district court should approve the settlement as 26 proposed by the parties.” Id. at 1182. 27 Considering the Petitions along with the Declarations filed in support of each, the 28 Court agrees with Magistrate Judge Skomal’s conclusion that a gross settlement sum of 1 $500,000 is reasonable in light of the facts of this case, the causes of action brought, and 2 recoveries received by similarly situated plaintiffs. 3 Here, the proposed settlement will result in payment (after attorney’s fees and 4 costs) of $299,707.18 to Mila, $45,091 to Zoe, and $45,091 to Vesper.3 (Doc. No. 41 at 5 5.) Upon receipt of payment, the funds will be deposited into separate settlement annuity 6 accounts set up for each of the minor Plaintiffs.4 Id. Under this arrangement, when the 7 minor Plaintiff turns eighteen (18) years of age, she will receive one disbursement 8 payment a year, for four years, from her individual annuity account.5 Id. The Court 9 agrees with Magistrate Judge Skomal’s assessment that the proposed methods of 10 disbursement are “fair, reasonable, and within the bounds of applicable law” as to each of 11 the minor Plaintiffs.6 Id. at 6. 12 The Court also finds that the amount deducted from the total recovery for 13 attorney’s fees is reasonable. Attorney’s fees and costs are typically controlled by 14 statute, local rule, or local custom. Generally, fees in minors’ cases historically have 15 been limited to twenty-five percent (25%) of the gross recovery. Napier by & through 16 Quiroz v. San Diego Cty., No. 3:15-cv-00581-CAB-KSC, 2017 WL 5759803, at *3 (S.D. 17 Cal. Nov. 28, 2017. To determine whether the fee is reasonable courts consider a myriad 18 of factors including the amount of the fee in proportion to the value of the services 19
20 21 3 The minors’ parents are not taking any settlement funds and Plaintiffs’ counsel reduced their fee from 33 1/3% to 20% to ensure adequate compensation for Mila. (Doc. 22 No. 41 at 5.) 23 4 The annuities will be purchased through Sage Settlement Consulting using rates from Pacific Life Insurance Company. 24 5 This would provide Mila with guaranteed lump sum payments of approximately 25 $92,050.73, $95,992.78, $98,999.17, and $101,834.82 at ages 18 through 21. (Doc. No. 40-1 at 25). It would also provide Zoe and Vesper each with guaranteed lump sum 26 payments of approximately $12,963.06, $13,387.28, $13,904.99, and $14,690.18 at ages 27 18 through 21. (Doc. No. 40-1 at 25; Doc. No. 40-2 at 25.) 6 See Cal. Prob. Code § 3602(c)(1) (providing as option that funds be deposited into 28 1 performed; the novelty and difficulty of the questions involved and skills required; the 2 amount involved and the results obtained; and the experience and ability of the attorney. 3 Cal. Rule of Ct. 7.955(b). 4 Here, minor Plaintiffs’ counsel seeks $100,000 in attorney’s fees, a sum that 5 represents twenty percent (20%) of the $500,000 gross settlement.7 (Doc. No. 41 at 7.) 6 Counsel has provided no documentation in support of this request. Nonetheless, the 7 Court finds that in consideration of the duration of this case, the amount of work 8 performed by Plaintiffs’ counsel, and the fee request’s adherence to an amount which is 9 less than the twenty-five percent (25%) limit historically applied, the amount of 10 attorney’s fees sought, in this case, is reasonable and does not suggest that the settlement 11 is unfair. 12 Next, the Court finds that an award of $8,928.38 to cover litigation costs of the 13 Plaintiffs’ counsel is also fair and reasonable under the circumstances.8 These include, 14 amongst other costs, $2,500 in expert fees, $3,019.45 for translations, and $1,443 in focus 15 group costs. (See Doc. No. 40-1 at 21, 40-2 at 21, and 40-3 at 21.) 16 Finally, the petition on behalf of Mila sets forth $1,183.82 in medical expenses that 17 are to be paid from the proceeds of the settlement. (Doc. No. 41 at 8.) The Court finds 18 such payment of medical expenses from settlement proceeds permissible.9 19 20 21 22 7 Minor Plaintiffs’ counsel seeks $76,940 based on Mila’s portion of the settlement 23 (Doc. No. 40-1 at 7) and $11,530 each from Zoe and Vesper’s portions of the settlement (Doc. No 40-2 at 7, 40-3 at 7.) 24 8 Minor Plaintiffs’ counsel set for costs accrued over the course of the litigation 25 totaling $8,928.38, with $6,869 to come from Mila’s settlement proceeds and $1,029 to come from both Zoe and Vesper’s settlement proceeds. (Doc. No. 40-1, 40-2, and 40-3 at 26 7.) 27 9 See Cal. Prob. Code § 3601(a) (“authorizing and directing that reasonable expenses, medical or otherwise … shall be paid from the money or other property to be 28 1 Accordingly, given the nature of the harm, the obstacles to prevailing at trial, and 2 the settlement amount received in similar cases, the Court concludes that the settlement 3 amount of $500,000 is fair, reasonable, and within the bounds of applicable law.10 As 4 such, and given that settlement is in the best interest of the minor Plaintiffs, the Court 5 ADOPTS the R&R and GRANTS the Petitions to Approve the Minors’ Compromise. 6 IV. CONCLUSION 7 Having thoroughly considered the R&R, the terms of the proposed settlement 8 agreement, and the Petitions, the Court finds that Mila, Zoe, and Vesper Shen’s interests 9 are adequately safeguarded and the proposed settlements are “fair and reasonable.” 10 Robidoux, 638 F.3d at 1179. Accordingly, the Court ADOPTS the R&R and GRANTS 11 the Petitions to Approve the Minors’ Compromise in the pending action. The Court 12 further ORDERS: 13 (1) Defendants shall prepare and deliver the settlement fund proceeds for 14 dispersal as follows: 15 (a) attorney’s fees in the amount of $76,940, $11,530, and $11,530 (or 16 collectively $100,000) to Plaintiffs’ counsel, The McClellan Law Firm; 17 (b) costs in the amount of $8,928.38 to Plaintiffs’ counsel, The 18 McClellan Law Firm; 19 (c) medical expenses in the amount of $1,183.82, paid directly to provider 20 Conduent (Cigna Medical Lien) via P.O. Box 30114, Salt Lake City, Utah 21 84130; and 22 (d) the balance of the settlement shall be distributed to each of the minor 23 Plaintiffs as set forth in the Petitions. 24 (2) The remaining amounts designated for each of the minor Plaintiffs 25 ($299,707.18 for Mila, $45,091 for Zoe, and $45,091 for Vesper) shall be 26
27 10 See Cal. Prob. Code § 3602(c)(1) (providing as option that funds be deposited into 28 1 invested into three structured settlement annuities comporting with the 2 options selected by the minor Plaintiffs’ guardian ad litem for the benefit of 3 the minor Plaintiffs. The funds will be held in the structured annuities until 4 the minor Plaintiffs reach the age of eighteen (18) and then be disbursed 5 based on the proposals selected by the guardian ad litem. Until that time, no 6 withdrawals may be made from the structured annuity without a written 7 order from this Court. 8 (3) All proceeds are to be paid within thirty (30) days after approval of the 9 minors’ compromise. Interest shall accrue at 7% per annum on any amounts 10 not paid within 30 days of this Order. 11 (4) Any annuity payments remaining to be paid after the death of Mila Shen will 12 be made payable in equal shares to her primary beneficiaries: Zoe Shen, 13 Vesper Shen, and Axel Shen. If one of Mila’s primary beneficiaries is no 14 longer living, then that person’s payments will be distributed in equal shares 15 to the remaining beneficiaries listed here. 16 (5) Any annuity payments remaining to be paid after the death of Vesper Shen 17 will be made payable in equal shares to her primary beneficiaries: Zoe Shen, 18 Mila Shen, and Axel Shen. If one of Vesper’s primary beneficiaries is no 19 longer living, then that person’s payments will be distributed in equal shares 20 to the remaining beneficiaries listed here. 21 (6) Any annuity payments remaining to be paid after the death of Zoe Shen will 22 be made payable in equal shares to her primary beneficiaries: Vesper Shen, 23 Mila Shen, and Axel Shen. If one of Zoe’s primary beneficiaries is no 24 living, then that person’s payments will be distributed in equal shares to the 25 remaining beneficiaries listed here. 26 (7) The parties are directed to file a request for dismissal of this action within 27 fourteen (14) days of the date of this Order. 28 /// 1 IT IS SO ORDERED. ° 2 3 DATED: December 31, 2019 HON. ROGER T. BENITEZ 4 United States District Judge 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28