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Livingston v. Kempersports Management, Inc.

United States District Court, E.D. California

August 28, 2014

KRISTINE LIVINGSTON, et al. Plaintiffs,
v.
KEMPERSPORTS MANAGEMENT, INC., Defendant.

ORDER GRANTING THE APPLICATION FOR MINOR'S COMPROMISE OF IZAAK MARK LIVINGSTON, A MINOR

SHEILA K. OBERTO, Magistrate Judge.

I. INTRODUCTION

On May 6, 2014, a Settlement Conference was held in this case before the undersigned, and the case settled. (Docs. 59-67.) On August 13, 2014, Plaintiff/Petitioner Kristine Livingston ("Livingston") filed an Application of Petitioner Kristine Livingston, Guardian Ad Litem, for Approval of Minor's Compromise for Izaak Mark Livingston, a Minor ("Minor's Petition"). (Doc. 69.) Livingston is the mother and the court-appointed guardian ad litem of Minor Plaintiff Izaak Mark Livingston ("Minor Plaintiff").

The Court has reviewed the Minor's Petition and supporting documents and determined that this matter is suitable for decision without oral argument pursuant to the Local Rules of the United States District Court, Eastern District of California, Rule 230(g). For the reasons set forth below, the Minor's Petition is APPROVED and GRANTED.

II. BACKGROUND

Kristine Livingston, individually and on behalf of Izaak Livingston (a minor), Jason Alan Livingston, and Wesley Alexander Livingston (collectively "Plaintiffs") filed the Complaint against Defendant Kempersports Management, Inc. ("Defendant") on March 14, 2012, in the Tulare County Superior Court. (Doc. 2.) On April 30, 2012, the Tulare County Superior Court appointed Kristine Livingston as the guardian ad litem for her son Izaak Livingston. On August 30, 2012, Defendant removed the action to this Court based on diversity. (Doc. 2.)

Plaintiffs' complaint asserted claims stemming from the death of Mark Livingston, Kristine Livingston's deceased husband and the father of Minor Plaintiff and adult sons Jason Livingston and Wesley Livingston. (Doc. 2, 12.) In May 2007, Mark Livingston was hired as the Golf Course Superintendent for Ridge Creek Dinuba Golf Club in the County of Tulare, California. (Doc. 2, 13.) In 2009, Defendant suspended Mark Livingston because other employees under his supervision were engaging in timecard fraud. Defendant ultimately terminated Mark Livingston's employment on March 15, 2010. Shortly thereafter, Mark Livingston suffered a heart attack and died on March 23, 2010. (Doc. 2, 13.) Defendant later promoted the same employees who allegedly committed timecard fraud to assume many of his duties, at lower pay rates than Mark's salary. (Doc. 2, 13.)

Plaintiffs alleged that Defendant discriminated against Mark Livingston, who was 55, in order to replace him with younger and less expensive employees. Plaintiffs asserted claims against Defendant under California's Fair Employment and Housing Act ("FEHA") for age discrimination, gender discrimination, several types of disability discrimination, and retaliation. Plaintiffs alleged that as a result of Mark Livingston's wrongful termination, he died of cardiac arrest. Plaintiffs sought damages for loss of economic support, loss of payment of medical bills, payment of funeral expenses, general damages, attorney's fees, costs of suit, prejudgment interest, and other relief as the court sought proper. (Doc. 2, 18-31.)

The parties participated in a voluntary settlement conference before Magistrate Judge Sheila K. Oberto on May 6, 2014. At the settlement conference, the parties agreed that Petitioner would waive all of her claims in this action against Defendant, and dismiss her claims with prejudice in exchange for a waiver of costs and fees. The parties also agreed that plaintiffs Wesley Livingston and Jason Livingston would dismiss their claims against Defendant with prejudice in exchange for a waiver of costs and fees. (Doc. 65.) As a result, the Minor Plaintiff's claim is the sole subject of the settlement.

At the settlement conference, Petitioner also agreed to resolve Izaak's claim against Defendant in exchange for a full release of all claims. (Doc. 69, 3.) The parties agreed that Defendant will pay a total of $57, 500.00, structured as follows:

1) Defendant will fund a structured settlement on behalf of the Minor Plaintiff with a present value of $25, 000;
2) Defendant will pay to Plaintiffs' attorney, Dean B. Gordon, $20, 000 as reimbursement for his reasonable costs expended; and
3) Defendant will pay to Plaintiffs' attorney, Dean B. Gordon, $12, 550 as attorney fees.

On May 9, 2014, Defendant filed a Joint Notice of Settlement indicating the parties had settled the action and Plaintiffs would file a Stipulation for Dismissal with Prejudice within 30 days. (Doc. 63.) On June 10, 2014, Plaintiffs filed a Stipulation and Proposed Order dismissing all claims other than those of the Minor Plaintiff with prejudice, and the Court issued an order dismissing the claims of Kristine Livingston, Jason Livingston, and Wesley Livingston on June 13, 2014. (Docs. 65, 67.) On July 29, 2014, the Court issued a minute order reminding Plaintiffs that pursuant to the Order, an application for approval to compromise the claim of the Minor Plaintiff Izaak Mark Livingston was to be filed within two weeks by Plaintiffs' counsel. (Doc. 68.) The Court ordered that Plaintiff Izaak Mark Livingston, through his guardian ad litem Kristine Livingston, file a Minor's Petition by no later than August 15, 2014. Petitioner Kristine Livingston filed the Minor's Petition currently before the Court on August 13, 2014.

III. DISCUSSION

A. Legal Standard for Compromise of Minor's Claim

As a derivative of Federal Rule of Civil Procedure 17(c), district courts have a special duty to safeguard the interests of litigants who are minors. Rule 17(c) provides, in pertinent part, that a district court "must appoint a guardian ad litem - or issue another appropriate order - to protect a minor or incompetent person who is unrepresented in an action." Fed.R.Civ.P. 17(c). In the context of proposed settlements in suits involving minor plaintiffs, the district court's special duty requires it to "conduct its own inquiry to determine whether the settlement serves the best interests of the minor." Robidoux v. Rosengren, 638 F.3d 1177, 1181 (9th Cir. 2011) (quoting Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir. 1978) (internal citation marks omitted)).

In Robidoux, the United States Court of Appeals for the Ninth Circuit provided specific guidance "on how to conduct this independent inquiry." Robidoux, 638 F.3d at 1181. While the Ninth Circuit noted that district courts have typically applied state law and the local rules governing the award of attorney's fees to make the reasonableness and fairness determination, the court held that "this approach places an undue emphasis on the amount of attorney's fees provided for in a settlement, instead of focusing on the net recovery of the minor plaintiffs under the proposed agreement." Id. The Ninth Circuit held that, instead, district courts should "limit the scope of their review to the question whether the net amount distributed to each minor plaintiff in the settlement is fair and reasonable, in light of the facts of the case, the minor's specific claim, and recovery in similar cases." Id. at 1181-82. Further, the fairness of each minor plaintiff's net recovery should be evaluated "without regard to the proportion of the total settlement value designated for adult co-plaintiffs or plaintiffs' counsel - whose interests the district court has no special duty to safeguard." Id. at 1182 (citing Dacanay, 573 F.2d at 1078).

Local Rule 202(b) sets forth that "[n]o claim by or against a minor or incompetent person may be settled or compromised absent an order by the Court approving the settlement or compromise." Local Rule 202(b)(2) further provides in pertinent part that an application for approval of a settlement of a minor:

shall disclose, among other things, the age and sex of the minor or incompetent, the nature of the causes of action to be settled or compromised, the facts and circumstances out of which the causes of action arose, including the time, place and persons involved, the manner in which the compromise amount or other consideration was determined, including such additional information as may be required to enable the Court to determine the fairness of the settlement or compromise...

B. Terms of the Compromise Settlement

The Minor's Petition sets forth that Minor Plaintiff Izaak was born on July 29, 2010, four and a half months after his father Mark Livingston passed away. (Doc. 69, ¶ 1.) The Minor's Petition presents the facts and circumstance of the case and indicates the manner in which a settlement was reached. (Doc. 69, ¶¶ 6-25.)

The Minor's Petition establishes that, out of the total global settlement amount of $57, 500, Plaintiffs' counsel will receive $20, 000 in costs and $12, 500 in attorney's fees, which represents 33.3% of the settlement amount after costs. (Doc. 69, ¶ 21.) Minor Plaintiff Izaak will receive the net settlement amount of $25, 000. (Doc. 69, ¶ 18; Doc. 69-1, 11.) The proposed Structured Settlement has a present value of $25, 000 and will fund an annuity, which including interest will pay $8, 777.16 per annum for five years to Minor Plaintiff Izaak when he attains majority. With interest, the total guaranteed amount is $43, 885.80. (Doc. 69-1, ¶¶ 18-19; Exh. B.) The Court must thus determine whether the amount allocated for the Minor Plaintiff is reasonable and fair.

C. The Reasonableness and Fairness of the Settlement Amount

In Robidoux, the Ninth Circuit directed district courts considering the compromise of a minor's claim to examine the fairness and reasonableness of the net settlement amount in view of the facts of the case, the minor's specific claim, and the recovery in similar cases. Robidoux, 638 F.3d at 1181-82. Here, the settlement agreement was reached following an all-day settlement conference before the undersigned. As such, the Court is familiar with the facts of this case and the representations made by the parties concerning the Minor Plaintiff Izaak's injuries and damages.

The Court notes that the Minor Plaintiff was not yet born during the incidents leading to Plaintiffs' suit, and therefore does not have memory of the events on which this suit is predicated. (Doc. 69, ¶ 1.) The Minor Plaintiff does not seek any out-of-pocket medical expenses as a result of Defendant's purported actions. (Doc. 69, ¶ 20.) While the Minor Plaintiff will suffer the loss of his father, he did not know his father. The Minor's Petition states that it is in Minor Plaintiff's best interest to resolve the case pursuant to the terms of the settlement and that the settlement is fair and reasonable to the Minor Plaintiff under the circumstances of this case. (Doc. 69, ¶ 25.)

Plaintiffs filed this action in 2012, and the facts of the case were thoroughly investigated and developed over the course of litigation. The parties concluded discovery prior to the settlement conference in May 2014. The Court notes that Defendant had filed a motion for summary judgment, which was pending at the time of settlement, and Plaintiffs acknowledged there was always risk and uncertainty regarding the outcome of that motion as well as at trial. ( See Docs. 55, 69-1 at ¶ 14.) A settlement, however, ensures that the Minor Plaintiff receives compensation for his claims.

After reviewing the facts of this case, including that the Minor Plaintiff Izaak was not yet born at the time of the events, as well as considering additional representations made by the parties during the settlement conference and recognizing the uncertainty of further litigating the claims, the Court finds the settlement amount allotted to Minor Plaintiff Izaak of $25, 000 to be fair and reasonable.

The Declaration of Dean B. Gordon establishes that the amount payable to the Minor Plaintiff has a present value of $25, 000, and will fund an annuity which will pay $8, 777.16 per annum for five years to the Minor Plaintiff when he attains majority. However, neither the Minor's Petition nor Mr. Gordon's Declaration specify a financial institution at which the funds will be deposited. The Court will require that the proposed net settlement amounts be deposited in blocked accounts by the Minor Plaintiff's guardian ad litem at federally insured financial institutions to be held there until the Minor Plaintiff reaches the age of majority.

Within 72 hours of receipt of a check payable to the order of the Petitioner as Trustee for the Minor Plaintiff, the Minor Plaintiff's settlement amount shall be placed into a blocked account for the benefit of the Minor Plaintiff, and shall be transferred to the Minor Plaintiff's custody when he reaches the age of 18. No withdrawals of principal or interest may be made from the blocked account without a written order under this case name and number, signed by a judge, and bearing the seal of this court, until the Minor Plaintiff attains the age of 18 years. See Local Rule 202(f). When the Minor Plaintiff attains the age of 18 years, the depository, without further order of this Court, is authorized and directed to pay by check or draft directly to the former Minor Plaintiff, upon proper demand, all monies including interest deposited under this order. The money on deposit is not subject to escheat. Plaintiffs' attorney and the guardian ad litem shall deliver to the depository a copy of this order at the time of deposit.

IV. CONCLUSION AND ORDER

Accordingly, IT IS HEREBY ORDERED that:

1. The proposed settlement between Minor Plaintiff Izaak Mark Livingston and Defendant is APPROVED as fair and reasonable;
2. The Application of Petitioner Kristine Livingston, Guardian Ad Litem, for Approval of Minor's Compromise for Izaak Mark Livingston, a Minor, is GRANTED;
3. Minor Plaintiff Izaak Livingston shall receive $25, 000 by way of settlement;
4. Within 72 hours of receipt of a check payable to the order of Petitioner as the Trustee for the Minor Plaintiff, the Petitioner shall deposit the check in a blocked account at a federally insured bank or credit union;
5. The respective settlement amounts shall be transferrable to the Minor Plaintiff's custody at the rate of $8, 777.16 per annum beginning when the Minor Plaintiff reaches the age of 18;
6. Petitioner and Minor Plaintiff's attorney shall deliver to the depository a copy of this order at the time of deposit;
7. No withdrawals of principal or interest may be made from the blocked accounts without a written order under this case name and number, signed by a judge, and bearing the seal of this court, until the Minor Plaintiff attains the age of 18 years. When the Minor Plaintiff attains the age of 18 years, the depository, without further order of this Court, is authorized and directed to pay by check or draft directly to the former Minor Plaintiff, upon proper demand, all monies including interest deposited under this order. The money on deposit is not subject to escheat; and
8. The parties' final dismissal documents shall be filed no later than September 22, 2014.

IT IS SO ORDERED.


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