Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_02-cv-06213/USCOURTS-caed-1_02-cv-06213-5/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

BETH MAXWELL STRATTON, CHAPTER

7 BANKRUPTCY TRUSTEE FOR THE

SGP BENEFIT PLAN, INC.,

Plaintiff,

v.

GLACIER INSURANCE

ADMINISTRATORS, INC.; GLACIER

INSURANCE ENTERPRISE, INC.;

FRESNO AGENT SERVICE TEAM, INC

DOING BUSINESS AS BEN MAR

SERVICES; LAWRENCE THOMPSON;

BRAD STARK; PIERRE TADA; NORMA

SPALDING; DICK NEECE, SR;

WILLIAM WOLHAUPTER; AND DOES 1

THROUGH 250, INCLUSIVE,

Defendants.

1:02-CV-06213 OWW DLB

MEMORANDUM DECISION AND ORDER

RE APPROVAL OF CLASS

SETTLEMENT AGREEMENT AND

NOTICE; GRANTING PERMANENT

INJUNCTION AGAINST FUTURE

CLAIMS; ATTORNEYS FEES

1. INTRODUCTION

A hearing on the approval of case settlement agreement and

related relief was held on September 18, 2006 and continued to

November 22, 2006. Plaintiff, Beth Maxwell Stratton (“Stratton”)

has made a motion for (1) approval of the settlement agreement

with all Defendants; (2) approval of proposed distribution of

settlement funds; (3) permanent injunction against future claims

or litigation; (4) approval of the bankruptcy trustee’s final

report of administration. Stratton brings this motion as a

Chapter 7 Bankruptcy Trustee of the SGP Benefit Plan, Inc., and

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 1 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 At times relevant hereto those officers and/or trustees 1

consisted of defendants Brad Stark, Pierre Tada, Norma Spalding,

Dick Neece, Sr., and William Wolhaupter, as well as Sunkist

employee Ted Jones. 

 Stratton has dismissed Sunkist and Defendant Jones from 2

the action without prejudice to Stratton’s right to re-file if

the settlement is not consummated. (Doc. 121, Motion for Final

Court Approval, Filed July 11, 2006.)

 The opposing parties were David Stark, Tenet Health 3

Systems Hospitals, Yuma Unified Medical Associates, David

Cruikshank, DaVita, Inc., and Kaweah Delta District Hospital. 

2

as the court-appointed independent fiduciary for the SGP Benefit

Plan (“The Plan”), and the SGP Benefit Trust(“The Trust” or,

collectively, “SGP/P/T”.) The proposed Settlement Agreement

resolves a dispute between the Plaintiff and Defendants Glacier

Insurance Administrators, Inc. (“Glacier”), Former Officers and

Trustees of SGP/P/T (“Former Trustee Defendants”), and Sunkist. 1 2

Objections to the settlement agreement were filed by six parties

who each seek a payment of their claims against SGP/P/T. Since 3

the September 18, 2006 hearing, these objections have been

resolved. 

2. PROCEDURAL HISTORY

The initial complaint in this action was filed on October 1,

2002. (Doc. 1, Complaint.) The complaint was amended on October

28, 2002. (Doc. 8, Amended Complaint (“FAC”).) On May 28, 2003

Stratton was appointed as Trustee and Independent Fiduciary of

SGP/P/T. (Doc. 46, Stipulation and Order Appointing Plaintiff,

Chapter 7 Bankruptcy Trustee, Beth Maxwell Stratton as

Independent Fiduciary and Trustee.) Stratton requested a

preliminary court approval of proposed settlements between the

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 2 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

parties to the litigation and of the notice to the claimants, as

well as a temporary stay and injunction of all litigation

connected with the SGP/P/T bankruptcy. (Doc. 81, Mot. for

Preliminary Court Approval of Proposed Settlements and of Notice

to Claimants, Filed August 4, 2004.) The motion was granted on

October 14, 2004. (Doc. 92, Order for Preliminary Court Approval

of Proposed Settlements and of Notice to Claimants by Plaintiff.) 

As a result the parties were enjoined from proceeding in related

state court litigation until a final judgment was entered in this

federal case. 

On July 11, 2006 Stratton requested final court approval of

the settlement agreement, notice to claimants, and a permanent

injunction against any future litigation. (Doc. 121, Mot. for

Final Court Approval.) Stratton then filed an addendum to her

motion on August 18, 2006. (Doc. 130, Mot. for Final Court

Approval, ERRATA to Memorandum of Points and Authorities, Filed

August 18, 2006.) A hearing on this motion was held on September

18, 2006 and continued to November 22, 2006. 

On November 17, 2006 Stratton filed a Second set of Proposed

Findings of Fact and Conclusions of Law. (Doc. 170, Second

Proposed Findings of Fact and Conclusions of Law.) Stratton also

filed a proposed order. (Doc. 171, Proposed Order, Filed

November 17, 2006.) 

//

//

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 3 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 Unless otherwise noted, the factual background is taken 4

entirely from Plaintiff’s Motion for Final Court Approval. (Doc.

121, Mot. for Final Court Approval.) 

4

3. FACTUAL BACKGROUND4

A. The Plan 

SGP was created in August 1990 as a California non-profit

mutual benefit corporation for the purpose of administering a

voluntary employees benefit association. The Plan, also referred

to at time as the Trust, is an employee welfare benefit plan

under ERISA § 1002(1)(A). It was designed to be a multiple

employer welfare arrangement in accordance with ERISA for the

purpose of providing medical, surgical, and/or hospital care

benefits to members and affiliates of Sunkist Growers, Inc.

(“Sunkist”). SGP was the designated plan sponsor. 

Glacier Insurance Enterprises, Inc. (“Glacier”) and its

president and chief executive officer, Larry Thompson, acted as

administrators and consultants of the Plan throughout its

existence. Glacier was responsible for reporting to the officers

of SGP/P/T. 

Sunkist was an original promoter of the Plan and is alleged

to have been a fiduciary and party in interest with respect to

the Plan within the meaning of ERISA. 29 U.S.C. §1002(21); 29

U.S.C. §1002(14). Sunkist members and officers including some of

the former Trustee Defendants and Ted Jones, were also officers

of SGP and/or trustees of the Plan and Trust. Sunkist endorsed

and actively participated in promotion of the Plan and provided

certain assurances regarding Plan financing. 

The Plan did well and operated without a loss throughout its

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 4 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

first years of existence. However, the Plan began to show

significant losses by 1999. For its fiscal year ending September

30, 1999, it had a $240,000 loss after accounting for funds in

reserve. By fiscal year end September 30, 2000, the annual

losses had increased to $3.5 million. 

The California Department of Insurance investigated the Plan

and directed that it stop accepting new insureds in July 2001. 

The Plan ceased operation in October of 2001. The United States

Department of Labor (“DOL”) conducted an exhaustive investigation

into the history and demise of SGP/P/T and determined that there

was possibly as much as $10 million in medical claims against the

Plan outstanding and unpaid as of the end of 2001. No claims

have been paid since the Plan ceased operation in October 2001. 

The plan is without assets and there are no funds to pay claims

except as may be produced through this litigation. Medical

providers began to seek payment of their claims directly from

their patients and/or their employers. 

On February 25, 2002, SGP, Inc. filed for protection under

Chapter 7 of the United States Bankruptcy Code. Stratton became

the duly qualified, appointed and acting Chapter 7 Bankruptcy

Trustee of SGP. The bankruptcy case was removed to the district

court. On May 28, 2003 the court appointed Stratton as an

independent fiduciary of the Plan and Trust in place of Former

Trustee Defendants. 

B. Stratton Litigation 

On October 1, 2002 Stratton initiated litigation to recover

SGP/P/T’s losses from Sunkist, Glacier, and the Former Trustee

Defendants alleging, in essence, each of the defendants had

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 5 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

breached fiduciary duties owed to SGP/P/T. Stratton alleged

causes of action for breach of fiduciary duties imposed by ERISA,

misrepresentation, breach of contract, negligence, and engaging

in prohibited transactions. 

C. Department of Labor Investigation

Prior to the initiation of this litigation, the (“DOL”) had

conducted an exhaustive investigation into the management,

operation, finances, and bankruptcy of the Plan. This

investigation included 570 hours of work, an inspection of

approximately 400 banker boxes of Glacier and Plan documents. 

Approximately 1,600 key documents were identified that provided

information as to the cause of SGP’s and the Plan’s collapse and

as to the identity of those potentially responsible for the

collapse. The DOL also interviewed twelve different individuals

deemed most knowledgeable about the operation and downfall of the

Plan. These included interviews of Former Trustee Defendants and

a two-day interview of Larry Thompson. 

The DOL shared with Stratton and her counsel the results of

its investigation. The DOL gave Stratton copies of key documents

and shared the substance of personal interviews and the

observations and conclusions drawn therefrom. Stratton and her

counsel reviewed and analyzed this evidence and conferred with

DOL representatives and counsel regarding the facts, issues, and

evidence in this case in an effort to reasonably identify those

individuals and entities with apparent liability and those

without. As a result, Stratton was able to avoid duplication and

to minimize the cost of conducting an extensive and time

consuming formal discovery to arrive at proposed settlements in

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 6 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

this litigation. 

D. Mediation and Proposed Settlements

Stratton argues that the proposed settlements are in the

best interest of all the parties involved. The Settlement Funds

from all Defendants will result in a distribution of

approximately $0.78 to $0.83 on the dollar for allowed claims

against an ERISA plan which otherwise might remain bankrupt, pay

nothing, and leave participants and beneficiaries to respond

personally to the full amount of claims and/or suits of medical

providers. However, the proposed settlements are contingent upon

court approval and a finding that the agreements settle, release,

and foreclose all claims of SGP/P/T, Plan participants and

beneficiaries, and other potential joint tortfeasors or coobligors against the settling Defendants. Absent settlement the

litigants may incur substantial additional legal fees and costs,

while postponing resolution of outstanding claims for years, all

without certainty of recovering more than the proposed settlement

amounts or potentially any amount, whatsoever. 

1. Sunkist

a. The Settlement Agreement

The first formal mediation session was convened in Fresno,

CA on October 14, 2002. It was presided over by John J.

McCauley, a formal civil litigator and a trained, certified,

independent, full-time mediator. The mediation was attended by

the following parties: (1) Stratton and her counsel, (2) trial

counsel for the Office of the Solicitor, United States DOL; (3)

Larry Thompson, represented by trial counsel and insurance

coverage counsel on behalf of Glacier, (4) Sunkist and Jones

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 7 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

through Sunkist’s Vice President for Corporate Relations and

General Counsel as well as outside trial counsel. 

Stratton claims that negotiations with Glacier at that time

were not productive. Negotiations with Sunkist were productive. 

The negotiations took most of the day and continued via telephone

throughout the following week. On October 21, 2002, with the

mediator’s assistance, Stratton and Sunkist reached a mutuallyacceptable framework for settlement. For seven months, Stratton

and her counsel negotiated details of the understanding with

Sunkist and reduced to a written Settlement Agreement and Mutual

Release which was signed on June 26, 2003. (Doc. 121, Stratton

Decl., Ex. A.) The agreement provides for resolution of all

Stratton’s claims against Sunkist and Jones in return for Sunkist

promise to pay into the Plan a base sum of $2.5 million to be

adjusted up or down depending upon total Plan claims ultimately

paid and amounts collected from other defendants. Sunkist

deposited the full $2.5 million into an escrow account and

through subsequent agreements, released portions of it to pay for

the expenses of claims administration. 

b. The Likelihood of Success in Litigation

Stratton believes that she has a better than 60% chance of

prevailing against Sunkist and Jones. However, Sunkist’s counsel

disputes Sunkists’ and Jones’ liability for the Plan’s losses. 

Stratton claims that Sunkist directors controlled the Plan and

manipulated it to Sunkist’s advantage. If successful, this claim

could produce a recovery of more than Sunkist has offered. 

However, absent evidence that Sunkist had a formal fiduciary

position in the Plan, Stratton likely would have to prove acts of

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 8 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

active malfeasance by Sunkist. Sunkist insists there is no

evidence to support such a claim. 

Sunkist argues that Stratton’s claims arise from the

following three facts: (1) Three of the five trustees of the Plan

also sat on Sunkist’s board of directors, (2) In November 1996,

Sunkist’s board of directors committed Sunkist to contribute

capital to enable the Plan to meet its $1 million excess reserve

requirements under 1994 legislation, and (3) In November 1996,

Sunkist renewed a trademark licensing agreement with the Plan in

return for a 1% royalty. 

Sunkist maintains that even if Stratton established that

Sunkist was obligated to honor a capital contribution commitment

an/or that the trademark license was a prohibited transaction

under ERISA, she would recover much less than Sunkist’s proposed

settlement. Sunkist asserts that its capital contribution

obligation was capped at the $1 million statutorily required for

excess reserves and that only the $258,581 Sunkist received as

licensing fees could be recovered if the licensing agreement were

to be a prohibiting transaction. Sunkist contests liability on

both claims and forcefully asserts factual and legal defenses to

both. 

Sunkist also maintains, and Stratton acknowledges for the

purposes of this motion, that Sunkist’s role in the operation of

the SGP Plan was more tangential than that of named defendants. 

Although Sunkist organized the SGP Plan in 1990 as a benefit for

employees of its member-growers and affiliated citrus packing

houses, Sunkist employees were not eligible to participate in it,

and Sunkist denies it ever managed the Plan. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 9 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

Sunkist further argues that its corporate structure actually

negates inference of control. Sunkist is a non-profit federated

marketing cooperative whose directors are grower-member

representatives selected by grower-members. Sunkist has no

inside directors. Most directors were principals and prominent

employees of citrus growing and packing businesses which marketed

fruit through Sunkist. These citrus business are financially

independent of Sunkist and one another, have their own employees,

and, in fact, compete with one another. 

A number of these citrus businesses also were participants

in the SGP plan. The Sunkist-related SGP Trust trustees were

high ranking employees or principals of the other businesses

participating in the SGP Plan, not employees of Sunkist. Some

were Directors of Sunkist as well as Trustees of the SGP Trust. 

(Doc. 130, Mot. for Final Court Approval, ERRATA to Memorandum of

Points and Authorities, Filed August 18, 2006.) As a result,

Sunkist maintains that the allegiance of these trustees was to

their own businesses, not to Sunkist. Moreover, claims dependant

on an “inferred” overlap may call for affirmative evidence that

Sunkist actually directed the activities of the Plan for its own

benefit. Stratton has not yet identified such evidence. The

Plan and its day to day activities were run by Defendant Lawrence

Thompson and Glacier who reported to the Plan trustees. 

c. Sunkist’s Good Faith Efforts To Reach

Settlement

Stratton claims that Sunkist has been cooperative in

settlement negotiations from the beginning. This cooperation

has, to a significant degree, made settlement of the entire case

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 10 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

possible. Sunkist was the very first party to actively

participate in settlement negotiations with Stratton and the

first to settle. For example, very early in the process it

agreed to provide the Plan with a guaranteed fund of $2.5

million. This guarantee facilitates Stratton’s efforts to pursue

and negotiate settlements with the other defendants. 

Additionally, when Stratton needed funds to identify claimants

and administer the claims, Sunkist agreed to advance in excess of

$200,000 of its settlement funds for that purpose even before the

proposed settlement was approved. 

2. Former Trustee Defendants

a. The Settlement Agreement

Stratton and the Former Trustee Defendants engaged in

extensive settlement negotiations designed to resolve the case

without depleting insurance funds available for settlement. On

August 11, 2004 Stratton entered into a written settlement

agreement with the Former Trustee Defendants. (Doc. 121,

Stratton Decl., Ex. B.) Former Trustee Defendants’ insurer

agreed to contribute $1 million, to settle the case. This

agreement is contingent upon the court approving the settlement

and barring all future litigation against the Former Trustee

Defendants. 

Stratton, with the concurrence of the DOL, has concluded

that immediately obtaining a $1 million settlement from Former

Trustee Defendants, without risk or significant additional cost

to the Plan, is the most prudent course of action and in the best

interest of the Plan participants and beneficiaries. 

//

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 11 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

b. The Trustee Defendants’ Insurance Policies

Stratton’s formal discovery revealed that the Former Trustee

Defendants, as a group, have two insurance policies that could

provide insurance coverage in this action: an “Executive

Protection Policy” and a “Directors and Officers Liability

Policy,” both issued by the Chubb Group of Insurance Companies

and its parent, Federal Insurance Company. The limit of each

policy is $1 million. 

Chubb asserts that only the “Executive Protection Policy”

has any potential to provide indemnity for the claims and it

claims that indemnity obligation is limited to state common law

claim which are preempted by ERISA. Also both policies are

“burning limits” policies, meaning that every dollar spent on the

defense of this case reduces the amount of coverage available for

indemnification or contribution towards settlement. More than

$300,000 has already been expended from the policies on legal

fees. 

After the Former Trustee Defendants tendered Stratton’s

claims to Chubb, the insurer issued a formal coverage opinion to

the effect that while both insurance policies cover costs of

defense, the “Directors and Officers” policy does not provide

indemnity coverage for the claims in this case. Consequently,

the maximum amount of insurance coverage the Former Trustee

Defendants have to contribute to the settlement in this action is

$1 million. 

c. The Likelihood of Success in Litigation

Stratton believes that she has a better than 60% chance of

prevailing against the Trustee Defendants. Although Stratton is

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 12 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

confident in her claims against the Former Trustee Defendants,

she recognizes there is risk she may not prevail in litigation

against them. Stratton claims that the Former Trustee Defendants

vigorously deny liability. They contend that they properly and

prudently relied upon information and reports from professional

service providers, including Glacier defendants, and they assert

legal defenses based on ERISA preemption of Stratton’s claims and

other grounds. 

Also, pursing litigation through trial would likely exhaust

all insurance funds otherwise available to satisfy a judgment. 

Considering the defenses the Former Trustee Defendants have

asserted and the large number of consultants and trial experts

required to take this case through trial, the Former Trustee

Defendants’ cost of defense has been credibly estimated to exceed

$2 million. Thus, after litigation, there would be no insurance

proceeds left after trial to satisfy a judgment. 

Lastly, Stratton believes that the Former Trustee Defendants

and their insurer will likely resist any attempt by Stratton to

seek a judgment over and above insurance coverage limits and then

must attempt to satisfy it directly from the personal assets of

one or more of the trustees. According to Stratton, any such

attempt would also be costly, time consuming, and potentially

unproductive as it would dissipate otherwise available insurance

funds. To the extent the Former Trustee Defendants have assets,

they are encumbered and/or protected by exemptions. Pursuit of

such litigation would also demand funds to cover Stratton’s

consultants, experts, and other litigation expenses. SGP has no

such funds. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 13 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 Judge Phillips provided a declaration supporting the 5

settlement. (Doc. 121, Stratton Decl., Ex. E.) 

14

3. Glacier Defendants 

a. The Settlement Agreement

On December 17, 2003, Stratton and the Glacier Defendants

underwent mediation presided over by retired Federal District

Court Judge, Layn R. Phillips, who is now a full time 5

professional mediator and manager of Irell & Manella’s

Alternative Dispute Resolution Center in Newport Beach, CA. The

following parties were in attendance: (1) Stratton and her

counsel, (2) Larry Thompson, (3) Glacier litigation counsel, (4)

Glacier insurance coverage counsel, (5) General Star’s Vice

President of Claims, (6) General Star’s counsel, (7) and the

United States DOL through its counsel from the Office of the

Solicitor and its Senior Investigator. 

After eleven hours of analyzing, evaluating, debating, and

attempting to compromise the competing claims, General Star

agreed to pay Stratton $2 million in settlement of Stratton’s

claims against all Glacier defendants subject to court approval

of the settlement terms. The parties spent the next several

months negotiating the details of the proposed settlement and

reducing them to the written settlement agreement and release

dated August 10, 2004. (Doc. 121, Stratton Decl., Ex. C.) 

General Star expressly conditioned its willingness to pay the $2

million on obtaining judicial assurances that it and Glacier

would not have to risk being exposed to further claims or demands

from other parties or claimants in connection with SGP or the

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 14 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

15

Plan. Glacier’s $2 million has been deposited with the Registry

of this Court for payment over to Stratton with interest if the

settlements are approved. 

b. The Glacier Defendants Insurance Policy

Glacier is insured under a $5 million Business Errors and

Omissions Liability policy issued by General Star Indemnity

Company. General Star, noting among other things, policy

exclusions for claims under ERISA, claims arising out of

insolvency of the Plan, and claims for actuarial and underwriting

errors, denies that its policy provides any coverage for the

claims asserted herein. 

General Star originally denied it even owed Glacier a duty

to defend Stratton’s action. As a result, Glacier was compelled

to hire coverage counsel and file suit against General Star

claiming that, at a minimum, General Star owed Glacier a defense

under the policy. In response, General Star relented in part and

agreed to undertake the defense of these claims against Glacier

under a reservation of rights. General Star’s reservation of

rights letter asserts several defenses to a claim for indemnity

coverage. 

Also, General Star’s policy is a “burning limits” policy,

which means that every dollar spent by General Star in defense of

these claims reduces the amount of coverage otherwise available

to indemnify Glacier against a judgment if one is obtained and if

coverage applies. Defense costs have been projected to exceed $2

million given the substantial legal and factual issues to be

addressed in litigation and the number of consultants and trial

experts needed for the process. Absent settlement, SGP/P/T has

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 15 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

16

no means of paying such litigation expenses. 

c. The Likelihood of Success in Litigation 

Stratton estimates that she has a better than 75% chance of

prevailing in litigation against the Glacier Defendants. 

However, Glacier intends to raise and vigorously litigate factual

and legal defenses against Stratton if the settlement is not

approved. Glacier’s litigation counsel drafted a five page

memorandum outlining contentions Glacier will make and issues it

will raise if the case proceeds. (Doc. 121, Stratton Decl., Ex.

C.) Stratton disputes the claims made by Glacier. Further,

Stratton argues that Glacier raises a number of potentially

complex issues Stratton will be forced to litigate if the

settlement is not approved. 

Stratton believes that this proposed settlement with the

Glacier Defendants is in the best interest of SGP/P/T. These

reasons include (1) concern over the potential viability of

insurance coverage issues raised by General Star, (2) Stratton’s

inability to identify through extensive investigation any

substantial unencumbered assets in the name of any of the Glacier

Defendants, including Larry Thompson which would be available to

execution at the time a judgment was eventually obtained, (3) the

belief based upon comments from Judge Phillips, that General Star

would not pay more in settlement without litigation, (4) and the

belief that, absent settlement, the cost of hiring experts and

litigating the multiple complex claims and defenses could well

exceed $2 million for each side so that even if Stratton

prevailed at trial, the net recovery to the Plan could be less

than that produced by a $2 million settlement at this time. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 16 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 The Declaration of Phillip Musson, President of 6

HealthComp, outlines HealthComp’s qualifications in detail and

provides a detailed description of the procedures followed by

HealthComp in identifying and notifying potential claimants, and

administering claims they submitted against the Plan. 

17

D. Preliminary Court Approval

On October 14, 2004, the Court issued an Order preliminarily

approving the settlement agreements and temporarily enjoining all

within the Court’s jurisdiction whose rights had been affected by

the SGP Plan’s bankruptcy from pursuing or commencing any

litigation against the SGP Trustee, SGP Plan, Defendants in this

case, SGP Plan employers, and SGP Plan beneficiaries and

participants to collect amounts claimed due from the operation of

the SGP Plan. Thereafter, on December 21, 2004, by stipulation

of the parties, the Court issued a further order extending the

above protections to Sunkist and Jones and approving Stratton’s

proposed Notice advising identifiable claimants of the

proceedings, the temporary injunctive relief, and the need for

each claimant to submit a Proof of Claim in a form which was also

approved by the Court. 

E. Claims Administration 

Stratton then, with the assistance of HealthComp Third Party

Administrators, a licensed and experienced third party claims 6

administrator for self insured health benefit plans, caused the

Court-approved notice and Proof of Claim form to be mailed

(1) to the most currently determinable

addresses of all post-1999 employer

group participants in the Plan

(2) all individuals and entities active in

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 17 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

18

the Plan after 1999

(3) all medical providers who had a Plan

claim processed after 1999,

(4) and all individuals and entities who

filed claims against SGP in the

bankruptcy action. 

As a result of these efforts, claims for payment of more

than 10,000 medical services billings were identified. Stratton

asserts that each and every claim was recorded, tracked, and

evaluated by HealthComp professional in accordance with Plan

provisions and professional standards. As a result, Stratton

was able to determine whether, and the extent to which, each

claim was covered by SGP Plan, whether the claimant was eligible

for coverage, and the precise amount covered and owed under the

Plan after application of deductibles, co-pays, co-insurance,

coverage maximums, exclusions, PPO discounts, and other Plan

limitations. 

Further, because of the several successive efforts to get

actual notice to all potential claimants, and the time needed to

evaluate and determine the covered amount of each claim under

the SGP Plan, HealthComp’s claim administration continued

through approximately November 2005. Through the process,

HealthComp professionals have determined that there is a total

of $4,284,073.91 owing from the Plan on valid, timely, and

unpaid claims. Though less than the amount originally estimated

by DOL representatives, the total of allowed claims is

consistent with what HealthComp professionals expected given

that notices were sent to every person or business which had

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 18 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 The settlement payments from both the Trustee Defendants 7

and the Glacier Defendants will be somewhat higher due to the

accumulation of interest. 

 These itemized costs include costs and expenses incurred 8

to date and projected future costs and expenses Stratton believes

necessary to complete administration of the Plan and close the

SGP/P/T estate. As stated in her Declaration, Stratton has used

her best efforts to project accurately those future costs and

expenses, but as with any projection, hers may prove deficient or

excessive. If excessive by at least $20,000, Stratton proposes

that the excess be distributed pro rata to each claimant. If the

excess, if any, is less than $20,000 a second distribution likely

would yield only pennies to most claimants. Stratton proposes

that anything less than $20,000 be deposited into the State of

California Unclaimed Property Fund for disbursement in accordance

with Code of Civil Procedure section 1300, et seq., as provided

in the Settlement Agreements. 

19

done business with SGP or the Plan in 2000 and 2001. 

F. Proposed Settlement and Distribution

Stratton’s plan for distribution of the settlement proceeds

is as follows: 

(1) Settlement Payments

a. From Sunkist $2,027,376

b. From Trustee Defendants $1,000,0007

c. Glacier Defendants $2,000,000

Total $5,027,376

(2) Costs and Expenses8

a. Bankruptcy Trustee/Independent Fiduciary $105,000

b. ERISA Consultant $53,800

c. Litigation Counsel $860,000

d. Accountants $17,600

e. Other Administrative Professionals $7,900

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 19 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 This amount is approximate. The final amount will change 9

due to accrued interest and possible adjustment of administrative

expense. Presently, this represents $0.83 for every dollar. 

20

f. HealthComp, Inc. Claims Administrators $298,000

g. Miscellaneous Other Administrative Expenses $110,000

Total $1,452,300

(3) Approximate Balance for Distribution to Claimants

Total $3,575,0769

Stratton claims that this proposed recovery for claimants

is multiple times greater than typically produced even in most

“asset” bankruptcy cases. Stratton proposes the following

procedure for actual release and distribution of the settlement

funds: 

(1) If this motion is granted and a Final Order and

Judgment entered thereon and the time for appealing

expires or an appeal is filed but results in final

affirmation of this Court’s order and judgment,

Stratton shall at that time petition this Court for

release of the settlement funds from Sunkist and from

the Court’s Registry to her in trust for payment of

SGP/P/T expenses and claims pursuant to the abovedescribed and Court-approved plan of distribution. 

(2) If an appeal is filed and an appellate court overrules

this Court’s entry of the Final Judgement and Order or

remands the action to the Court for reconsideration

and the remand order directs or effects a material

change to the terms of a settlement with a settling

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 20 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

21

party, the Court shall, by agreement of Stratton and

the settling parties, release the settlement funds

from the Registry of the Court and return them to the

settling parties and the Settlement Agreements will be

deemed void ab initio and have no effect. 

(3) If and after this Court’s Judgment and Order become

final and all prerequisites and conditions of

settlement have been satisfied and Stratton has paid

Plan costs and expenses, distributed the settlement

funds to the claimants, and deposited all

undistributed funds into the California Unclaimed

Property Fund in accordance with California Code of

Civil Procedure section 1300, et seq., Stratton shall

report to the Court and all parties to this action

that she has completed the distribution and seek to

obtain this Court’s order terminating the Plan and

Trust discharging SGP and Stratton. 

G. Opposition to Settlement and Distribution

No objections to the substantive relief sought have

been filed. (Doc. 150, Stratton Reply and Reply Summary to All

Objections, Filed September 11, 2006.) The only objections are

by claimants who objected to the way that their particular

claims are treated under the proposed plan of distribution. 

(Id.) Since the September 18, 2006 hearing, those objections

have been resolved. (Doc. 170, Second Proposed Findings of Fact

and Conclusions of Law, Filed November 17, 2006.) 

H. Relief Requested 

Stratton seeks an order from this Court for the following: 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 21 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

22

(1) Approving Stratton’s settlement

agreements with Sunkist Growers, Inc.

And Ted Jones, the Glacier Defendants,

and the Former Trustee Defendants. 

(2) Permanently barring and enjoining the

following from initiating or pursuing

any claims or actions against SGP/P/T or

the Settling parties relating in any way

to SGP/P/T including claims or actions

relating to the creation, operation,

management, administration, marketing or

failure of SGP, the Plan, or the Trust;

the payment or non payment of benefits

or claims for services; or any promise

representation, contract, or other

activity relating to SGP, the Plan, or

the Trust: 

(a) all claimants, creditors,

participants, and beneficiaries of

SGP/P/T, 

(b) recipients of settlement funds,

and others including those who

filed bankruptcy claims or Proofs

of Claims in this action and all

who received Stratton’s notice of

this motion and the opportunity to

be heard at the hearing on this

motion. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 22 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

23

(3) Finding that all persons or entities who

accept a check from Stratton pursuant to

her Distribution Plan are, by endorsing,

cashing, or otherwise negotiating that

check agreeing to and will be bound by

the terms of the settlement agreement. 

(4) Approving payment of fees and

reimbursement of expenses to

administrative and other professionals

(5) Approving the proposed Distribution Plan

(6) Approving the Bankruptcy Trustee’s Final

Report of Administration and 

(7) Retaining jurisdiction of this case to

ensure the settlements are carried out. 

4. STANDARD OF REVIEW

“The court must approve any settlement...of the claims...of

a certified class.” Fed. R. Civ. P. 23(e)(1)(A). The court may

approve a settlement only after a hearing and on finding that it

is fair, reasonable, and adequate. Fed. R. Civ. P. 23(e)(1)(C). 

Such approval is required to make sure that any settlement

reached is consistent with plaintiffs’ fiduciary obligations to

the class. See, Ficalora v. Lockheed Cal. Co., 751 F.2d 995,

996 (9th Cir. 1985). The court also serves as guardian for the

absent class members who will be bound by the settlement, and

therefore must independently determine the fairness of any

settlement. Id. However, the district court’s role in

intruding upon what is otherwise a private consensual agreement

is limited to the extent necessary to reach a reasoned judgment

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 23 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 It is not the role of the district court to reach any 10

ultimate conclusions on the contested issues of fact and law

which underlie the merits of the dispute. Officers for Justice

v. Civil Service Com., 688 F.2d at 625. It is the uncertainty of

the outcome in litigation and avoidance of wasteful and expensive

litigation that induce consensual settlements. Id.

24

that the agreement is not the product of fraud or collusion

between the negotiating parties, and that the settlement, taken

as a whole, is fair, reasonable, and adequate to all concerned. 

FDIC v. Alshuler (In re Imperial Corp. of Am.), 92 F.3d 1503,

1506 (9th Cir. 1996). Therefore, the settlement hearing is not

to be turned into a trial or rehearsal for trial on the merits.

Officers for Justice v. Civil Service Com., 688 F.2d 615, 625

(9th Cir. 1982). Ultimately, the district court’s 10

determination is nothing more than an amalgam of delicate

balancing, gross approximations, and rough justice. Id.

In determining whether a settlement agreement is fair,

adequate, and reasonable to all concerned, a district court may

consider some or all of the following factors: (1) the strength

of the Plaintiff’s case (2) the risk, expense, complexity, and

likely duration of further litigation; (3) the risk of

maintaining class action status throughout the trial; (4) the

amount offered in settlement; (5) the extent of discovery

completed; (6) the stage of the proceedings; (7) the views and

experience of counsel; (8) any opposition by class members; (9)

the presence of a governmental participant. Linney v. Cellular

Alaska Pshp., 151 F.3d 1234,1242 (9th Cir. 1998). This list of

factors is not exclusive and the court may balance and weigh

different factors depending on the circumstances of each case. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 24 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

25

Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir.

1993). This necessarily requires the court to make a careful

analysis of all the facts and applicable law. Montgomery County

Real Estate, 83 F.R.D 305, 316 (MD 1979). In addition, where

the payment of attorneys fees is also part of the negotiated

settlement, the fee settlement must be evaluated for fairness in

the context of the overall settlement. Kinsely v. Network

Assocs., 312 F.3d 1123, 1126 (9th Cir. 2002). 

5. DISCUSSION

A. The Merits of the Settlement Agreement 

1. Strength of Stratton’s Case and the Expense,

Complexity, and Likely Duration of Further

Litigation

Stratton believes she has a better than 60% chance of

prevailing against both Sunkist and the Former Trustee

Defendants in litigation. As against the Glacier Defendants,

Stratton believes she has a greater than 75% change of

prevailing in litigation. However, each of the Defendants

dispute and deny liability. 

Sunkist argues that Stratton will recover less than the

$2,027,376.00 settlement amount Sunkist has agreed to pay. 

Sunkist asserts that its capital contribution obligation was

capped at the $1 million statutorily required for excess

reserves and that only $258,581 could be recovered. Sunkist

also maintains that Stratton will find no evidence to support a

claim of active malfeasance by Sunkist in relation to SGP/P/T. 

Proof of active malfeasance is required in this case where

Sunkist did not have a formal fiduciary position in the Plan. 

Sunkist’s role in the operation of the SGP Plan was more

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 25 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

26

tangential and Sunkist employees were not eligible to

participate in the Plan. Sunkist denies it ever managed the

Plan. Sunkist further argues that its corporate structure

prevents it from exercising control over the Plan as it has no

inside Directors. Most directors were principals and prominent

employees of grower-member citrus businesses that are

financially independent of Sunkist. While some of the Sunkist

related SGP Trustees were Directors of Sunkist, none were

Sunkist employees and Sunkist maintains that their allegiance

was to their own businesses, not to Sunkist. Stratton admits

that claims dependant on an “inferred” overlap may call for

evidence that Sunkist actually directed the activities of the

Plan for the benefit of Sunkist. Stratton admits that she has

not yet identified such evidence. 

As against the Trustee Defendants, although Stratton is

confident in her claims, she also recognizes the risk that she

may not prevail against them in litigation. Former Trustee

Defendants deny liability. They contend that they properly and

prudently relied upon information and reports from professional

service providers. Also, Stratton argues that because the

insurance policy for the Former Trustee Defendants is a “burning

limits” policy, pursuing litigation would likely exhaust all

insurance proceeds otherwise available to satisfy judgment. 

Litigation will necessarily involve a large number of

consultants and trial experts. The cost of trial to final

judgment is estimated to exceed $2 million and, after

litigation, there would be no insurance proceeds left. Were

Stratton to seek judgment above the insurance coverage limit,

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 26 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

27

her recourse is against the Former Trustee Defendants. The

Former Trustee Defendants claim their assets are encumbered or

protected by exemptions. 

Glacier likewise intends to raise and vigorously litigate

factual and legal defenses against Stratton if the settlement is

not approved. Glacier submitted a five page memorandum

outlining a number of complex issues they intend on raising if

the case goes to trial. Litigation is estimated to delay the

resolution of this matter for several years. 

The cost of pursuing judgment through litigation, the risk

of not prevailing, and the delay and difficulty in litigating

insurance coverage issues and/or pursuing individual assets in

the face of a likely concerted defense effort weighs in favor of

settlement among the parties. 

2. Amount Offered in Settlement 

The agreement between Sunkist and Stratton provides for a

resolution of all claims against Sunkist and Jones in return for

Sunkist’s payment of a base sum of approximately $2.5 million. 

Sunkist deposited the full amount into an escrow account and,

through subsequent agreements released a portion of it to pay

for the expenses of claims administration. 

In the agreement between Former Trustee Defendants and

Stratton, Former Trustee Defendants have agreed to contribute $1

million to settle the case. 

In the agreement between Glacier and Stratton, Glacier has

agreed to contribute $ 2 million. This amount has been

deposited with the Registry of this Court for payment over to

Stratton with interest if the settlement is approved. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 27 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 This also satisfies the factor taking into account the 11

presence of a governmental participant since the United States

DOL conducted the investigation in this case. 

28

The combined settlement agreements yield approximately

$5,027,376.00. Stratton argues that the proposed settlements

are in the best interest of all the parties involved. The

Settlement Funds from all Defendants will result in a

distribution and payment of approximately $0.78 to $0.83 on the

dollar for allowed claims against an ERISA plan which otherwise

may remain bankrupt, pay nothing, and leave participants and

beneficiaries to respond personally to the full amount of claims

and/or suits of medical providers. However, the proposed

settlements are contingent upon court approval and a finding

that the agreements settle, release, and foreclose all claims of

SGP/P/T, Plan participants and beneficiaries, and other

potential joint tortfeasors or co-obligors against the settling

Defendants. 

3. The Extent of Discovery Completed at this Stage

in the Litigation11

Stratton argues that she has been able to minimize the cost

of conducting extensive and time consuming formal discovery by

relying on the investigation conducted by the DOL prior to the

initiation of this litigation. The DOL conducted an

investigation into the management, operation, finances, and

bankruptcy of the Plan. This investigation involved 579 hours

of work and an inspection of approximately 400 banker boxes of

Glacier and Plan documents. From this investigation Stratton

received information as to the cause of SGP’s and the Plan’s

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 28 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

collapse and as to the identity of those potentially responsible

for the collapse. The DOL shared with Stratton and her counsel

the results of their investigation and gave Stratton copies of

key documents and conclusions. 

The only motions filed in this case related to the

settlement efforts in this case. The settlement proposal was

not hastily arrived at and is the result of several years of

negotiations amongst the settling parties. No objecting party

complained about the inadequacy of discovery.

4. The Views and Experience of Counsel

Stratton is the trustee and the Chapter 7 court appointed

independent fiduciary for SGP/P/T. (Doc. 121-5, Stratton Decl.

In Support of Motion, Filed July 11, 2006, ¶ 1.) She is also a

partner with the law firm Seng and Stratton. (Id.) Stratton

has engaged in the investigations, negotiations and settlements,

and administrative and other acts related to these settlement

agreements since 2002. Stratton believes that approval of these

settlement agreements is in the best interests of all the

parties. Further, this motion is brought with the knowledge and

approval of the Secretary of the United States DOL who, although

not a party to this litigation, has followed the case closely

and authorized Stratton to inform the Court that the DOL has no

objections. (Doc. 121-5, Stratton Decl. In Support of Motion, ¶

4.) 

Further, Judge Layne Phillips who served as the mediator on

December 17, 2003, in negotiations between Stratton and the

Glacier Defendants also supports the court approval of this

settlement. (Doc. 121-5, Ex. E, Phillips Decl. In Support of

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 29 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

30

Motion.) Judge Phillips is a retired Federal District Court

Judge who is now a full time professional mediator and manger of

Irell & Manella’s Alternative Dispute Resolution Center in

Newport Beach, CA. In his 25 years as a private attorney, U.S.

Attorney, Federal Judge and Mediator, Judge Phillips has had

extensive experience with the issues present in this case. 

(Doc. 121-5, Ex. E, Phillips Decl. In Support of Motion., ¶ 8.) 

Judge Phillips argues that this is “a very very complex case in

which both sides face substantial substantive, procedural, and

insurance coverage issues.” (Id., at ¶ 9(a).) It is likely

that each side will incur a large amount of legal expenses if

settlement is not reached and the case goes on to litigation. 

(Id., ¶ 9(b).) Judge Phillips therefore supports the proposed

settlement and encourages the Court to approve it. (Id., ¶ 6.) 

5. Opposition by Class Members 

There were no objections filed to the substantive relief

sought by the parties. The only objections are by claimants who

object to the way their particular claims are treated under the

proposed plan of distribution. Since the hearing on September

18, 2006 all objections against the settlement have been

resolved. 

After a careful balance of the aforementioned factors,

Stratton’s request for approval of the settlement agreement and

distribution plan is GRANTED. 

B. Was the Notice of the Settlement Provided Fair? 

Adequate notice is critical to court approval of a class

settlement under Fed. R. Civ. P. 23(e). Hanlon v. Chrysler

Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). “The best notice

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 30 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

31

practicable under the circumstances” must be provided to class

members. Fed. R. Civ. P. 23(c)(2)(B). Notice is satisfactory

in the context of settlement if it fairly apprises class members

of the terms of the settlement in sufficient detail to afford

them the opportunity to decide whether they should accept the

benefits offered, opt out and pursue their own remedies, or

object to the settlement. Churchill Village, L.L.C. v. General

Elec., 361 F.3d 566, 575 (9th Cir. 2004); see also Hanlon, 150

F.3d at 1025.

The district court approved the form of notice in this case

during the preliminary approval process. (See, Doc. 92, Order

RE: Preliminary Approval of Settlement; Approval of Notice to

Claimants; and Temporary Injunctive Relief, Filed October 14,

2004.) The Notice presented meets the requisite standards of

clarity and conciseness as required by Fed. R. Civ. P. 23. It

explains the nature of the action, the definition of the Class,

a brief summary of the Class claims, and that a Class member may

enter an appearance through counsel if the member so desires. 

(See Doc. 121, Notice of Motion for Final Court Approval, Filed

July 11, 2006.) The Notice provides Class members with

information explaining that there is no “opt-out” procedure in

this case. (Id.) It informs claimants that if they object to

any relief sought in the motion, a claimant must file and serve

a written objection, giving specific instructions of how to do

so. (Id.) In addition, the Notice explains the binding effect

of the Settlement Agreement on Class members, stating that they

“will be bound by it, and [] will not be able to bring a

separate lawsuit alleging the same or similar claims.” (Id.) 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 31 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

32

In early 2005, Stratton and Musson, determined the scope of

the mailing list which would be used for mailing the “claims

package” to persons and entities who may have a claim against

SGP Benefit Plan. (Doc. 149-3, Musson Decl. In Reply to Kaweah

Objection, Filed September 11, 2006, ¶ 3.) The claims package

included the claim form which was previously approved by the

court. (Id.) The mailing list consisted of approximately

30,000 addresses, and was derived from several different

sources, including the mailing list of those who had filed

claims with the bankruptcy court in the SGP Benefit Plan, Inc.

case. (Id.) 

The claims package was mailed in February 2005. (Id., ¶

4.) After the mailing, approximately 3,000 returned envelopes

were received. (Id.) The claims administrator then prepared a

spreadsheet of the addresses of all the returned envelopes. 

(Id.) Further, notices of the September 18th hearing on this

matter were mailed in July 2006 in both English and Spanish. 

(Id., ¶ 7.) The claims administrator received approximately

5,142 returned envelopes. (Id.) The claims administrator

conducted a random sampling of 10 of those envelopes to

determine whether the notice in them was complete in both

English and Spanish. (Id.) The claim administration staff then

conducted a random sampling of 200 additional envelopes and

found that three envelopes did not contain a complete copy of

both the English and Spanish versions of the notice. (Id.)

At the hearing on September 18, 2006 Stratton informed the

court that she failed to comply with a provision of the

settlement agreement to conduct a reasonable search of

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 32 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 The All Writs Act, 28 U.S.C. § 1651(a) provides, “The 12

Supreme Court and all courts established by Act of Congress may

issue all writs necessary or appropriate in aid of their

respective jurisdiction and agreeable to the usages and

principles of law.” 

33

additional addresses for the returned mail. The hearing was

continued to November 22, 2006 to give Stratton an opportunity

to attempt to remail returned Notices and report to the parties

on her efforts to do so. At the November 22, 2006 hearing,

Stratton informed the court that she remailed the returned

notices in compliance with the provision. 

Notice in this case is found to be fair and reasonable. 

C. Stratton’s Request for Permanent Injunction 

Even where subject matter jurisdiction is satisfied in the

original action, enforcement of a final settlement agreement and

order requires its own basis for jurisdiction before the federal

court may interpret and apply its own judgment to the future

conduct contemplated by the judgment. Sandpiper Vill. Condo.

Ass’n v. Louisiana-Pacific Corp., 428 F.3d 831, 841 (9th Cir.

2005). The requisite independent basis for jurisdiction may be

supplied by a provision in the settlement agreement and order

that expressly retains jurisdiction in the district court for

the purpose of overseeing and enforcing prior judgment. Id. 

Such a provision, in conjunction with the All Writs Act,12

empowers a district court to protect its judgment from a

subsequent action that frustrates the purpose of the settlement

agreement and order. Id. Injunctions under the All Writs Act

are not subject to the standards for preliminary injunction

under Fed. R. Civ. P. 65. In re Baldwin-United Corp., 770 F.2d

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 33 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 The Anti Injunction Act, 28 U.S.C. § 2283 provides, “A 13

court of the United States may not grant an injunction to stay

proceedings in a State court except as expressly authorized by

Act of Congress, or where necessary in aid of its jurisdiction,

or to protect or effectuate its judgments. 

34

328, 330 (2nd Cir. 1985). 

The All Writs Act is limited by the Anti-Injunction Act.13

Sandpiper Vill. Condo. Ass’n., 428 F.3d at 841. However, under

the Anti-Injunction act a federal court may intervene and enjoin

future litigation in three narrow exceptions, one of which

includes, when it is necessary, to protect the court’s

jurisdiction. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025

(9th Cir. 1998). 

In seeking approval for the settlement Stratton has

requested that the following be enjoined from initiating or

pursuing any claims or actions against SGP/P/T or the Settling

parties relating in any way to the instant matter: 

(1) all claimants, creditors, participants, and

beneficiaries of SGP/P/T who are subject to the court’s

jurisdiction

(2) recipients of settlement funds, and others including

those who filed bankruptcy claims or Proofs of Claims in

this action and all who received Stratton’s notice of this

motion and the opportunity to be heard at the hearing on

this motion. 

The terms of this settlement agreement requires that all

suits against Defendants regarding their action relative to

SGP/P/T be permanently enjoined for the agreements to have

effect. In dealing with such settlements, the Second Circuit

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 34 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

35

has said, “as a practical matter, no defendant in the

consolidated federal actions in the present case could

reasonably be expected to consummate a settlement of those

claims if their claims could be reasserted under state law,

whether by states on behalf of the plaintiffs, or by anyone

else, seeking recovery of money to be paid to the plaintiffs.” 

In re Baldwin United Corp., 770 F.2d at 336-337. Allowing other

state or federal cases to be brought against the settling

Defendants would be counter productive and result in a waste of

party and judicial resources that have be invested in settling

this matter. Stratton, as the SGP trustee is acting in the

interest of both SGP and the claimants to maximize recovery. 

The parties have all been given notice and an opportunity to

object. 

In accordance with the best interest of all the parties

involved, Stratton’s request for a permanent injunction is

GRANTED. 

D.. Attorney’s Fees

Attorneys’ fees provisions included in proposed class

action settlement agreements are, like every other aspect of

such agreements, subject to the court’s scrutiny for fairness,

reasonableness, and adequacy. Staton v. Boeing Co., 327 F.3d

938, 963 (9th Cir. 2003). “Thus, to avoid abdicating its

responsibility to review the agreement for the protection of the

class, a district court must carefully assess the reasonableness

of a fee amount spelled out in a class action settlement

agreement.” Id. If fees are unreasonably high, there is a

“likelihood [] that the defendant obtained an economically

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 35 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 When a settlement agreement creates a large fund for 14

distribution to a class, as is the case here, courts may use

either of these two options in determining what is fair and

reasonable. 

36

beneficial concession with regard to the merits provisions, in

the form of lower monetary payments to class members or less

injunctive relief for the class than could otherwise have [been]

obtained.” Id. at 964. However, the court’s task in reviewing

negotiated fees is different from the court’s task in fashioning

fee awards from scratch. Robbins, 127 Cal. App. 4th at 444. 

The court is simply to determine whether the negotiated fee is

facially fair and reasonable. Id. This task requires the court

to review the settlement agreement as a whole, including the fee

award, to ensure that it was fairly and honestly negotiated, is

not collusive, and adequately protects the interests of the

parties. Id. Plaintiffs’ attorneys have a duty to limit fees

to an amount that represents the value of the work done. Id.

Therefore, although a negotiated fee may represent a reasoned

business decision to settle, a negotiated fee that exceeds a

reasonable fee for the attorneys’ contribution may not be

approved. Id.

In calculating attorneys’ fees in civil class action suits,

the district court has discretion to use either the percentage

method or the lodestar/multiplier method. Hanlon, 150 F.3d at

1029. In determining Attorneys’ Fees, counsel has used the 14

lodestar method in this case. “In determining what a reasonable

attorney’s fee entails, the district court must apply the hybrid

approach adopted in Hensley v. Eckerhart, 461 U.S. 424, 433 []

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 36 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

37

(1983).” United States v. $12,248 U.S. Currency, 957 F.2d 1513,

1520 (9th Cir. 1992). “The most useful starting point for

determining the amount of a reasonable fee is [1] the number of

hours reasonably expended on the litigation [2] multiplied by a

reasonable hourly rate.” Sorenson v. Mink, 239 F.3d 1140, 1145

(9th Cir. 2001)(relying upon Hensley, 461 U.S. at 433). The

resulting figure is known as the “Lodestar.” 

To determine what qualifies as reasonable attorney’s fees,

the Ninth Circuit has adopted the twelve Lodestar Factors as

“guidelines [and] as appropriate factors to be considered in the

balancing process required in a determination of reasonable

attorney’s fees:” 

(1) the time and labor required, 

(2) the novelty and difficulty of the questions involved,

(3) the skill requisite to perform the legal service

properly,

(4) the preclusion of other employment by the attorney due

to acceptance of the case, 

(5) the customary fee, 

(6) whether the fee is fixed or contingent, 

(7) time limitations imposed by the client or the

circumstances,

(8) the amount involved and the results obtained, 

(9) the experience, reputation, and ability of the

attorneys, 

(10) the “undesirability” of the case, 

(11) the nature and length of the professional relationship

with the client, and 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 37 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

38

(12) awards in similar cases.

Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 71 (9th Cir.

1975) (suits brought pursuant to 29 U.S.C. §§ 412 and 529)

(citing Johnson, 488 F.2d 714); see also $12,248 U.S. Currency,

957 F.2d at 1520 (applying the twelve factors outlined in Kerr

tothe EAJA). “[Although] the lodestar determination has emerged

as the predominate element of the analysis....the court [can

still] make adjustments to the lodestar figure based on the

‘riskiness’ of the lawsuit and the quality of the attorney’s

work.” Jordan v. Multnomah Co., 815 F.2d 1258, 1262 n.5 (9th

Cir. 1986). In addition, the court may reduce the fee award “if

the relief, however significant, is limited in comparison to the

scope of the litigation as a whole.” Hensley, 461 U.S. at 440. 

1. Beth Maxwell Stratton

Stratton requests the following fees: 

Person’s Name Hourly Rate x Total Hours = Total Fees

Beth Mexwell

Stratton,

Chapter 7

Turstee

$175.00 x. 167.85 hours = $28,763.75

Jeanne Bohlae,

Secretary/Legal

Assistant

$65.00 x 5.60 hours = $364.00

Rochelle

Ramirez,

Assistant

$50.00 x 3.2 hours = $160.00

Angelo

DeSantis,

Assistant

$50.00 x 5.10 hours = $255.00

Angela Guthrie,

Assistant

$25.00 x. 2.0 hours = $50.00

TOTAL $29,502.75

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 38 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

39

Stratton requests the following as an Independent Fiduciary

of the SGP benefit Plan and Trust for services rendered through

April 18, 2006: 

Person’s Name Hourly Rate x Total Hours = Total Fees

Beth Maxwell

Stratton,

Chapter 7

Trustee

$175.00 x 205.95 hours = $ 36041.25

Desiree

Terronez,

Assistant

$100.00 x. 13.5 hours = $1,350.00

TOTAL $ 37,391.25 adjusted to $38,752.50

Stratton requests the following as compensation for her

employees:

Person’s Name Hourly Rate x Total Hours = Total Fees

Rochelle

Ramirez,

Assistant

$50.00 x 35.5 hours = $1,775.00

Angela

Guthrie,

Assistant

$25.00 x. 22.0 hours = $550.00

Nithi Jhaveri,

Assistant

$50.00 x 26.5 hours = $1,325.00

TOTAL $3,650.00

Lastly, Stratton requests a reimbursement of expenses, the

sum of $6,542.88. 

Stratton requests a total of $78,448.13 for her services.

2. Trucker Huss Law Firm

To the Trucker Huss law firm, a recognized San Francisco

authority in the ERISA field retained by the Trustee/Independent

Fiduciary to advise her on ERISA law and legal issued unique

thereto, the sum of $48,746.26. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 39 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

40

3. Seng & Stratton’s Request for Attorney’s Fees

The contract between Stratton and Seng & Stratton is based

on a contingency agreement approved by the bankruptcy court on

May 15, 2002. (Doc. 113, Seng & Stratton Application for Fees,

Filed July 7, 2006.) Pursuant to the agreement, if recovery is

obtained after a lawsuit is filed but before the date the case is

first set for trial, Seng and Stratton shall be paid: $75.00/hour

for all attorney time spend in the case, $25.00/hour for all

legal assistant/paralegal time spent on the case and 15% of the

settlement/recovery. Seng & Stratton request the following in

attorneys fees: 

Person’s Name Hourly Rate x Total Hours = Total Fees

Michael J.

Seng, Partner

$75.00 x 759.60 hours = $56,970.00

Beth Maxwell

Stratton,

Partner

$75.00 x 333.60 hours = $25,020.00

Research

Attorney,

Independent

Contractor

$75.00 x 2.40 hours = $180.00

Legal

Assistant /

Paralegal

$25.00 x 31 hours = $775.00

TOTAL $82,945.00

The calculation of the contingency fee is as follows: 

Settlement with Sunkist $2,027,376.00

Settlement with Glacier

Defendants

$2,000,000.00

Settlement with Former Trustee

Defendants

$1,000,000.00

Total Settlement/Recovery $5,027,376.00

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 40 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 Stratton has informed the court that Janzen, Tamberi, & 15

Wong may submit further fee applications for fees and costs

incurred after April 2006. The court has not yet received such

application.

41

 x 15% $754,106.40

The total fees requested are: $837,051.40. Seng & Stratton is

also requesting an expense reimbursement of $2,980.80. 

4. McCormick, Barstow, Sheppard, Wayte, & Carruth

Attorney James P. Wagoner requests a total of $945.00. This

is based on the following: $225.00 x 4.2 hours = $945.00. 

5. Law Office of Alyson A. Berg

Attorney Alyson A. Berg requests a total of $1,065.00. 

6. Janzen, Tamberi, & Wong, Accountants for Plaintiff

According to the Declaration of Christopher A. Ratzlaff,

CPA, accountants for Plaintiff are requesting a total of

$12,600.00, which is a reasonable value of the services rendered

by the accountants for Plaintiff. 

15

All hours calculated are reasonable. Class counsel spent

nearly four years investigating and researching this case,

working closely with the DOL legal and investigative staff to

determine liability of the Plan and reach a settlement with all

respective parties. reviewing extensive documentation and

engaging in negotiations amongst all parties to reach a

settlement. The hourly rates used to calculate the lodestar are

also reasonable. There were no objections to the proposed fees

by any party. 

The award for Attorneys Fees is GRANTED. 

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 41 of 42
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

42

6. CONCLUSION

After a careful balance of the aforementioned factors,

Stratton’s request for approval of the settlement agreement and

distribution plan is GRANTED. 

In accordance with the best interest of all the parties

involved, a Stratton’s request for a permanent injunction is

GRANTED. 

The following Attorneys Fees are GRANTED:

• To Stratton a total of $78,448.13 for her services as

Bankruptcy Trustee and as Independent Fiduciary. 

• To the Trucker Huss law firm a total of $48,746.26. 

• To Seng & Stratton a total of $840,032.20, which includes

the request for expense reimbursements. 

• To McCormick, Barstow, Sheppard, Wayte & Carruth a total of

$945.00 for attorney services rendered. 

• To Attorney Alyson A. Berg, a total of $1,065.00. 

• To Janzen, Tamberi, & Wong, Accountants for Plaintiff a

total of $12,600.00. 

IT IS SO ORDERED.

Dated: January 26, 2007 /s/ Oliver W. Wanger 

b2e55c UNITED STATES DISTRICT JUDGE

Case 1:02-cv-06213-LJO-GSA Document 185 Filed 01/29/07 Page 42 of 42