Opinion ID: 767140
Heading Depth: 2
Heading Rank: 3

Heading: The Approval of the Settlement

Text: 54 In Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1078 (2d Cir. 1995), we held that a district court's decision to approve the settlement of a class action is reviewed for abuse of discretion. Among other reasons, we emphasized that the district court bears the ultimate responsibility for ensuring that the interests of vulnerable class members are vindicated and that the district court enjoys a familiarity . . . with the proceedings, the parties, and the performance of counsel. Id. Those same considerations militate in favor of applying an abuse of discretion standard to a district court's decision to approve the compromise of an incompetent's claims, and we therefore do so here. See Dacanay v. Mendoza, 573 F.2d 1075, 1079 (9th Cir. 1978) (It is an ancient precept of Anglo-American jurisprudence that infant and other incompetent parties are wards of any court called upon to measure and weigh their interests.). In exercising its discretion, the district court's focus is to determine whether a proposed settlement is fair, reasonable, and adequate, by comparing the terms of the compromise with the likely rewards of litigation. Maywalt, 67 F.3d at 1079 (citations and internal quotation marks omitted). 55 We do not find that the district court abused its discretion in determining that the settlement negotiated by Niss was fair, reasonable, and adequate when compared to Neilson's likely recovery were she to have proceeded to trial. We believe that Neilson's frequent inconsistencies and well-established paranoia would have created substantial obstacles for her at trial, including the risk that she would be unable to testify, or to do so with the necessary lucidity, or to cope with cross-examination. But even were we to grant, as Neilson urges, that Neilson might have overcome those obstacles either through the presentation of deposition testimony or by relying on statements made by Michelle Mayes of Colgate's Human Resources Department in support of her retaliation claim, we nevertheless believe that the totality of the circumstances justifies the district court's approval of the settlement. Assuming Neilson could prevail at trial, any recovery that she would receive would necessarily be delayed at least until a trial could be completed. Moreover, in calculating damages, the jury would be aware of Neilson's mental disorder and of its early onset; those facts would certainly limit any potential recovery for lost wages and might diminish other forms of recovery as well. In view of these limited prospects for recovery from litigation, it was within the district court's discretion to conclude that a settlement promising certain, immediate recovery of lifetime health care benefits and a pension income of approximately $ 30,000 per year was fair, reasonable, and adequate. 6 56 Neilson also challenges the settlement on the ground that, wholly apart from the question of fairness, its approval was infected by procedural error. Neilson cites the Southern District's Local Rule 83.2(a)(1): The proceeding upon an application to settle or compromise . . . an action [by or on behalf of an incompetent] shall conform, as nearly as may be, to the New York State statutes and rules, but the court, for cause shown, may dispense with any New York State requirement. S.D.N.Y. R. 83.2(a)(1). By virtue of that local rule, Neilson argues, the district court was obliged to withhold settlement approval until Niss filed an affidavit containing all of the information required by 1208 of the New York Civil Practice Law and Rules. See N.Y. C.P.L.R. 1208 (McKinney 1997). 57 CPLR 1208 requires that a proposed settlement of an incompetent's action be accompanied by an affidavit from the incompetent's representative providing eight pieces of information. See id. at 1208(a). It is undisputed that Niss's affidavit provided sufficient information with respect to five of those pieces of information the name, age, and residence of the guardian and the ward, the circumstances giving rise to the action, the terms and proposed distribution of the settlement, and the facts surrounding any other motion or petition for settlement of the same claim. Neilson claims that Niss failed to provide the remaining three pieces of information: (1) the nature and extent of damages sustained by the incompetent; (2) whether reimbursement for medical or other expenses has been received from another source; and (3) whether a member of the incompetent's family is asserting a claim. 58 Niss's affidavit does, however, reflect the conclusion that Neilson had no viable case under the civil-rights laws. Niss also provides an analysis of a potential disability claim that he believed Neilson possessed. When Neilson argues that Niss failed to include a description of the nature and extent of damages suffered by the incompetent, then, it seems that she is actually just expressing her disagreement with Niss's conclusions. We find, therefore, that Niss did provide information regarding the nature and extent of the damages sustained by the . . . incompetent. Id. at 1208(a)(4). However, we agree with Neilson that Niss failed to include a statement about reimbursement or information regarding claims by Neilson's family members. But these failures do not require this Court to vacate the district court's approval of the settlement. 59 Rule 83.2 is hardly a rigid obligation imposed on district courts. The rule provides that the court, for cause shown, may dispense with any New York State requirement and that the court should follow the state procedure as nearly as may be. S.D.N.Y. R. 83.2(a)(1). Judge Rakoff explained that he was impressed by how quickly the federal guardian ad litem had been able to negotiate a favorable settlement for a plaintiff who had been denied relief for over four years. He also repeatedly expressed the particular need to resolve matters expeditiously given Neilson's frequent complaints that no one was trying to help her. Judge Rakoff attributed Niss's success to the swifter processes accorded under federal law to appoint a guardian ad litem unhindered by the limitations sometimes imposed by state law. The district court then explicitly indicated that the need for these swifter processes was a good cause that had been shown for dispensing with state procedures and, on that basis, dispensed with them. That decision was not an abuse of discretion. While there appears to be some authority indicating that, as a matter of state law, failure to comply with 1208 is grounds for refusing to approve a settlement, Neilson cites no authority establishing that a federal court applying Rule 83.2 is required to reject any settlement that is not compliant with CPLR 1208 in every particular. 60