Cases Involving a Party Who Is a Minor

Appointment of a guardian or similar representative is usually accomplished by filing a form petition with the court. See, e.g., Cal. Court Forms MC-350. Typically, the applicant must provide basic information relating to the nature of the case, describe why the proposed guardian is competent and qualified to protect the minor's interests, and state that the guardian has no adverse interests. The proposed guardian must also agree to accept the responsibilities and duties inherent in acting on behalf of the applicant's best interest. Such duties include, for example, the maintenance of confidential information that may be learned from the minor's records, health care providers, and mental health care providers.

Practice Pointer: If your product liability case involves a minor, ensure as early as possible in the litigation that there is proper representation. If the opposing party is a minor, meet and confer immediately with opposing counsel regarding the necessity for the appointment of a guardian ad litem or other representative of the minor's interest. Any issue of representation should be resolved prior to any compromise or settlement of the action in order to avoid potential difficulties in later enforcement proceedings.

Entering into a Compromise with a Minor

Most attorneys and clients are familiar with the concept that minors may lack the capacity to enter into contractual agreements. While the age of incapacity may differ depending on the jurisdiction, the principle is generally the same ' contracts entered into by “infants” are voidable. In accordance with this fundamental precept, minors cannot compromise or settle an action or agree for an order or judgment to be entered for or against them. The guardian or conservator of an estate or a guardian ad litem acts on behalf of a minor with respect to these types of decisions, and may only do so with court approval. See 43 C.J.S. Infants ' 335.

Court approval is obtained via a petition to approve a minor's compromise. The purpose of the petition is to provide the court with sufficient information to evaluate the fairness of the compromise to the minor. Thus, the court will look not only to the settlement amount for the minor, but also will look at any other settlements for other parties and whether the minor's settlement is fair by comparison. While review of the petition is pending, the compromise remains voidable by the minor or minor's guardian.

To evaluate whether the compromise is in the best interests of the minor, the court may consider the nature of the tort claims, any injuries suffered, settlement offers broken down by each defendant, terms of the settlement, settlements offered to other parties, the justification for settlement apportionment between the parties, amounts of medical expenses and sources of payment (e.g., amounts covered by insurance), total amount of attorney's fees, and a detailed description of the method for distribution of settlement amounts for the minor (e.g., trust, payment to a custodian, annuity). This detailed review can require the production of records such as doctors' reports containing diagnoses and prognoses, medical liens, and attorney's fee agreements. Some courts also require that the minor and the person acting on the minor's behalf personally appear at the hearing to approve the minor's compromise. The court may also require attendance and testimony of witnesses, such as an examining physician.

The court's authority is broad, and it has the power to compromise a minor's claim even over the dissent of the minor's parent or guardian ad litem. Federal courts applying state law for the review of minor's compromises have gone as far as to evaluate the reasonableness of the petition and adjust the terms of the settlement, including fees and costs taken from the minor. In making a reduction of fees and costs, the court may evaluate the skill, diligence, expertise, and time spent by the minor's attorney. The fact that the minor's guardian has approved the attorney's fees does not relieve the court of its duty to assess their reasonableness.

Some states require that proceeds of a minor's compromise be held in a “blocked financial investment for the benefit of the minor” and that proof of the establishment of the account must be filed with the court. Setting up such accounts may create challenges for the parties and should be factored into any settlement timelines.

Court approval provides assurance to the parties that the settlement is final. A court-approved settlement bars the minor from bringing a subsequent action for the same injuries after the minor attains majority. In some circumstances, if the parties do not seek court approval of the minor's compromise, the agreement may nevertheless be ratified if the minor ratifies it after attaining majority.

Practice Pointer: Do not underestimate the amount of time it may take to prepare a minor's compromise and have it approved by the court. Depending on the facts of the case and the involvement of the judge, you may need to present detailed information, as described above, regarding injuries suffered, future care, and the future protection of the financial interests of the minor.

There can also be additional challenges in dealing with the financial accounts established for the minor, such as annuities. For example, some annuities may require that the terms of the annuity be incorporated into the written compromise. Counsel for the minor should determine as early as possible the terms of the accounts that will hold the minor's funds so that any additional requirements by the financial institutions can be factored into the parties' agreement.

Challenges to Maintaining Confidentiality

The vast majority of complaints filed in United States courts are not adjudicated. Instead, most are resolved through some other method, such as mediation, arbitration, and settlement. Confidentiality is often the cornerstone for reaching agreements between parties. The courts favor settlement and endeavor to support the confidentiality of such agreements. However, when settling a claim involving a minor, confidentiality will likely not be an option. The lack of confidentiality is not just a concern for clients, but also for the minor's attorney, who will have to place his or her fee agreement in the public record.

Because court approval of a minor's compromise is required, courts are reluctant to permit the filing of the compromise documents under seal, particularly when the request to do so is based solely on the desire for confidentiality of a settlement sum. There typically must be a compelling interest for filing records under seal. To file the minor's compromise under seal, a party must consult the court's local rules. Typically, a party must file a motion to file documents under seal and lodge the documents at issue with the court for in-camera review. If the court denies the request, the petition to approve the minor's compromise will be filed and become part of the public record.

While it may not be possible to keep the settlement amounts out of the public record, the parties may still include provisions in the compromise prohibiting further disclosure, ensuring the settlement amounts will only become known if someone seeks them out in the public record.

Practice Pointer: Try to build safeguards into a minor's compromise to protect the terms from further disclosure. Just because the terms of the compromise are in the public record does not mean that the parties cannot agree to other restrictions on disclosure.

Conclusion

It is crucial that attorneys on both sides of a product liability matter keep in mind the capacity of the parties to sue. In addition to minors, other parties lacking capacity will require similar protection of their interests. Federal rules require that certain challenges to a party's capacity be included in the answer to the pleading or may otherwise be waived. Therefore, it is important to be cognizant of the parties' status at the outset of litigation and any changes in status during the litigation. For example, if a party suddenly becomes incapacitated due to illness or an accident, immediate steps should be taken to ensure that the party's interest is properly represented.

In cases where the incapacitated party is a minor, it is a best practice to be proactive in seeking all required court approvals for representation and compromise. It is also crucial that clients, who may be unfamiliar with the procedures and implications of a court's review of a minor's compromise, be advised of the additional steps that will be required to attain a final resolution of the matter.

Courtney Vaudreuilis an associate at McKenna Long & Aldridge, LLP in Los Angeles. She can be reached at [email protected] or 213-243-6194.

While product liability attorneys are often cognizant of issues relating to standing of their clients and opponents, the unique posture of minor children may be overlooked or underappreciated. The law recognizes that the judicial system must ensure that the interests of minors are safeguarded. Therefore, there are established rules and procedures to which the parties must adhere. Failure to follow the requisite steps may result in the nullification of actions taken in product liability litigation on behalf of the minor.

Ensuring Proper Representation of Minors

In most jurisdictions, when a party is a minor, incompetent person, or person for whom a conservator has been appointed, the person must appear either by a guardian or conservator of the estate or by a guardian ad litem appointed by the court in which the action or proceeding is pending, or by a judge. If a client or opposing party falls within any of these categories, it is imperative that the party in question is properly represented in the action. See, e.g., Federal Rules of Civil Procedure Rule 17.

Appointment of a guardian or similar representative is usually accomplished by filing a form petition with the court. See, e.g., Cal. Court Forms MC-350. Typically, the applicant must provide basic information relating to the nature of the case, describe why the proposed guardian is competent and qualified to protect the minor's interests, and state that the guardian has no adverse interests. The proposed guardian must also agree to accept the responsibilities and duties inherent in acting on behalf of the applicant's best interest. Such duties include, for example, the maintenance of confidential information that may be learned from the minor's records, health care providers, and mental health care providers.

Practice Pointer: If your product liability case involves a minor, ensure as early as possible in the litigation that there is proper representation. If the opposing party is a minor, meet and confer immediately with opposing counsel regarding the necessity for the appointment of a guardian ad litem or other representative of the minor's interest. Any issue of representation should be resolved prior to any compromise or settlement of the action in order to avoid potential difficulties in later enforcement proceedings.

Entering into a Compromise with a Minor

Most attorneys and clients are familiar with the concept that minors may lack the capacity to enter into contractual agreements. While the age of incapacity may differ depending on the jurisdiction, the principle is generally the same ' contracts entered into by “infants” are voidable. In accordance with this fundamental precept, minors cannot compromise or settle an action or agree for an order or judgment to be entered for or against them. The guardian or conservator of an estate or a guardian ad litem acts on behalf of a minor with respect to these types of decisions, and may only do so with court approval. See 43 C.J.S. Infants ' 335.

Court approval is obtained via a petition to approve a minor's compromise. The purpose of the petition is to provide the court with sufficient information to evaluate the fairness of the compromise to the minor. Thus, the court will look not only to the settlement amount for the minor, but also will look at any other settlements for other parties and whether the minor's settlement is fair by comparison. While review of the petition is pending, the compromise remains voidable by the minor or minor's guardian.

To evaluate whether the compromise is in the best interests of the minor, the court may consider the nature of the tort claims, any injuries suffered, settlement offers broken down by each defendant, terms of the settlement, settlements offered to other parties, the justification for settlement apportionment between the parties, amounts of medical expenses and sources of payment (e.g., amounts covered by insurance), total amount of attorney's fees, and a detailed description of the method for distribution of settlement amounts for the minor (e.g., trust, payment to a custodian, annuity). This detailed review can require the production of records such as doctors' reports containing diagnoses and prognoses, medical liens, and attorney's fee agreements. Some courts also require that the minor and the person acting on the minor's behalf personally appear at the hearing to approve the minor's compromise. The court may also require attendance and testimony of witnesses, such as an examining physician.

The court's authority is broad, and it has the power to compromise a minor's claim even over the dissent of the minor's parent or guardian ad litem. Federal courts applying state law for the review of minor's compromises have gone as far as to evaluate the reasonableness of the petition and adjust the terms of the settlement, including fees and costs taken from the minor. In making a reduction of fees and costs, the court may evaluate the skill, diligence, expertise, and time spent by the minor's attorney. The fact that the minor's guardian has approved the attorney's fees does not relieve the court of its duty to assess their reasonableness.

Some states require that proceeds of a minor's compromise be held in a “blocked financial investment for the benefit of the minor” and that proof of the establishment of the account must be filed with the court. Setting up such accounts may create challenges for the parties and should be factored into any settlement timelines.

Court approval provides assurance to the parties that the settlement is final. A court-approved settlement bars the minor from bringing a subsequent action for the same injuries after the minor attains majority. In some circumstances, if the parties do not seek court approval of the minor's compromise, the agreement may nevertheless be ratified if the minor ratifies it after attaining majority.

Practice Pointer: Do not underestimate the amount of time it may take to prepare a minor's compromise and have it approved by the court. Depending on the facts of the case and the involvement of the judge, you may need to present detailed information, as described above, regarding injuries suffered, future care, and the future protection of the financial interests of the minor.

There can also be additional challenges in dealing with the financial accounts established for the minor, such as annuities. For example, some annuities may require that the terms of the annuity be incorporated into the written compromise. Counsel for the minor should determine as early as possible the terms of the accounts that will hold the minor's funds so that any additional requirements by the financial institutions can be factored into the parties' agreement.

Challenges to Maintaining Confidentiality

The vast majority of complaints filed in United States courts are not adjudicated. Instead, most are resolved through some other method, such as mediation, arbitration, and settlement. Confidentiality is often the cornerstone for reaching agreements between parties. The courts favor settlement and endeavor to support the confidentiality of such agreements. However, when settling a claim involving a minor, confidentiality will likely not be an option. The lack of confidentiality is not just a concern for clients, but also for the minor's attorney, who will have to place his or her fee agreement in the public record.

Because court approval of a minor's compromise is required, courts are reluctant to permit the filing of the compromise documents under seal, particularly when the request to do so is based solely on the desire for confidentiality of a settlement sum. There typically must be a compelling interest for filing records under seal. To file the minor's compromise under seal, a party must consult the court's local rules. Typically, a party must file a motion to file documents under seal and lodge the documents at issue with the court for in-camera review. If the court denies the request, the petition to approve the minor's compromise will be filed and become part of the public record.

While it may not be possible to keep the settlement amounts out of the public record, the parties may still include provisions in the compromise prohibiting further disclosure, ensuring the settlement amounts will only become known if someone seeks them out in the public record.

Practice Pointer: Try to build safeguards into a minor's compromise to protect the terms from further disclosure. Just because the terms of the compromise are in the public record does not mean that the parties cannot agree to other restrictions on disclosure.

Conclusion

It is crucial that attorneys on both sides of a product liability matter keep in mind the capacity of the parties to sue. In addition to minors, other parties lacking capacity will require similar protection of their interests. Federal rules require that certain challenges to a party's capacity be included in the answer to the pleading or may otherwise be waived. Therefore, it is important to be cognizant of the parties' status at the outset of litigation and any changes in status during the litigation. For example, if a party suddenly becomes incapacitated due to illness or an accident, immediate steps should be taken to ensure that the party's interest is properly represented.

In cases where the incapacitated party is a minor, it is a best practice to be proactive in seeking all required court approvals for representation and compromise. It is also crucial that clients, who may be unfamiliar with the procedures and implications of a court's review of a minor's compromise, be advised of the additional steps that will be required to attain a final resolution of the matter.

Courtney Vaudreuilis an associate at McKenna Long & Aldridge, LLP in Los Angeles. She can be reached at [email protected] or 213-243-6194.