United States District Court, E.D. Texas, Texarkana Division.
LAURA RIOS-HERNANDEZ, individually and on behalf of her minor children, H.R. and O.R. Plaintiffs,
v.
SCANNING DEVICES, INC., ADVANCED PACKAGING CONCEPTS, LLC, BOOTH &HARRIS DISTRIBUTING, BARDAC CORPORATION, and HB REGISTRATION CORPORATION Defendants.
CIVIL ACTION NO. 5:23-CV-0005-JRG-JBB
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Filed 05/15/2025
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
J. Boone Baxter UNITED STATES MAGISTRATE JUDGE
*1 The above-referenced case was referred to the undersigned United States Magistrate Judge for pre-trial purposes in accordance with 28 U.S.C. § 636. On March 26, 2025, the undersigned conducted a prove-up hearing to determine whether a settlement as agreed upon among the parties is in the best interests of the minor children involved.
This case arises from a workplace accident that occurred on January 4, 2021, in Bowie County, Texas. Laura Rios-Hernandez was an operator for Fay J Packaging in Wake Village, Texas. She was severely injured while inspecting a sensor in the large paper bag making machinery at her workplace. Her hair was caught in the machinery, crushing her skull and ripping off a large section of her scalp. Rios-Hernandez filed suit against Scanning Devices, Inc., Advanced Packaging Concepts, LLC, Booth &Harris Distributing, and Bardac Corporation on December 9, 2022, in Bowie County Texas District Court, 5th Judicial District. She brought claims of design defect, marketing defect, failure to warn, negligence, gross negligence, and respondeat superior. Dkt. No. 4. She sought damages including past and future medical expenses, pain and suffering, mental anguish, physical impairment, disfigurement, lost wages and lost earning capacity, as well as exemplary damages.
On January 13, 2023, Bardac Corporation filed a Notice of Removal invoking this Court’s diversity jurisdiction. Dkt. No. 1. Rios-Hernandez filed her First Amended Complaint on May 24, 2023, adding her minor daughter H.R. and minor son O.R. as Plaintiffs and asserting claims on their behalf for loss of consortium and loss of care, affection, and support of their parent. Dkt. No. 33. She also added HB Registration Corporation, SICK AG, and SICK, Inc. as defendants.
The Court referred the parties to mediation which was completed on January 16, 2025. Rios-Hernandez, individually and on behalf of her minor children H.R. and O.R. (“Plaintiff”), Intervenor National American Insurance Company (“Intervenor”),1 and remaining Defendants Advanced Packaging Concepts, LLC and Bardac Corporation (“Defendants”)2 (jointly, “the Parties”) reached a settlement agreement on all claims. See Dkt. No. 92.
*2 On January 28, 2025, the Court appointed Carly Anderson as guardian ad litem for the two named minor children in connection with the settlement of the case. Dkt. No. 93. At the present time, H.R. is fifteen and O.R. is twelve.3 After reviewing the settlement agreement and the pleadings and meeting with counsel and Plaintiffs, including H.R. and O.R., the guardian ad litem filed under seal her 8-page report. Dkt. No. 94. In the sealed Report of Guardian Ad Litem, Ms. Anderson explained that considering the limited availability of coverage, the strongly contested liability in this complicated products case, and the substantial lien asserted by workers’ compensation, the apportionment of $25,000.00 each to H.R. and O.R. after expenses and attorney fees is “fair, just, reasonable and in the best interests of H.R. and O.R.” Id. at 4;see also id. at 6.
At the prove-up hearing on March 26, 2025, Ms. Anderson stated it is her recommendation that the settlement be approved by the Court. Rios-Hernandez appeared remotely on behalf of herself and the two minor children. She testified through a court-appointed interpreter that she considered the settlement in the best interests of the children, and she further asked the Court to approve the settlement agreement.
Following the prove-up hearing, the undersigned requested additional information from Plaintiffs’ attorney-in-charge, Scott P. Armstrong. Of particular concern to the Court was subjecting the gross recovery (which included $25,000.00 for each child) to the worker’s compensation lien.
The Parties have since modified the settlement agreement in accordance with discussions that took place during the hearing, and the terms of the settlement are contained in the sealed Confidential Settlement and Release Agreement. Dkt. No. 103. On May 6, 2025, the Parties filed a Joint Motion to Approve Settlement with Mr. Armstrong’s Declaration attached for the Court’s consideration. Dkt. No. 100.
On May 5, 2025, Ms. Anderson filed under seal her supplemental report which outlines the new division of the settlement proceeds (which now doubles the recovery for each child and does not subject their recovery to liens, expenses, or attorney fees assessed against the children’s proceeds). Dkt. No. 98 at 2. According to the Supplemental Report of Guardian Ad Litem, Ms. Anderson has reviewed the declaration provided by Mr. Armstrong, which addresses the time and effort put forth by Plaintiffs’ counsel as well as the difficulty of the underlying cause of action. Id. at 1. Ms. Anderson explains Plaintiffs’ counsel has also offered to reduce contractual attorney fees even further to provide the additional recovery to the children. Id. Ms. Anderson believes this division to be fair, equitable, and in the best interests of the minor children. Id. at 2.
As the recovery for each child has doubled ($50,000.00 each), Ms. Anderson now recommends that the settlement funds obtained from Defendants be paid by check to fund annuities to be maintained by Arcadia Settlement Group through New York Life Insurance Company, which is rated A+XV by A.M. Best Company. The annuities would provide the following payments (subject to some slight variation based on time of purchase):
H.R.: $15,000 at age 18;$20,000 at age 21;and $30,789.35 at age 25 (totaling $65,789.35)
O.R.: $15,000 at age 18;$20,000 at age 21;and $40,608.45 at age 25 (totaling $75,608.45) Id. Ms. Anderson recommends that the Court accept and approve the revised apportionment of the settlement proceeds and approve the modified settlement agreement in the best interest of the children. Id.
*3 The undersigned, after considering the hearing testimony of Laura Rios-Hernandez,4 reviewing the terms of the revised settlement agreement, and reviewing the Supplemental Report of the Guardian Ad Litem, is of the opinion the settlement agreement is fair, just, and equitable and is in the best interests of the minor Plaintiffs. Therefore, the Court recommends the District Judge grant the Joint Motion to Approve Settlement (Dkt. No. 100) and approve the terms of the settlement as set forth in the sealed Confidential Settlement and Release Agreement (Dkt. No. 103).
The undersigned further recommends the Court order that Carly Anderson be paid guardian ad litem fees in the amount of $4,380.00.
Finally, all attorneys involved, including Mr. Armstrong, Mr. Edwards, Mr. Tolliver, Mr. Montgomery, and Mr. Donavan, are commended for effectively representing their respective clients. These attorneys made a considerable effort to identify a creative solution that amicably resolves this complex case.
Objections
Within fourteen (14) days after service of the magistrate judge’s report, any party must serve and file specific written objections to the findings and recommendations of the magistrate judge. 28 U.S.C. § 636(b)(1)(C). Failure to file specific, written objections will bar the party from appealing the unobjected-to factual findings and legal conclusions of the magistrate judge that are accepted by the district court, except upon grounds of plain error, provided that the party has been served with notice that such consequences will result from a failure to object. See Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996) (en banc), superseded by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending the time to file objections from ten to fourteen days).
The parties may eliminate this 14-day objection period by filing a joint notice stating all parties waive any objections and agree to the findings and recommendations of this Report.
SIGNED this the 15th day of May, 2025.
Footnotes |
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| 1 | On February 9, 2024, National American Insurance Company filed its Original Petition in Intervention to pursue its subrogation rights against Defendants to the extent of its workers’ compensation payments to/or on behalf of Rios-Hernandez. Dkt. No. 66. |
| 2 | On September 14, 2023, District Judge Gilstrap granted Defendant SICK AG’s Motion to Dismiss for Lack of Personal Jurisdiction, dismissing Plaintiffs’ claims against Defendant SICK AG with prejudice as to refiling for lack of personal jurisdiction. Dkt. No. 56. On August 20, 2024, Judge Gilstrap accepted the parties’ Joint Stipulation of Dismissal With Prejudice as to all of Plaintiffs’ and Intervenor’s Claims against Defendants SICK, Inc. and Scanning Devices, Inc. Dkt. No. 77. On May 14, 2025, Judge Gilstrap entered Orders of Dismissal With Prejudice of Plaintiffs’ and Intervenor’s Claims Against Defendants Booth &Harris Distributing and HB Registration Corporation, both of whom had not appeared in this matter. See Dkt. Nos. 106, 107. |
| 3 | “Complicating the offers was the multi-million-dollar lien asserted by Texas Workers’ Compensation.” Report of Guardian Ad Litem at 4. According to Ms. Anderson, the mediator was able to negotiate the compensation lien down to an amount that made settlement possible. Id. The negotiated settlement with Intervenor also ensured that Rios-Hernandez will continue to receive her workers’ compensation benefits in the future. Id. |
| 4 | At the end of the prove-up hearing, after having requested additional information from Plaintiffs’ counsel, the undersigned explained to Ms. Rios-Hernandez that the allocation for the minor children might be adjusted upwards. Ms. Rios-Hernandez confirmed that she would find any changes to the allocation in the best interests of her minor children. |