Cy Pres You'll Read This

Learn about the state of cy pres law without having to pay for a CLE class!

Today, Washington Legal Foundation published a short and useful working paper authored by James M. Beck and Rachel B. Weil titled "Cy Pres" Awards: Is the End Near for a Legal Remedy With No Basis in Law? 

The paper effectively summarizes recent litigation demonstrating courts' skepticism of such awards, wherein settlement funds are paid to third parties instead of to class members.

Beck and Weil highlight some CCAF-generated precedents, such as Chief Justice Roberts's statement in Marek v. Lane, 134 S. Ct. 8 (2013), the Third Circuit's opinion in In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir. 2013), and the Seventh Circuit's opinion in Redman v. Radioshack Corp., ___ F.3d ___, 2014 U.S. App. LEXIS 18181, 2014 WL 4654477 (7th Cir. Sept. 19, 2014). (Credit is also due to Bexis, the blogging nom de guerre of Mr. Beck, whose post "Sunsetting Cy Pres" drew attention to the Redman ratio's applicability to cy pres remedies just one day after Redman v. Radioshack was decided.)

The rationale for having a defendant settle class members' claims by paying money to third parties is that it would be impossible to compensate the class members themselves. But it's a reverse Robin Hood, wherein money that belongs to the aggrieved nationwide mass of class members is taken and funneled to well-connected recipients, like the plaintiffs' lawyers' preferred local charities and alma maters. Sometimes, it isn't even true that class members can't be located!

What do you think about cy pres? How do you think it should be pronounced: see pray, or sigh pray?

Leave your comments below.

October 15

Tomorrow morning, the Supreme Court will announce orders relating to two cert petitions we filed (with substantial and critically necessary pro bono assistance) that it considered at its October 11 conference: Martin v. Blessing (which long-time readers remember as the Sirius XM case) and Marek v. Lane (the Facebook Beacon cy pres case). Both petitions made SCOTUSblog's "Petitions We're Watching" list, which means that the experts there think that those petitions have a better than average chance of being granted--but since "average" means "less than 1%," odds are still long.

I'll be speaking at the University of Chicago Law School at lunchtime, and hope to see some readers there.

Marek v. Lane cert petition in the Wall Street Journal

In The Wall Street Journal, David Rivkin and Lee Casey write about Marek v. Lane, arguing that it's time to end class-action settlements that only reward lawyers, not plaintiffs. Earlier.

August and September update

We've been very busy!

• In Fraley v. Facebook, the district court adopted our theory of attorneys' fees (zero value for injunctive relief and for settlement money paid to administrators); the parties, perhaps in response to our objection, upped the class-member award to $15 from $10. So a fee reduction of $2.5 to $3 million, with several million more available for the class. Not a bad day's work, and enough of an improvement that we're not going to appeal the parts of the decision the court got wrong.


• Speaking of whether class counsel should get a commission on money paid to the settlement administrator... You may recall the Ninth Circuit throwing out a bad settlement (in an opinion later modified) over Frosted Mini-Wheats that paid $800,000 to consumers, $2 million to lawyers, and some unknown figure to unknown cy pres. On remand, the parties set up a $4 million settlement fund—but $900,000 or so is earmarked for settlement administration. Is that a $4 million settlement, or is it really a $3.1 million settlement, because that's all the class can hope to get? Class counsel is "only" seeking $1 million this time, which is still disproportionate to actual class relief; meanwhile, the objectors who turned the $800,000 in class relief into over $2 million of class relief aren't being given anything. This morning, I'll be at the fairness hearing in San Diego, presenting the CCAF objection of Chicago Law professor Todd Henderson. Class counsel's main argument against us is that we're funded by the Koch brothers (not remotely true), and therefore we should be ignored. 


• We filed a cert petition appealing our Second Circuit loss in Sirius. I'll write a longer post about that, plus our amicus support.


• Another case that merits a longer post is a fascinating Eighth Circuit brief we filed last week in an appeal of a $2.6 million cy pres award.


• Speaking of bad cy pres (and bad coupon settlements), we filed our opening Ninth Circuit brief in EasySaver Rewards ($8.85 million for attorneys, $3 million for local cy pres, $225,000 and worthless coupons for the class) in July.
   
• CCAF attorney Adam Schulman filed an objection to the horrendous settlement in Berry v. LexisNexis, which is like Dry Max Pampers, but far worse, with a larger class and the attorneys asking for $5.5 million. This merits a longer post, but we were honored that a passel of very highly-paid attorneys representing a competing class action and their objectors saw fit to adopt so many of our arguments.


• In Pearson v. Target Corp., class counsel is seeking $4.5 million for a settlement over glucosamine sales likely to pay less than half of that to the class. I am a class member, and CCAF attorney Melissa Holyoke filed an objection on my behalf.


• In the Southwest Drink Voucher case, the court approved the settlement, but hasn't ruled on the attorneys' fees yet. We're deciding whether to appeal.


• Cato filed an amicus in support of our cert petition in the Facebook Beacon case.


• More press coverage than you can shake a stick at. And I did a lengthy "Liberty Law Talk" podcast with Richard Reisch about class action abuse generally.

Given that one of our attorneys is pregnant, another is getting married, and a third is moving, we're being very productive, though of course, we've had help from pro bono counsel.

CCAF in today's New York Times

The Adam Liptak article also generously cites my Congressional testimony on cy pres. Earlier: Marek v. Lane; Dry Max Pampers.

We maintain a complete set of our press coverage. Have we forgotten something? Drop us a line.

In addition, when I started doing this in 2009, I joked that there were only a dozen cases worth reading. That number is way up in 2013. We'd like to take some credit, given seven precedential appellate victories under CCAF's belt, and a number of good district-court and appellate decisions based on our litigation or on precedents we created. We've started a web page on the subject (which will be helpful for others wanting to object or design courses on the subject); happy to take suggestions if we left something important out.

We'd like to make our website a little nicer. If you have a good design sense and happen to want to provide us some pro bono web work to set us up a system that we can easily maintain, drop us a line.

Our first cert petition, challenging Facebook Beacon cy pres settlement

We weren't involved in the 2-1 Lane v. Facebook cy pres decision disadvantaging consumers, and jumped at the opportunity to challenge it in the Supreme Court. On Friday (with generous pro bono work from BakerHostetler) we filed our first cert petition, and the first substantive request that the Supreme Court clarify the law of cy pres, a unique public-policy problem that both the Chamber of Commerce and Public Citizen agree upon. 

The Center has previously won such landmark cy pres decisions as In re Baby Products Antitrust Litigation and Nachshin v. AOL. I testified about the problem before a House Subcommittee in March, and will be speaking on an ABA panel on the subject in Boston in October.