stating that the court in Eisen, 479 F.2d at 1017-18, rejected a fluid recovery procedure in an antitrust case where it “avoided constitutionally required notice to each class member, dispensed with individual calculation of damages, and distributed the damages to future traders who were not necessarily members of the class.”
How later courts described this case
- stating that the court in Eisen, 479 F.2d at 1017-18, rejected a fluid recovery procedure in an antitrust case where it “avoided constitutionally required notice to each class member, dispensed with individual calculation of damages, and distributed the damages to future traders who were not necessarily members of the class.”
- finding that a district court’s use of cy pres to distribute unclaimed settlement funds was an abuse of discretion because it did not “adequately target the plaintiff class and fail[ed] to provide ade- quate supervision over distribution”
- stating that the “ ‘manageability’ requirement includes consideration of the potential difficulties in notifying class members of the suit, calculation of individual damages, and distribution of damages”
- affirming award of “in gross” judgment in class action under Farm Labor Contractor Registration Act, distinguishing Eisen and In re Hotel on the basis that statutory, per-violation damages under Act — unlike antitrust or security damages — did not require individual proof of actual damages
Written by the judges who cited it.
The opinion
FERNANDEZ, Circuit Judge,
concurring:
I concur in the decision to remand this case for further proceedings. I also concur in most of Judge Farris’ cogent opinion. I cannot, however, agree with what amounts to a direction to the district court to apply cy pres or to escheat any excess funds to the government. Nor can I agree with the further direction that return of the funds to the defendants “is not an available option.” While those dicta may not cause difficulty in future cases, they are unfair to the defendants in this one.
Cy pres is a fine concept in its proper place. Thus, it has commonly been used when a trustor has given funds for a specific charitable purpose, and that purpose has now been accomplished. Courts then undertake the risky task of divining what new purposes the trustor would have intended, and they try to approximate that intent as closely as possible. It is also a fine concept when parties have agreed that cy pres shall be used if money is left over at the end of a class action settlement. The individuals with a right to the funds have then committed themselves to that regime, just as a trustor may be said to have done so.
However, in this case it is proposed that the doctrine be used in the absence of any expression of purpose or intent by any of those who have any right to the funds. Its use may well amount to little more than an exercise in social engineering by a judge, who finds it offensive that defendants have profited by some wrongdoing, but who has no legitimate plaintiff to give the money to. It is a very troublesome doctrine, which runs the risk of being a vehicle to punish defendants in the name of social policy, without conferring any particular benefit upon any particular wronged person. This difficulty has, in part, motivated the courts which have rejected the notion. See, e.g., In re Hotel Telephone Charges, 500 F.2d 86 (9th Cir.1974), and Eisen v. Carlisle & Jacquelin, 479 F.2d 1005, 1013 (2nd Cir.1973), vacated on other grounds, 417 U.S. 156 , 94 S.Ct. 2140 , 40 L.Ed.2d 732 (1974).
In fact, even the case that is relied upon in the main opinion, Nelson v. Greater Gadsden Housing Auth., 802 F.2d 405 , 409 (11th Cir.1986), appears to be a very unusual use of the cy pres doctrine. There the money was to be spent by defendants on the Authority’s own property. It may not have been defendants’ preferred way to use that capital, but the improvements would still belong to the Authority. Also, it is worth noting that the Authority appears to be a public entity which is committed to supplying affordable housing to those who could not otherwise afford it. Thus, it appears that the funds may have already been committed to a public use, and only the nature of that use changed and that only slightly.
Here it is said that a judge can use a liquidated damage provision to mulct the defendants for an enormous sum of mon *1313 ey. 1 Then, if the judge cannot find plaintiffs to give it to, he can do good by distributing that money to someone who has no claim whatever upon it. 2 In my opinion, that is fundamentally wrong.
Moreover, I find the notion of escheat little better, especially where, as here, the United States Government has already had an opportunity to pursue the defendants, has in fact done so, and has collected an amount that satisfied it.
The outcome of this litigation establishes that the defendants’ rights to their own money are not superior to the rights of the plaintiffs. However, defendants’ rights remain superior to those of anyone else.
Last, but not least, I do not believe that we need to specify the remedies that may or may not be appropriate, if, somehow, the funds are not distributed to the intended plaintiffs. Were it necessary for us to do so, other possibilities could be considered, such as a pro tanto distribution to the plaintiffs who are found. Still, it seems to me that we have done enough if we do no more at this time than strike down the distribution ordered by the district court, since, even under cy pres doctrine, that distribution is improper. The district court could then assess the situation after an attempt to locate the class members has been made and the amount remaining, if any, has been ascertained. Indeed, it is possible that virtually all of the funds will be distributed to those entitled to them. Throughout this litigation, plaintiffs said that was a reasonable possibility. If so, the cy pres issue may become moot.
Therefore, I concur in the result, but, respectfully, must disassociate myself from some of the reasoning.
. Of course, the sum we have allowed is less than the even greater fund the district court was creating.
. The district judge does not have complete power. As here, some appellate judges will have to agree. See also Houck v. Folding Carton Admin. Comm., 881 F.2d 494 (7th Cir.1989), cert. denied, — U.S. —, 110 S.Ct. 1471 , 108 L.Ed.2d 609 (1990) and In re Folding Carton Antitrust Litigation, 744 F.2d 1252 (7th Cir.1984), ce rt. dismissed, 471 U.S. 1113 , 106 S.Ct. 11 , 86 L.Ed.2d 269 (1985), in which two attempts by a district court to apply cy pres failed.