Opposition Brief — Richard Estle Carson, III, Petitioner v. Kathryn Hyland, et al.
Supreme Court briefMar 10, 2023
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Nos. 22-566 and 22-634
In the
Supreme Court of the United States
WILLIAM YEATMAN,
Petitioner,
v.
KATHRYN HYLAND, et al.,
Respondents.
RICHARD ESTLE CARSON, III,
Petitioner,
v.
KATHRYN HYLAND, et al.,
Respondents.
On Petitions for Writs of Certiorari to the
United States Court of A ppeals for the Second Circuit
BRIEF IN OPPOSITION OF CLASS
REPRESENTATIVE RESPONDENTS
Caitlin J. Halligan
Counsel of Record
Faith E. Gay
Yelena Konanova
David A. Coon
Max H. Siegel
Selendy Gay Elsberg PLLC
1290 Avenue of the Americas
New York, NY 10104
(212) 390-9000
challigan@selendygay.com
Counsel for Class
Representative Respondents
319275
i
QUESTIONS PRESENTED
1.
Whether the Second Circuit correctly held that
the district court did not abuse its discretion when
it certified a settlement class under Rule 23(b)(2)
and found the settlement agreement, which
included a cy pres award and preserved class
members’ rights to bring individual damages
actions, fair, reasonable, and adequate under
Rule 23(e).
2.
Whether the Second Circuit correctly concluded
that class representative service awards are not
per se impermissible in Rule 23(b)(2) class action
settlements.
ii
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . i
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . ii
TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . iv
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 1
A. Factual Background and District
Court Proceedings . . . . . . . . . . . . . . . . . . . . . 2
B. Second Circuit Proceedings . . . . . . . . . . . . 10
REASONS FOR DENYING THE PETITIONS . . . . 14
I.
Yeatman’s Petition Does Not Warrant
Review by This Court . . . . . . . . . . . . . . . . . . . . . 16
A. There Is No Conf lict A mong the
Circuits on Cy Pres Awards . . . . . . . . . . . . 16
B. T he Case Is a Poor Vehicle for
Addressing Any Concerns About Cy Pres
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
II. Carson’s Petition Does Not Warrant Review
by This Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
iii
Table of Contents
Page
A. There Is Near Unanimity Among the
Circuits on the Permissibility of Service
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
B. The Second Circuit Properly Affirmed
the Service Awards Here . . . . . . . . . . . . . . 31
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
iv
TABLE OF CITED AUTHORITIES
Page
CASES:
Berni v. Barilla S.p.A.,
964 F.3d 141 (2d Cir. 2020) . . . . . . . . . . . . . . . . . . . . . . 7
Berry v. Schulman,
807 F.3d 600 (4th Cir. 2015), cert. denied sub nom.
Schulman v. LexisNexis Risk & Information
Analytics Grp., Inc., 137 S. Ct. 77 (2016) . . . . . . . . . 29
Boeing Co. v. Van Gemert,
444 U.S. 472 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Cent. R.R. & Banking Co. of Ga. v. Pettus,
113 U.S. 116 (1885) . . . . . . . . . . . . . . . . . . . . . 30, 31, 32
Chieftain Royalty Co. v.
Enervest Energy Inst. Fund XIII-A, L.P.,
888 F.3d 455 (10th Cir. 2017),
cert. denied sub nom. Chieftain Royalty Co.
v. Nutley, 139 S. Ct. 482 (2018) . . . . . . . . . . . . . . . . . 29
China Agritech, Inc. v. Resh,
138 S. Ct. 1800 (2018) . . . . . . . . . . . . . . . . . . . . . . . . . 31
City of Detroit v. Grinnell Corp.,
495 F.2d 448 (2d Cir. 1974) . . . . . . . . . . . . . . . . . . . . . 17
v
Cited Authorities
Page
Cobell v. Salazar,
679 F.3d 909 (D.C. Cir.),
cert. denied sub nom. Craven v. Cobell,
568 U.S. 995 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Cook v. Niedert,
142 F.3d 1004 (7th Cir. 1998) . . . . . . . . . . . . . . . . 29, 31
Decohen v. Abbasi, LLC,
299 F.R.D. 469 (D. Md. 2014) . . . . . . . . . . . . . . . . . . . 20
Frank v. Gaos,
139 S. Ct. 1041 (2019) . . . . . . . . . . . . . . . . . . . . . . . . . 18
Hadix v. Johnson,
322 F.3d 895 (6th Cir.),
cert. denied sub nom. Moore v. Johnson,
540 U.S. 854 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Harris v. Quinn,
573 U.S. 616 (2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Hughes v. Kore of Ind. Enter., Inc.,
731 F.3d 672 (7th Cir. 2013) . . . . . . . . . . . . . . . . . 20, 25
In re Apple Inc. Device Performance Litig.,
50 F.4th 769 (9th Cir. 2022) . . . . . . . . . . . . . . . . . 15, 29
In re Baby Prods. Antitrust Litig.,
708 F.3d 163 (3d Cir. 2013) . . . . . . . . . . . . . . . . . . 19, 24
vi
Cited Authorities
Page
In re EasySaver Rewards Litig.,
906 F.3d 747 (9th Cir. 2018) . . . . . . . . . . . . . . . . . . . . 25
In re Google Inc. Cookie Placement
Consumer Priv. Litig.,
934 F.3d 316 (3d Cir. 2019) . . . . . . . . . 11, 12, 17, 19, 20,
21, 22, 23
In re Google Inc. St. View Elec. Commc’ns Litig.,
21 F.4th 1102 (9th Cir. 2021) . . . . . . . . . . . . . . 12, 20, 27
In re LivingSocial Mktg. & Sales Pracs. Litig.,
298 F.R.D. 1 (D.D.C. 2013) . . . . . . . . . . . . . . . . . . . . . 20
In re Lupron Mktg. & Sales Pracs. Litig.,
677 F.3d 21 (1st Cir. 2012) . . . . . . . . . . . . . . . 12, 19, 25
In re Motor Fuel Temperature Sales Pracs. Litig.,
872 F.3d 1094 (10th Cir. 2017) . . . . . . . . . . . . . . . . . . 26
In re Subway Footlong Sandwich Mktg. Litig.,
869 F.3d 551 (7th Cir. 2017) . . . . . . . . . . . . . . . . . . . . 19
In re U.S. Bancorp Litig.,
291 F.3d 1035 (8th Cir.),
cert. denied sub nom. Jansen v. U.S.
Bank Nat’l Ass’n, 537 U.S. 823 (2002) . . . . . . . . . . . 29
In re Universal Serv. Fund
Tel. Billing Pracs. Litig.,
2013 WL 2476587 (D. Kan. June 7, 2013) . . . . . . . . . 20
vii
Cited Authorities
Page
Janus v. AFSCME,
138 S. Ct. 2448 (2018) . . . . . . . . . . . . . . . . . . . . . . . . . 26
Johnson v. NPAS Solutions, LLC,
975 F.3d 1244 (11th Cir. 2020),
reh’g en banc denied, 43 F.4th 1138
(11th Cir. 2022), cert. filed sub nom. Johnson v.
Dickenson, No. 22-389 (Oct. 21, 2022), and
Dickenson v. Johnson, No. 22-517
(Dec. 5, 2022). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 29
Jones v. Monsanto Co.,
38 F.4th 693 (8th Cir. 2022),
cert. filed sub nom. St. John v. Jones,
No. 22-554 (Dec. 16, 2022) . . . . . . . . . . . . . . . 20, 25, 27
Klier v. Elf Atochem N. Am., Inc.,
658 F.3d 468 (5th Cir. 2011) . . . . . . . . . . . . . . . . . 19, 24
Knox v. SEIU,
567 U.S. 298 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Marek v. Lane,
571 U.S. 1003 (2013) . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Masters v. Wilhelmina Model Agency, Inc.,
473 F.3d 423 (2d Cir. 2007) . . . . . . . . . 19, 22, 24, 25, 26
viii
Cited Authorities
Page
Melito v. Experian Mktg. Sols., Inc.,
923 F.3d 85 (2d Cir.),
cert. denied sub nom. Bowes v. Melito,
140 S. Ct. 677 (2019) . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Michel v. WM Healthcare Sols., Inc.,
2014 WL 497031 (S.D. Ohio 2014) . . . . . . . . . . . . . . . 20
Mirfasihi v. Fleet Mortg. Corp.,
356 F.3d 781 (7th Cir. 2004) . . . . . . . . . . . . . . . . . . . . 24
Murray v. Grocery Delivery E-Servs. USA Inc.,
55 F.4th 340 (1st Cir. 2022) . . . . . . . . . . . . . . . . . . 15, 29
Nelson v. Mead Johnson & Johnson Co.,
484 F. App’x 429 (11th Cir. 2012) . . . . . . . . . . . . . . . . 20
Pearson v. NBTY, Inc.,
772 F.3d 778 (7th Cir. 2014) . . . . . . . . . . . . . . . . . . . . 24
Sullivan v. DB Invs., Inc.,
667 F.3d 273 (3d Cir. 2011),
cert. denied sub nom. Murray v. Sullivan,
566 U.S. 923 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Trustees v. Greenough,
105 U.S. 527 (1881) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Wal-Mart Stores, Inc. v. Dukes,
564 U.S. 338 (2011) . . . . . . . . . . . . . . . . . . . 14, 16, 17, 18
ix
Cited Authorities
Page
STATUTES:
26 U.S.C. § 501(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
26 U.S.C. § 4911 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
College Cost Reduction and Access Act, Pub. L.
No. 110-84, 121 Stat. 784 (2007) . . . . . . . . . . . . . . . . . 2
Rules Enabling Act , P ub. L. No. 73 - 415,
48 Stat. 1064 (1934) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
RULE:
Fed. R. Civ. P. 23 . . . . . . 1, 2, 4, 5, 7, 8, 9, 10, 11, 12, 13, 14,
15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25,
26, 27, 28, 30, 32
OTHER AUTHORITIES:
Am. L. Inst., Principles of the Law of Aggregate
Litigation, § 3.07 . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 26
Newberg and Rubenstein on Class Actions
(6th ed. 2022) . . . . . . . . . . . . . . . . . . . . . . . 17, 28, 29, 30
1
STATEMENT OF THE CASE
Petitioners William Yeatman and Richard Estle
Carson III each seek this Court’s review of a decision of
the United States Court of Appeals for the Second Circuit
that affirmed the district court’s certification and approval
of a Rule 23(b)(2) class-action settlement over Petitioners’
objections.
Respondents are Class Representatives who took out
federal student loans to pay for their education, along with
Navient Corporation and Navient Solutions LLC (together,
“Navient”), the private for-profit company that serviced
these loans. When Navient failed to provide accurate
advice about borrowers’ eligibility for forgiveness of the
Class Representatives’ loans under the Public Service
Loan Forgiveness program (“PSLF”) and thereby
stymied their efforts to have the loans forgiven, the Class
Representatives sued Navient on behalf of a putative
nationwide class. The United States District Court for
the Southern District of New York (Cote, J.) dismissed all
but one of Plaintiffs’ claims, and expressed grave doubts
about the possibility of certifying a damages class under
Federal Rule of Civil Procedure 23(b)(3).
After protracted arms-length negotiations and
mediation, Plaintiffs and Navient agreed to a settlement
in which Navient changed its business practices to deliver
better and more accurate information to borrowers
about their PSLF eligibility and the requirements for
achieving loan forgiveness, and promised to contribute a
cy pres award to establish a nonprofit organization. That
organization would counsel student borrowers about loan
forgiveness options, provide advice to help borrowers
determine whether they have claims to redress individual
2
harm, and make referrals to outside organizations for
assistance with individual litigation. In exchange, the
class agreed to release their claims for non-monetary
relief and the right to bring damages claims through
aggregate actions, but class members retained the right
to sue Navient individually for money damages.
The district court certified a settlement class under
Rule 23(b)(2) and approved the settlement under Rule 23(e)
as “‘fair, reasonable, [] adequate,’ and ‘in the best interest
of the Settlement Class as a whole.’” Yeatman App. 3a.
Petitioners appealed, arguing that the district court
erred in certifying the class, approving the settlement,
and (with respect to Petitioner Carson) approving service
awards of $15,000 to the Class Representatives. They
contended that the settlement did not benefit the class,
that a waiver of aggregate damages claims is not allowed
in a Rule 23(b)(2) settlement, and that service awards to
class representatives are impermissible. The court of
appeals affirmed, holding that the district court did not
abuse its discretion in certifying the class and approving
the settlement.
A.
Factual Background and District Court
Proceedings
In 2007, Congress enacted the Public Service Loan
Forgiveness program, Pub. L. No. 110-84, 121 Stat. 784
(2007), to address the crushing burden of student debt
facing public servants such as teachers, nurses, police
officers, and teachers. E.g., C.A. App. 30 ¶ 1 (cost of
higher education has risen more than 700% since 1983,
with over 40 million people in the United States having
taken out student loans). The PSLF statute provides
3
that the balances on student loans owned by the federal
government will be forgiven once a public-service worker
makes 120 on-time monthly payments under a qualifying
repayment plan. See Yeatman App. 4a.
The Department of Education contracted with,
among others, Navient to service borrowers’ loans and
guide borrowers in navigating the complexities of PSLF
eligibility. See id. Because not all loan repayment plans
qualify for PSLF, it is essential that a public servant who
wants to obtain forgiveness make informed decisions
about their repayment plan both at the outset of and
throughout the 120-month repayment period. Part of
Navient’s responsibilities under its servicing contract
was to assist borrowers in making optimal choices by
giving them accurate information about repayment and
loan forgiveness options—an obligation that Navient itself
touted to borrowers. C.A. App. 34–36 ¶¶ 8–16.
In 2018, Respondents Kathryn Hyland, Melissa
Garcia, Jessica Saint-Paul, Rebecca Spitler-Lawson,
Michelle Means, Elizabeth Kaplan, Jennifer Guth, Megan
Nocerino, Elizabeth Taylor, and Anthony Church (“Class
Representatives”) sued Navient on behalf of a putative
nationwide class of borrowers employed in public service
for Navient’s failures in implementing the PSLF program.
As alleged in the complaint, Navient failed to “live up to
its obligation to help vulnerable borrowers get on the
best possible repayment plan and qualify for PSLF.”
Yeatman App. 4a. Navient “[d]eceived borrowers by
[erroneously] informing them PSLF was not available
to them,” “[m]isled borrowers by stating they were ‘on
track’ for PSLF when in fact their repayment plan did
not qualify for PSLF,” and “[a]dvised borrowers not to
4
submit paperwork that would verify their employment
and other qualifying factors for PSLF.” Yeatman App.
4a. As a result, borrowers were forced to make excess
payments, accrue additional interest on their loans, or lose
PSLF eligibility altogether. Id. 4a–5a. In short, public
servants who could have qualified for the program “were
‘denied loan forgiveness at alarming rates.’” Id. 4a; C.A.
App. 37 ¶ 17.
Navient vigorously contested Plaintiffs’ suit. The
United States District Court for the Southern District
of New York (Cote, J.) dismissed all but one of Plaintiffs’
claims. With respect to the remaining claim for violation
of New York’s consumer protection law, the court noted
that the Class Representatives’ claim turned on oral
representations made by Navient to individual borrowers,
and cautioned that it “just can’t imagine there would be
any uniform[] oral representation[s].” Yeatman App.
5a. In the court’s view, there was “an enormous hurdle
to certifying [a Rule 23(b)(3) damages class]” because
common questions of fact would not predominate over
individual questions, as Rule 23(b)(3) requires. Id. 5a.
Following extended negotiations and mediation led
by a magistrate judge, the parties executed a Settlement
Agreement and Release (“Settlement Agreement”).
See Yeatman App. 6a, 47a–92a. Both sides agreed that
Plaintiffs would seek certification of a nationwide Rule
23(b)(2) settlement class. Yeatman App. 57a–58a. Class
members agreed to release claims for non-monetary relief
and aggregate claims for monetary relief, but expressly
retained the right to file individual lawsuits for monetary
relief. Id. 6a. Navient agreed to business reforms
intended to ensure that its representatives would provide
5
better and more accurate information to public service
workers seeking loan forgiveness. Id. 66a.
Navient also agreed to fund a cy pres award with
$1.75 million (later increased to $2.25 million). The cy
pres recipient, a nonprofit organization, would “provide
education and student loan counseling to borrowers
employed in public service” to enable them to pursue loan
forgiveness, and would also advise borrowers on whether
they might have claims to redress individual harm and
make referrals to outside organizations for assistance
with potential litigation. Id. 6a. In addition, the cy pres
recipient was tasked with “‘generat[ing] administrative
and legislative reforms’ to improve PSLF.” Id.; see also
id. 94a–95a (describing organization’s goals).1 Navient
also agreed to pay a $15,000 service award to each Class
Representative, subject to court approval. Id. 75a.
The district court held a preliminary settlement
approval hearing on June 10, 2020, and subsequently
granted conditional certification of a Rule 23(b)(2)
injunctive-relief settlement class and preliminary
approval of the Settlement Agreement and proposed cy
pres recipient. See Yeatman App. 7a. The court found that
certification of a settlement class pursuant to Rule 23(b)(2)
was appropriate. The court recognized that absent class
members would release aggregate damages claims but
1. Petitioner Ca rson mischa racter i zes the cy pres
organization as a “political-lobbying organization” that would
advance positions favored by Class Representatives’ union.
Carson Pet. 4. In fact, the new organization is a nonprofit under
Section 501(c)(3) of the Internal Revenue Code, Yeatman App. 93a,
and thus is limited by statute in its ability to engage in lobbying,
see 26 U.S.C. § 4911.
6
underscored that “the class members aren’t giving up
really a viable claim for relief, that is, a class action
claim for damages,” C.A. App. 276:2–11, and further, the
absent class members would retain individual claims for
damages, id. 646:18–25. Additionally, the court found
that “the Settlement was entered into at arm’s length
by experienced counsel, including after an in-person
mediation,” and preliminarily found that the settlement
was “fair, reasonable, and adequate.” C.A. App. 291
¶¶ 1–3.
Petitioners objected on the purported grounds that
“the cy pres award would not benefit the class, that the
settlement improperly released monetary claims, and that
class counsel were compromised by a conflict of interest.”
Yeatman App. 7a–8a.
The district court held a fairness hearing at which it
heard from all class members who had requested time,
including both Petitioners’ counsels. At the hearing, the
court reiterated that the case “was unlikely to succeed as
a [damages] class action if litigation proceeded further.”
C.A. App. 606:3–5. According to the court, “[a]ny
misrepresentations that may have been made by Navient
or any omissions, [or] failures to speak, would have arisen
in response to questions asked by borrowers,” and that
presented “an enormous hurdle to finding that there were
common questions of fact that would bind the class and
for finding that individual fact issues and questions would
not overwhelm this litigation if pursued as a [damages]
class action.” C.A. App. 606:5–7; 10–14; see also Yeatman
App. 42a.
The court addressed various potential concerns
about the settlement raised by the objectors. Noting that
7
Rule 23(b)(2) class action settlements do not permit class
members to opt out, the court found any concern on that
point was “adequately dealt with by the fact that individual
class members retain their right to bring individual
lawsuits.” Yeatman App. 44a. The court also addressed
a recent Second Circuit decision holding that Rule 23(b)(2)
certification is appropriate only where “all class members
stand to benefit from injunctive relief.” Berni v. Barilla
S.p.A., 964 F.3d 141, 143 (2d Cir. 2020). The court found
that the settlement satisfied Berni, crediting the parties’
submissions explaining how all class members stood to
benefit from the reforms to Navient’s business practices
and the cy pres organization. Yeatman App. 44a; D. Ct.
Dkt. 111.
In response to objections that there was no direct
monetary relief for class members, the court emphasized
that there “is no sound argument to suggest[] that
there could be a class action that would result in a
monetary award to individual class members because
the circumstances for each individual member differ
so dramatically.” Yeatman App. 42a. Thus, the court
concluded, “the only avenue for obtaining a monetary
award for an individual class member is to pursue [their]
own individual action,” id., and the settlement identified
and preserved that crucial right.
Turning to the specifics of the settlement, the court
noted that while Navient could have “withst[ood] a greater
judgment,” the settlement was “absolutely within the
range of reasonable settlements,” especially “because
there [was] a grave risk that there would have been no
recovery at all” had the case proceeded. Yeatman App.
43a–44a. The court recognized “the great debt our nation
8
owes [public servants], and to the extent that settlement
will benefit public service employees, it is all to the good.
And to the extent that this settlement benefits Navient
by causing it to improve its practices and training, that is
all to the good as well.” C.A. App. 607:17–22.
With respect to the cy pres award, the district court
rejected Yeatman’s objection that prior relationships
between class counsel and certain attorneys who would
likely work with the cy pres organization created the
appearance of a conflict of interest. The court praised
the cy pres organization for its “independent, wellqualified board overseeing the work of its employees in the
education and training and outreach that will help public
service employees be better informed and better able to
take advantage of all their rights.” Yeatman App. 46a.
The district court expressed concern about Plaintiffs’
request, made pursuant to the Settlement Agreement,
for $500,000 in attorneys’ fees to partially reimburse the
payment of hourly legal fees by the American Federation
of Teachers (“AFT”), 2 and directed that the amount be
paid to the cy pres organization instead, in accordance
with the terms of the Settlement Agreement. Yeatman
App. 44a–46a. The court emphasized that its denial of
attorneys’ fees “is not a criticism of AFT and should
not be heard as such.” Id. 46a. Indeed, the court found
2. Contrary to Petitioner Carson’s aspersions, Carson Pet.
3, proper notice of the fee request was provided to the class at the
time the court set for attorneys’ fees applications in accordance
with Rule 23(h)(1), C.A. App. 638:17–639:3; see also Yeatman
App. 19a n.4 (“We agree with Plaintiffs, however, that ‘[n]othing
in Rule 23 required that the class notice disclose the proposed
reimbursement [to AFT].’” (alterations in original)).
9
that “the motive behind AFT acting as it has and the
commitment it has shown in this litigation and funding
fully this litigation is nothing but admirable.” Id.
“[B]ecause of AFT’s work and its decision and its
generosity,” the court concluded, “the class has achieved
a significant benefit, and that significant benefit will
have or may have a profound impact on all public service
employees.” Id.
The district court issued a final approval order on
October 9, 2020. The court ruled that certification under
Rule 23(b)(2) was appropriate, Yeatman App. 27a–28a,
and noted that class members were releasing “all claims
for monetary relief brought on an aggregate or class basis
or for non-monetary relief arising out of the same facts
underlying this lawsuit,” id. 28a. The court further noted
that the Agreement “does not release or discharge, but
instead expressly preserves, the right of [class members]
to file individual lawsuits for monetary relief.” Id. 29a.
The court approved the service awards, emphasizing
that “the class representatives opened their lives to
scrutiny,” “laid bare their financial circumstances, their
career choices, and their personal histories,” and even
“suffered personal attacks because they have served in
their role as named Plaintiffs in order to benefit all class
members.” Id. 30a. The court also observed that the
Class Representatives waived the right to sue Navient
individually, even though the service awards would
“compensate each Class Representative for only a fraction
of the debt that they held at some point in time.” Id.
Finally, the court denied the sole request for attorneys’
fees and directed that the requested amount be added to
the amount distributed to the cy pres recipient, for a total
of $2.25 million. Petitioners appealed.
10
B. Second Circuit Proceedings
The United States Court of Appeals for the Second
Circuit affirmed. First, the court of appeals rejected
arguments from both Petitioners Yeatman and Carson
that the class lacked standing because some class
members’ loans were no longer serviced by Navient, noting
that “[a]t least six of the named plaintiffs continue to have
a relationship with Navient.” Yeatman App. 11a. 3
Second, the court of appeals explained why certification
of a Rule 23(b)(2) class was proper. It found that all
members of the class stood to benefit from the proposed
injunctive relief: Reforms to Navient’s business “will
benefit class members whose loans continue to be serviced
by Navient,” and “will also benefit the remaining class
members … by providing them accurate information
about PSLF and helping them determine whether they
have viable individual claims for damages.”4 Yeatman
App. 12a–13a. The court of appeals further concluded
that the record supported Plaintiffs’ allegations that
“Defendants … acted or refused to act on grounds
that apply generally to the Settlement class.” Yeatman
App. 14a.
3. Yeatman’s assertion that “nearly half of all class
members … no longer had loans serviced by Navient or were
otherwise now unqualified for PSLF,” Yeatman Pet. 14, is wholly
unsupported by the record.
4. Petitioner Carson’s claim that the cy pres organization “is
designed primarily to serve future borrowers,” Carson Pet. 7, is
wrong, as both the district court and court of appeals found. See,
e.g., Yeatman App. 13a n.2, 46a.
11
While the court of appeals emphasized that the
reforms to Navient’s business were independently
sufficient to justify Rule 23(b)(2) certification, Yeatman
App. 13a & n.2, the court further found that in addition
to the business reforms, “the settlement’s cy pres award
also benefits the whole class by funding a nonprofit,
Public Service Promise, that will help all borrowers learn
whether or not they are eligible for loan forgiveness and
‘provid[e] guidance on [PSLF] applications or assistance
in challenging denials,’” id. Citing with approval In re
Google Inc. Cookie Placement Consumer Priv. Litig.
(“Google Cookie”), 934 F.3d 316 (3d Cir. 2019), the court
concluded that “[w]here, as here, the parties in a Rule
23(b)(2) injunctive class action reach a settlement that
requires the defendant to make a monetary contribution
to a third party, the award is more accurately described
as a mandatory injunction to establish or contribute to a
selected organization than as a refashioning of monetary
relief.” Yeatman App. 13a n.2.
The court of appeals rejected Yeatman’s argument
that because the settlement waived aggregate claims for
monetary damages, it was an abuse of discretion to certify
a Rule 23(b)(2) class, rather than a Rule 23(b)(3) class.
The court stressed that “‘individual class members [in
fact] retain their right to bring individual lawsuits,’ and
the settlement does not prevent absent class members
from pursuing monetary claims.” Yeatman App. 15a–16a.
Indeed, the court noted, “one of the functions of [the cy
pres organization] is to advise class members of their
litigation options and refer them to outside organizations
for further assistance.” Yeatman App. 15a n.3. 5
5. Petitioner Carson’s assertion that Plaintiffs expected the
settlement to “effectively bar the vast majority of Class Members
12
Third, the court of appeals affirmed the district
court’s approval of the settlement as fair, reasonable,
and adequate under Rule 23(e). Yeatman App. 16a–17a.
It found that the district court had “carefully analyzed”
the relevant factors and “reasonably concluded that … the
settlement was ‘absolutely within the range of reasonable
settlements,’ especially ‘because there [was] a grave risk
that there would have been no recovery at all’ had the case
proceeded.” Yeatman App. 16a–17a.
The court of appeals embraced the conclusion of its
“sister circuits” that “class members can ‘benefit—albeit
indirectly—from a defendant’s payment of funds to an
appropriate third party.’” Yeatman App. 17a (quoting In re
Google Inc. St. View Elec. Commc’ns Litig., 21 F.4th 1102,
1116 (9th Cir. 2021), and citing Google Cookie, 934 F.3d
at 330; In re Lupron Mktg. and Sales Practices Litig.,
677 F.3d 21, 35 (1st Cir. 2012)). That was true here, the
court found, because the cy pres organization will “assist[]
all class members in navigating PSLF and determining
whether they have a viable individual monetary claim
against Navient.” Yeatman App. 17a–18a.
As for both Petitioners’ insistence that a cy pres
award is improper if it is feasible to distribute funds
directly to the class, the court explained this concern was
misplaced here because it “misconstrues the settlement
fund as a damages award that was redistributed to
Public Service Promise through the cy pres doctrine.”
Yeatman App. 18a. In reality, “the settlement fund
never belonged to class members as damages.” Id.
from seeking any relief at all,” Carson Pet. 5–6, is baseless, as the
court of appeals indicated, Yeatman App. 15a n.3.
13
“[T]he class members expressly reserved their individual
right to later sue Navient for money damages[], and
there is no evidence to suggest that Navient would have
otherwise agreed to distribute the funds to the class.” Id.;
see also Yeatman App. 20a (observing that the parties’
settlement came “only after the District Court indicated
that Rule 23(b)(3) certification would likely fail”). The
court also rejected both Petitioners’ arguments that the
cy pres award unlawfully compels speech in violation of
the First Amendment. As the court explained, “[t]he
settlement agreement does not involve state action that
implicates the First Amendment” because the district
court’s “review of the settlement agreement in this case
essentially determined whether it was ‘fair, reasonable,
and adequate’ and was merely an exercise in compliance
with Rule 23(e),” which under controlling precedent “is
not sufficient to constitute state action.” Yeatman App.
18a–19a (internal quotation marks omitted).
The court of appeals found ample support for the
district court’s rejection of both Petitioners’ complaints
about the relationship between Plaintiffs’ counsel and
AFT. Petitioners did not “point[] to any evidence that
conflicts with [the district court’s] finding that ‘the motive
behind AFT acting as it has and the commitment it has
shown in this litigation … is nothing but admirable.’”
Yeatman App. 20a. Nor did the court of appeals identify
any evidence impugning class counsel’s conduct. Id.
With respect to the fee request, the court held
that Rule 23 did not require disclosure of the proposed
reimbursement to AFT in the class notice; the district
court took the issue into account in denying all fees; and
neither Petitioner had shown how any alleged deficiencies
14
in the notice would be grounds for invalidating the
settlement. Yeatman App. 19a n.4.
Finally, the court of appeals affirmed approval of
the Class Representative service awards, noting that
such awards are permitted under the circuit’s precedent
and that the district court “offered compelling reasons
for compensating the class representatives” that “were
supported by the record.” Yeatman App. 22a.
REASONS FOR DENYING THE PETITIONS
Neither petition warrants this Court’s review.
Yeatman’s petition, which focuses on the inclusion of a
cy pres award in a class action settlement, ignores the
fundamental distinctions between Rule 23(b)(2) injunctiverelief class actions and Rule 23(b)(3) damages class actions
in a bid to conjure up a circuit split. See Wal-Mart Stores,
Inc. v. Dukes, 564 U.S. 338, 361–63 (2011) (Rules 23(b)(2)
and (b)(3) have different “justifications,” “structure[s],”
and “procedural protections”). The legal standard
applied by the Second Circuit in affirming the district
court’s certification of a Rule 23(b)(2) class and approval
of the settlement, including the cy pres award, comports
with the only other circuit to address the inclusion of a
cy pres award in a Rule 23(b)(2) class action. And even if
the standards governing cy pres awards in Rule 23(b)(3)
class actions were relevant (which they are not), there is
no split among the circuits on that issue either.
Not only is there no circuit split on point, but this
case would be a poor vehicle for addressing Yeatman’s
manifold objections to cy pres awards. Yeatman’s central
concern is the diversion of class member damages to cy
15
pres awards. That issue is not implicated by a Rule 23(b)(2)
class action settlement, where by definition individual
damages awards are unavailable. Nor is this case a viable
vehicle to tackle any potential concerns about whether cy
pres awards create the risk of inflated attorneys’ fees, bad
incentives for district courts choosing cy pres recipients,
and forum shopping. Those issues are not presented in
this case.
Carson’s petition, which focuses on the permissibility
of class representative service awards, likewise offers no
good reason for this Court’s review. The Second Circuit’s
ruling on this issue is fully consistent with the decisions of
two of the three other circuits to have addressed Carson’s
argument.6 The Eleventh Circuit’s contrary ruling in
Johnson v. NPAS Solutions, LLC is an outlier. 975 F.3d
1244 (11th Cir. 2020) (“Johnson I”), reh’g en banc denied,
43 F.4th 1138 (11th Cir. 2022) (“Johnson II”), cert. filed sub
nom. Johnson v. Dickenson, No. 22-389 (Oct. 21, 2022),
and Dickenson v. Johnson, No. 22-517 (Dec. 5, 2022). The
disagreement among the federal circuits on the question
is shallow and provides no compelling grounds for a grant
of certiorari.
At bottom, both Petitioners ask this Court to grant
certiorari to correct what they believe to be erroneous
factual findings made by the district court and affirmed
by the Second Circuit. They argue that the benefits of the
settlement were insufficient, air what they call “political”
disagreements about the details of the cy pres relief, and
6. Murray v. Grocery Delivery E-Servs. USA Inc., 55 F.4th
340, 353 (1st Cir. 2022); In re Apple Inc. Device Performance
Litig., 50 F.4th 769, 785–87 (9th Cir. 2022).
16
speculate about alleged conflicts of interest regarding
class counsel and the proposed cy pres recipient. Each
of those complaints was addressed and rejected by the
lower courts, and Petitioners’ requests that this Court
revisit those fact-bound determinations provide no good
basis for this Court’s review.
I.
Yeatman’s Petition Does Not Warrant Review by
This Court
A.
There Is No Conflict Among the Circuits on Cy
Pres Awards
Yeatman asks this Court to address whether, or in
what circumstances, a court may certify a class under
Rule 23(b)(2) or approve a settlement as adequate under
Rule 23(e) when the relief includes a cy pres award.
Yeatman Pet. i. No circuit split exists as to either issue.
At the outset, Yeatman’s petition ignores the key
distinction between different types of class actions
that this Court has emphasized. Class actions in which
plaintiffs seek individualized damages awards must be
certified under Rule 23(b)(3), and there must be notice to
class members and the opportunity to opt out. Dukes, 564
U.S. at 361, 363. Class actions seeking “final injunctive
relief or corresponding declaratory relief” must be
certified under Rule 23(b)(2). Fed. R. Civ. P. 23(b)(2);
see also Dukes, 564 U.S. at 360. Crucially for this
case, “individualized award[s] of money damages” are
unavailable in Rule 23(b)(2) class actions. Dukes, 564 U.S.
at 361. “The key to the (b)(2) class is ‘the indivisible nature
of the injunctive or declaratory remedy,’” which “must
perforce affect the entire class at once.” Id. at 360–62.
17
Because “each class member’s individualized claim for
money” is not at stake, notice and the opportunity to opt
out are not required. Id. at 363.
This distinction between Rule 23(b)(2) and Rule 23(b)(3)
is of substantial consequence, as this Court recognized
in Dukes, 564 U.S. 338, and it matters for both of the
issues that Yeatman raises in his Question Presented.
The requirements for certifying a Rule 23(b)(2) versus
Rule 23(b)(3) class are different under the text of the Rule
itself. See id. at 360–63. As for adequacy, a court must
consider what the settlement provides as compared with
the best possible recovery. See Fed. R. Civ. P. 23(e), 2009
Adv. Comm. Notes; City of Detroit v. Grinnell Corp., 495
F.2d 448, 463 (2d Cir. 1974). In a Rule 23(b)(2) action,
individual damages are by definition unavailable and
thus not relevant in evaluating adequacy, see Dukes, 564
U.S. at 360–61, but they must be carefully considered in
analyzing the adequacy of a Rule 23(b)(3) settlement, see
Newberg and Rubenstein on Class Actions § 13:51 (6th
ed. 2022) (collecting approaches to evaluating adequacy
of damages settlement).
Class certification. Yeatman identifies no circuit
split on class certification under Rule 23(b)(2). The only
case Yeatman cites as part of his purported circuit split,
Yeatman Pet. 22–24, that addressed class certification is
Google Cookie. There, the Third Circuit reached the same
conclusion as the Second Circuit below: A cy pres award
can be appropriate relief in a Rule 23(b)(2) class and does
not preclude certification. Google Cookie, 934 F.3d at 331;
Yeatman App. 14a n.2. And indeed, the Second Circuit
cited Google Cookie with approval. Yeatman App. 17a.
Yeatman’s remaining cases do not address certification. In
18
any event, they involve classes certified under Rule 23(b)(3)
and thus are inapposite to the question whether a class
may be certified under Rule 23(b)(2), as noted above. See
Dukes, 564 U.S. at 360.
Yeatman’s position on certification before this Court
represents a substantial departure from his arguments
below. Before the Second Circuit, Yeatman argued that
Rule 23(b)(2) certification was improper because not all
members of the settlement class stood to benefit from the
injunctive relief, and that a cy pres award cannot count as
a benefit to class members for purposes of ascertaining
whether a Rule 23(b)(2) class can be certified. Yeatman
App. 12a–13a & n.2; see also Yeatman C.A. Br. at 18–25.
The Second Circuit rejected these arguments, holding
that the reforms to Navient’s business were a sufficient
benefit to support Rule 23(b)(2) certification. Yeatman
App. 12a–13a. While the Second Circuit agreed with the
Third Circuit that a cy pres award is appropriate Rule
23(b)(2) relief, that determination was not necessary to its
ruling on certification; it held that even if the settlement
here had not included a cy pres award, the benefits of
the settlement’s business practice enhancements to
class members sufficed to certify the class. Yeatman
App. 12a–14a.7
7. For that reason—and also because this is a Rule 23(b)(2)
action, not a Rule 23(b)(3) action—this case does not present the
concern raised by Justice Thomas in Frank v. Gaos concerning “cy
pres-only arrangement[s]” in which a “settlement agreement …
provided no other form of meaningful relief to the class” except a
cy pres award. 139 S. Ct. 1041, 1047 (2019) (Thomas, J., dissenting).
19
Yeatman does not meaningfully challenge the Second
Circuit’s determination that Navient’s business reforms
are independently sufficient to support Rule 23(b)(2)
certification. 8 Thus, the inclusion of cy pres relief could
provide grounds for setting aside the lower courts’ rulings
on certification only if that alone rendered a class per se
uncertifiable under Rule 23(b)(2). But Yeatman did not
press that position below, and he identifies no cases that
support such a position, let alone create a circuit split on
the question.
Adequacy. Yeatman’s challenge to the adequacy of cy
pres settlements under Rule 23(e) fares no better. Every
circuit to have addressed the adequacy of a Rule 23(b)(2)
or Rule 23(b)(3) settlement with a cy pres component
permits them, as do district courts in the four regional
circuits that have not addressed the issue. 9 Yeatman
8. In a footnote, Yeatman contends that the Second Circuit’s
“analysis of settlement benefit was separately flawed” because the
standard for measuring whether class members benefited was
purportedly too low. Yeatman Pet. 19 n.1 (citing In re Subway
Footlong Sandwich Mktg. Litig., 869 F.3d 551 (7th Cir. 2017)).
Yeatman points to a Seventh Circuit case that reversed approval
of a Rule 23(b)(2) settlement after finding the injunctive relief
lacked any value. Contrary to Yeatman’s contention, that decision
creates no split on the fact-bound question of whether the specific
business reforms here had value, and in any event, the lower
courts’ conclusion that the reforms benefited the class—even
without the cy pres award—was well-supported.
9. See In re Lupron Mktg. & Sales Pracs. Litig., 677 F.3d
21, 34–35 (1st Cir. 2012); Masters v. Wilhelmina Model Agency,
Inc., 473 F.3d 423, 435 (2d Cir. 2007); In re Baby Prods. Antitrust
Litig., 708 F.3d 163, 172–73 (3d Cir. 2013); Google Cookie, 934 F.3d
at 328; Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468, 475 (5th
20
points to a purported split on whether a court must
consider the feasibility of distributing damages to class
members before allowing cy pres relief. First, all but one
of the cases Yeatman cites, see Yeatman Pet. 18–26, are
Rule 23(b)(3) damages class actions, whereas this case
is a Rule 23(b)(2) injunctive-relief class action with no
damages award. The remaining case is a Rule 23(b)(2)
action, and it accords with the ruling below. Second, even
if the Court looked to Rule 23(b)(3) actions, there is no
true split on the standard for assessing cy pres awards
in those settlements either.
With respect to Rule 23(b)(2) actions, the Second
Circuit’s standard for evaluating the adequacy of cy pres
relief was fully consistent with the decision of the only
other court of appeals to evaluate the adequacy of a cy pres
award in the context of a Rule 23(b)(2) injunctive-relief
class action. In Google Cookie, a class of consumers sued
Google for its use of web browser cookies that tracked
user data. 934 F.3d at 320. The district court certified an
injunctive-relief class under Rule 23(b)(2), and the parties
reached a settlement in which Google agreed to stop using
the tracker cookies and pay a $5.5 million cy pres award to
various organizations dedicated to internet privacy. Id. at
Cir. 2011); Hughes v. Kore of Ind. Enter., Inc., 731 F.3d 672, 676
(7th Cir. 2013); Jones v. Monsanto Co., 38 F.4th 693, 699 (8th Cir.
2022), cert. filed sub nom. St. John v. Jones, No. 22-554 (Dec. 16,
2022); Google St. View, 21 F.4th at 1113; Nelson v. Mead Johnson
& Johnson Co., 484 F. App’x 429, 435 (11th Cir. 2012); Decohen
v. Abbasi, LLC, 299 F.R.D. 469, 476 n.15 (D. Md. 2014); Michel v.
WM Healthcare Sols., Inc., 2014 WL 497031, at *26 (S.D. Ohio
2014); In re Universal Serv. Fund Tel. Billing Pracs. Litig., 2013
WL 2476587, at *3–5 (D. Kan. June 7, 2013); In re LivingSocial
Mktg. & Sales Pracs. Litig., 298 F.R.D. 1, 13–14 (D.D.C. 2013).
21
321–22. Unlike here, the class also released all individual
damages claims. Id. at 321; Yeatman App. 6a. Yeatman’s
counsel represented the sole objector, who argued (as
Yeatman does here) that a cy pres award should have
instead been distributed to class members in individual
damages awards.
The Third Circuit rejected this argument, citing
Dukes. It held that “a cy pres-only (b)(2) settlement
that satisfies Rule 23’s certification and fairness
requirements … ‘belong[s]’ to the class as a whole, and not
to individual class members as monetary compensation”
because “[d]irect monetary distributions typically would
not accomplish the purpose of a (b)(2) class.” Google
Cookie, 934 F.3d at 328. The court endorsed Google’s
argument that “th[e] settlement fund was never intended
to compensate class members monetarily,” but instead
“enhance[d] the settlement’s deterrent effect by funding
data privacy institutions that will work to prevent similar
potential privacy invasions from occurring in the future.”
Id. The court remanded solely on questions concerning
the relationship between the cy pres recipient and class
counsel and whether there could be a class-wide release of
individual damages claims in a Rule 23(b)(2) class action.
Id. at 329–31.
The Second Circuit’s decision here is in complete
accord with Google Cookie. The court of appeals below
held that “the settlement fund” here is not “a damages
award that was redistributed to Public Service Promise,”
because it “never belonged to class members as damages.”
Yeatman App. 18a. Instead, the court explained that the
cy pres award was properly “characterized as injunctive,
22
or equitable, relief,” and, as in Google Cookie, was not
“aimed at repurposing funds that would otherwise
have been distributed to the class as money damages.”
Yeatman App. 13a n.2 (citing Google Cookie, 934 F.3d at
328). Both circuits thus agree that cy pres awards can be
adequate relief in Rule 23(b)(2) class actions because they
do not displace individualized damages awards, but rather
belong to the class as a whole and serve to enhance the
settlement’s deterrent effect. No other circuit court has
addressed the adequacy of cy pres awards when a class
is certified under Rule 23(b)(2).
Yeatman appears to suggest that the decision
below deepens a split on whether a court must address
the feasibility of distributing further damages to
class members, Yeatman Pet. 18–22, but this ignores
the distinctions between Rule 23(b)(2) and 23(b)(3)
settlements. Because this is a Rule 23(b)(2) settlement,
as the Second Circuit explained, feasibility is irrelevant,
as “the settlement fund never belonged to class members
as damages,” Yeatman App. 18a—a conclusion that flows
directly from this Court’s holding in Dukes. By contrast,
when considering Rule 23(b)(3) settlements involving cy
pres awards, the Second Circuit has evaluated feasibility.
See Masters, 473 F.3d at 436 (endorsing rule that cy pres
awards are suitable when “direct distribution to class
members is not economically feasible” and remanding
for consideration of feasibility).10 Yeatman’s complaint
that the Second Circuit’s approach did not include a
10. Yeatman’s list of cases favoring damages awards rather
than cy pres relief, Yeatman Pet. 32–34, is irrelevant because each
of those cases was a Rule 23(b)(3) class action in which damages
awards were available, unlike here.
23
feasibility analysis, Yeatman Pet. 19–20, simply reflects a
repackaged version of his disagreement with the district
court’s decision that Rule 23(b)(3) certification was
impossible, and conversely, that Rule 23(b)(2) certification
was appropriate. That boils down to a request for error
correction.
Nor is there any conflict between the decision below
and Google Cookie on how to evaluate potential conflicts
of interest in class action settlements. Google Cookie
remanded for further consideration of a cy pres award
because the district court “conducted no fact finding,
either through additional filings or an evidentiary hearing,
to determine the nature of the relationships between
the cy pres recipients and Google or class counsel.” 934
F.3d at 330. Here, the district court held a multi-hour
settlement approval hearing during which it found that
an “independent, well-qualified board [would] oversee[]”
the cy pres organization, that the “motive” behind the
litigation was “admirable,” and that “the class has
achieved a significant benefit.” Yeatman App. 46a. The
Second Circuit agreed. Id. at 20a.
The circuit court likewise considered and rejected
Yeatman’s allegations that class counsel were conflicted,
concluding that “counsel agreed to settle only after the
District Court indicated that Rule 23(b)(3) certification
would likely fail. Absent settlement, the class members
here may not have received anything at all.” Id. This
thorough review by both courts below reflects precisely
the analysis that the Third Circuit held was required in
Google Cookie.
Along similar lines, Yeatman claims that the Second
Circuit parted from other circuits in its consideration of
24
Section 3.07 of the American Law Institute’s Principles of
the Law of Aggregate Litigation (the “ALI Principles”).
Yeatman Pet. 23. But as noted infra at 26, the Second
Circuit has endorsed Section 3.07, and nothing in the
decision below suggests otherwise. Yeatman’s arguments
on this point simply reflect his disagreement with the
lower courts’ fact-bound analysis—and rejection—of the
conflicts he alleged.
Even if Rule 23(b)(3) cases were somehow pertinent
to the certification and adequacy analyses in Rule 23(b)(2)
cases, there is no split on the legal standard for assessing
the adequacy of Rule 23(b)(3) settlements with cy pres
awards. Yeatman claims the Third, Fifth, and Seventh
Circuits allow cy pres awards only when distribution of
further damages to class members is infeasible, Yeatman
Pet. 21–22, but he misinterprets those cases. The Third
Circuit in Baby Products expressly “decline[d] to hold
that cy pres distributions are only appropriate” in cases
“where further individual distributions are economically
infeasible.” 708 F.3d at 173. While the Fifth Circuit
in Klier noted that courts should distribute damages
to class members where feasible, it limited that point
to “a distinct category of [] cases, in which funds have
gone unused by a particular subclass,” and described its
approach as fitting “comfortably with the prior decision
of … [its] sister circuits”—citing the Second Circuit as
an example. 658 F.3d at 478 & n.28 (citing Masters, 473
F.3d at 436). The Seventh Circuit rejected a cy pres award
in Pearson v. NBTY, Inc. because the claims process
was ineffectual, 772 F.3d 778, 784 (7th Cir. 2014), and
Mirfasihi v. Fleet Mortgage Corp. did the same based
on inadequate notice, 356 F.3d 781, 786 (7th Cir. 2004).
When the Seventh Circuit—in a decision Yeatman fails
25
to mention—confronted a case without such procedural
defects, it encouraged the use of cy pres awards because
they would promote consumer protection more effectively
and at lower administrative cost than a direct distribution
of de minimis damages. Hughes, 731 F.3d at 678.
Yeatman casts the First, Eighth, and Ninth Circuits
as adopting more generous standards for cy pres awards,
but that, too, is misplaced. He notes that the Ninth Circuit
has permitted cy pres awards when damages distributions
would be de minimis. See, e.g., In re EasySaver Rewards
Litig., 906 F.3d 747, 761–62 (9th Cir. 2018). But that
position accords with the Seventh Circuit’s decision in
Hughes and the First Circuit’s position as well. See
Lupron, 677 F.3d at 34–35 (rejecting further distributions
in Rule 23(b)(3) action because absent class members
who had not filed claims would benefit more from cy pres
distribution). As for the Eighth Circuit’s ruling in Jones
v. Monsanto Co., 38 F.4th at 699, its instruction that a
district court should “make its own assessment of the
damages ‘that would be recoverable’ by class members
before approving distribution of the residual funds cy
pres” is consistent with Klier, Baby Products, Hughes,
and EasySaver. When courts assess whether further
damages distributions are feasible or whether damages
awards would be de minimis, they make an assessment of
the damages that would be recoverable, which is exactly
what Jones calls for.
Notably, Yeatman does not acknowledge that the
Second Circuit applies the feasibility standard in Rule
23(b)(3) settlements, even though he cited a decision on
that point repeatedly below. Masters v. Wilhelmina Model
Agency remanded a cy pres settlement for reconsideration
26
because the parties did not contend that “it would be
onerous or impossible to locate class members or [that]
each class member’s recovery would be so small as to make
an individual distribution economically impracticable.”
473 F.3d at 436; see also id. (approvingly citing draft ALI
Principles limiting Rule 23(b)(3) cy pres relief to cases
where damages awards are “not economically feasible”).
This is exactly the standard Yeatman claims the Second
Circuit has disavowed. Masters also approvingly cites and
applies Section 3.07 of the ALI Principles, id., defeating
Yeatman’s contention that there is any split on adherence
to this provision.
Yeatman also complains that the decision below gives
insufficient weight to class members’ First Amendment
rights. Yeatman Pet. 30–32. He cites no circuit split on
this question, and none exists. The only other circuit
to have addressed whether court approval of a private
agreement to settle a class action represents state action
reached the same conclusion as the Second Circuit: It
does not. See Yeatman App. 18a–19a; In re Motor Fuel
Temperature Sales Pracs. Litig., 872 F.3d 1094, 1113 (10th
Cir. 2017). Were it otherwise, any judicial determination
of rights under private contracts would be state action
and open private contracts to constitutional scrutiny. By
comparison, the decisions of this Court that Yeatman cites,
Yeatman Pet. 31, involved enforcement of state statutes,
not private contracts, and thus the decision below creates
no inconsistency with them, either. See Janus v. AFSCME,
138 S. Ct. 2448, 2460 (2018) (Illinois Public Labor
Relations Act); Harris v. Quinn, 573 U.S. 616, 624 (2014)
(same); Knox v. SEIU, 567 U.S. 298, 302 (2012) (California
agency shop statute). Nor are there any meaningful First
Amendment concerns about cy pres awards in any event.
27
The Ninth Circuit addressed the merits of Yeatman’s
First Amendment argument—after declining to reach
the state action question—and held that cy pres awards
do not violate the First Amendment. Google St. View,
21 F.4th at 1118–19. The Eighth Circuit has reached the
same conclusion. Jones, 38 F.4th at 699–700.
B. The Case Is a Poor Vehicle for Addressing Any
Concerns About Cy Pres Awards
Yeatman raises a host of objections to the Second
Circuit’s rulings on certification and adequacy, attacking
the adequacy of relief to the settlement class, the approval
of the cy pres recipient, and purported conflicts of interest.
E.g., Yeatman Pet. 19 n.1, 28. Those amount to requests
for error correction and provide no grounds for review.
To the extent this Court wishes to address any
concerns about whether cy pres awards inappropriately
divert money away from individual class members or
allow gamesmanship with respect to attorneys’ fees, see
Yeatman Pet. 27–30; see also Marek v. Lane, 571 U.S. 1003
(2013) (Roberts, C.J., respecting the denial of certiorari),
this action does not squarely present them. Not only is this
a Rule 23(b)(2) action—in which no funds are distributed
directly to class members by definition—but the class
members here retained the right to sue for individual
money damages.
Nor would this case be a good vehicle to tackle
Yeatman’s other concerns. The district court declined
to award attorneys’ fees to class counsel, and thus any
question about whether a cy pres award allows for inflation
of fees, see Yeatman Pet. 28-29, is purely hypothetical.
Nor could this settlement have “tempt[ed] [the district
28
court] to play benefactor with someone else’s money”:
Unlike the cases Yeatman cites, here the parties—not the
district court—agreed to a cy pres award and selected
its recipient. Yeatman Pet. 30. And the case presents no
opportunity to address any potential for forum shopping.
Yeatman himself does not claim this occurred here and
points instead to “the experience of other circuits” in Rule
23(b)(3) actions. Yeatman Pet. 34–36.
Yeatman has failed to identify any split among the
courts of appeals with regard to their approach to cy pres
awards in class-action settlements. Should the Court wish
to address the propriety of cy pres awards in Rule 23(b)(3)
actions, the pending petition in St. John v. Jones, No. 22554, would allow it to do so.11
II. Carson’s Petition Does Not Warrant Review by This
Court
A.
There Is Near Unanimity Among the Circuits
on the Permissibility of Service Awards
There is no reason for this Court to grant certiorari
to decide whether service awards to class representatives
are permissible. Service awards have been “present in
class action law for close to a half century,” Newberg and
Rubenstein on Class Actions § 17:2 (6th ed. 2022), and this
Court has denied numerous petitions for certiorari on
this question, including two from Carson’s counsel. See,
11. Yeatman now asserts that class members in this case
“indisputably have standing,” Yeatman Pet. 17, and the court of
appeals expressly concurred, Yeatman App. 9a-12a. But Yeatman
squarely took the opposite position below, see Yeatman App. 9a,
raising additional doubts about whether this case would be a good
vehicle to resolve any questions about cy pres relief.
29
e.g., Bowes v. Melito, No. 19-504, cert. denied, 140 S. Ct.
677 (2019); Craven v. Cobell, No. 12-234, cert. denied, 568
U.S. 995 (2012).
With the sole exception of the recent Johnson decision
from the Eleventh Circuit, the circuit courts have applied
consistent standards. That body of precedent ensures
that service awards appropriately compensate class
representatives for their contributions and burdens, while
not giving them an excessive benefit relative to other class
members.12 See Newberg and Rubenstein on Class Actions
§ 17:13 (6th ed. 2022) (describing circuit court standards).
Indeed, Carson’s catalog of cases invalidating specific
service awards, see Carson Pet. 27–28, confirms that the
lower courts are policing service awards with vigilance.
The Eleventh Circuit’s categorical ban is an outlier,
see Johnson I, 975 F.3d at 1266 (Martin, J., concurring in
part and dissenting in part) (collecting cases); Newberg
and Rubenstein on Class Actions § 17:4 (6th ed. 2022), and
12. See, e.g., Murray, 55 F.4th at 353; Sullivan v. DB Invs.,
Inc., 667 F.3d 273, 333 n.65 (3d Cir. 2011), cert. denied sub nom.
Murray v. Sullivan, 566 U.S. 923 (2012); Berry v. Schulman, 807
F.3d 600, 613–14 (4th Cir. 2015), cert. denied sub nom. Schulman v.
LexisNexis Risk & Information Analytics Grp., Inc., 137 S. Ct. 77
(2016); Hadix v. Johnson, 322 F.3d 895, 897 (6th Cir.), cert. denied
sub nom. Moore v. Johnson, 540 U.S. 854 (2003); Cook v. Niedert,
142 F.3d 1004, 1016 (7th Cir. 1998); In re U.S. Bancorp Litig., 291
F.3d 1035, 1038 (8th Cir.), cert. denied sub nom. Jansen v. U.S.
Bank Nat’l Ass’n, 537 U.S. 823 (2002); Apple Device Performance,
50 F.4th at 785–87; Chieftain Royalty Co. v. Enervest Energy
Inst. Fund XIII-A, L.P., 888 F.3d 455, 468–69 (10th Cir. 2017),
cert. denied sub nom. Chieftain Royalty Co. v. Nutley, 139 S. Ct.
482 (2018); Cobell v. Salazar, 679 F.3d 909, 922 (D.C. Cir.), cert.
denied sub nom. Craven v. Cobell, 568 U.S. 995 (2012).
30
does not reflect a sufficiently developed conflict to warrant
this Court’s review, either in this case or the pending
petition in Johnson. This case, where the decision of the
court below regarding service awards is in accord with
every circuit but the Eleventh, would be an especially poor
candidate to address any purported conflict.
Moreover, the near-unanimous view of the circuits
permitting service awards is correct. Carson points to two
nineteenth-century decisions that long predate Rule 23,
modern class actions, and even the Rules Enabling Act,
Pub. L. No. 73-415, 48 Stat. 1064 (1934). See Trustees v.
Greenough, 105 U.S. 527 (1881); Cent. R.R. & Banking
Co. of Ga. v. Pettus, 113 U.S. 116 (1885). As the Second
Circuit explained in a prior case, which was in turn relied
upon by the Second Circuit below, Greenough and Pettus
did not “provide factual settings akin to” a Rule 23 class
action and thus are “inapposite.” Carson App. 23a & n.5
(citing Melito v. Experian Mktg. Sols., Inc., 923 F.3d 85,
96 (2d Cir.), cert. denied, 140 S. Ct. 677 (2019)).
That “factual setting” is important. Rule 23 provides
the foundation for class representative service awards
because “class membership alone [is what] entitles
the class representative” to the award. Newberg and
Rubenstein on Class Actions § 17:4 (6th ed. 2022). Given
that Greenough and Pettus predate the adoption of Rule
23, they cannot control the permissibility of Rule 23 service
awards. Carson points to Boeing Co. v. Van Gemert, 444
U.S. 472, 478 (1980), Carson Pet. 23-24, but that case was
about attorneys’ fees, not service awards, and the Court
referenced Greenough and Pettus to illustrate the history
of “traditional practice in courts of equity” regarding
fee shifting, not to suggest those precedents bear on the
interpretation of Rule 23. Indeed, this Court approvingly
31
referenced service awards as recently as 2018. See China
Agritech, Inc. v. Resh, 138 S. Ct. 1800, 1810–11 & n.7
(2018) (noting that a plaintiff who “lead[s] the class” may
receive “an attendant financial benefit,” including “a share
of class recovery above and beyond her individual claim”
(citing Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998)
(affirming $25,000 service award))).
B. The Second Circuit Properly Affirmed the
Service Awards Here
The Second Circuit correctly affirmed the service
awards here. The court of appeals properly found no
abuse of discretion in the district court’s determinations
that Greenough and Pettus were inapposite. Yeatman
App. 20a–22a. It noted the “compelling reasons for
compensating the Class Representatives,” including
the “personal attacks” they suffered as a result of their
service, and found that the district court’s findings “were
supported by the record.” Id. at 22a.
The proceedings before the district court confirm
that conclusion. The district court conducted a lengthy
fairness hearing, and its analysis of the proposed awards
was meticulous. As the district court noted, each Class
Representative submitted a detailed declaration setting
forth the extensive efforts they had expended throughout
the case—on average, 125 hours per person, including
substantive contributions to the filings, responses to
discovery requests, and participation in settlement
discussions and mediation. C.A. App. 402, 434, 443–44,
456–57, 651. The court found that the service awards
would “compensate each Class Representative for only
a fraction of the debt that they held,” even though the
Class Representatives agreed, in exchange, “to give up
32
the right to sue Navient individually.” Carson App. 30a.
The court also took account of “evidence that the Class
Representatives [] suffered personal attacks because they
have served in their role as named Plaintiffs.” Id.
At the fairness hearing, Carson argued that service
awards are prohibited by Greenough and Pettus. C.A.
App. 618–19. His written submission further objected
that the Class Representatives were receiving an outsized
benefit, that the service awards suggested a conflict of
interest, and that the Class Representatives did not submit
detailed records comparable to attorney time sheets. D.
Ct. Dkt. 167, at 17–22. The district court determined the
awards to be justified for the reasons noted above.
The court also rejected the speculative conflicts
that Carson raised, as well as his complaint that absent
class members did not receive damages. It determined
that “because individualized issues regarding any
misrepresentations or omissions by Navient would likely
have prevented [Rule 23(b)(3)] class certification, and
therefore there is likely no monetary relief that could have
been awarded to absent class members on an aggregate
basis, there is little risk that the Class Representatives
breached their duty to absent class members in agreeing
to this settlement.” Carson App. 32a.13 For that reason,
upon review of the Class Representatives’ declarations,
13. Carson suggests that the Class Representatives and
their counsel “arranged … for the Settlement to be submitted for
approval under Rule 23(b)(2), rather than under Rule 23(b)(3),”
Carson Pet. 6, but this flatly misrepresents the record that the
Class Representatives and their counsel fought aggressively for
Rule 23(b)(3) certification and turned to Rule 23(b)(2) certification
only after the district court indicated that Rule 23(b)(3)
certification would be impossible, see Yeatman App. 20a.
33
the Second Circuit found that the awards “did not lie
outside the bounds of the District Court’s discretion.”
Carson App. 22a.
Carson now levels accusations against AFT, complains
of a “kickback” (his term for hourly attorneys’ fees),
and suggests (wrongly) that a settlement that expressly
preserved individual damages claims would, in fact, bar
class members from bringing such claims. See Carson
Pet. 3–6. But the district court addressed each of Carson’s
objections, and the Second Circuit properly affirmed those
factual findings. C.A. App. 648–52; Carson App. 24a.
Carson’s contention that the Circuit erred in doing so is
a fact-bound request for error correction that does not
warrant review.
***
CONCLUSION
The petitions for writs of certiorari should be denied.
Caitlin J. Halligan
Counsel of Record
Faith E. Gay
Yelena Konanova
David A. Coon
Max H. Siegel
Selendy Gay Elsberg PLLC
1290 Avenue of the Americas
New York, NY 10104
(212) 390-9000
challigan@selendygay.com
Counsel for Class
Representative Respondents
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