Amicus Curiae Brief — Frank v. Gaos, 138 S. Ct. 1697 (2018) (No. 17-961)

No. 17-961

3n The

Supreme Court of the United States

THEODORE H. FRANK AND MELISSA ANN HOLYOAK,

Petitioners,

We

PALOMA GAOS, ON BEHALF OF HERSELF AND

ALL OTHERS SIMILARLY SITUATED, ET AL.,

Respondents,

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF OF THE AMERICAN BAR

ASSOCIATION AS AMICUS CURIAE IN

SUPPORT OF NEITHER PARTY

Of Counsel: HILARIE BASS

REX S. HEINKE Counsel of Record

JESSICA WEISEL PRESIDENT

AKIN GUMP STRAUSS AMERICAN BAR ASSOCIATION

HAUER & FELD LLP 321 N. CLARK STREET

1999 AVENUE OF THE STARS CHICAGO, ILLINOIS 60610

SUITE 600 (312) 988-5000

LOS ANGELES, CA 90067 abapresident@americanbar.org

(310) 229-1000

heinke@aki

Counsel for Amicus Curiae

American Bar Association

a SS SE A a LOTTO

1

QUESTION PRESENTED

Whether, or in what circumstances, a cy pres

award of class action proceeds that provides no direct

relief to class members supports class certification

and comports with the requirement that a settlement

binding class members must be “fair, reasonable, and

adequate.”

TABLE OF CONTENTS

QUESTION PRESENTED......................c000-cccceeeeeeeeeees i

pS EE iii

INTEREST OF AMICUS CURIAE........................0+++- l

SUMMARY OF ARGUMENT ..........00000000.0.....0.0..000002. 4

el 6

1. Cy Pres Serves Important Purposes in

Class Action Settlements.................................. 6

Il. Legal Services Organizations That

Serve Low-Income and Indigent

Litigants Are Proper Recipients of Cy

Pres Awards Because They Share the

Same Purpose as Rule 23(b)(3) Class

Se lntcndeiiickecendinsceveninninandabipnbntsiemaeinscptaesencens 9

Ill. States Laws and Rules Providing for Cy

Pres Awards in Class’ Action

Proceedings Could Be Imperiled by a

Ruling Imposing Constitutional or

Other Strict Limitations on Cy Pres

PIII aicnidepiiensihbicsasetetpirstinadiedninietmibdidideitcines 15

SEINE saison ccnt-stnccanidiaiadindédenseeabbemapateniaidesactin 20

i

ill

TABLE OF AUTHORITIES

CASES:

Amchem Prods. v. Windsor,

521 U.S. 591, 117 S. Ct. 2231 (1997)...........

Carnegie v. Household Int'l, Inc.,

376 F.3d 656 (7th Cir. 2004) .......................

In re Baby Prods. Antitrust Litig.,

708 F.3d 163 (3d Cir. 2013)..........................

In re Lupron Mktg. & Sales Practice Litig.,

677 F.3d 21 (ist Cir. 2012) ......................06+.

Keepseagle v. Perdue,

856 F.3d 1039 (D.C. Cir. 2017) ....................

Klier v. Elf Atochem N. Am., Inc.,

658 F.3d 468 (5th Cir. 2011)........................

Leyva v. Medline Indus. Inc.,

716 F.3d 510 (9th Cir. 2013)........................

Mace v. Van Ru Credit Corp.,

109 F.3d 338 (7th Cir. 1997)........................

Masters v. Wilhelmina Model Agency, Inc.,

473 F.3d 423 (2d Cir. 2007)......................--+-

Mirfasihi v. Fleet Mortg. Corp.,

356 F.3d 781 (7th Cir. 2004) ........................

iv

Nachshin v. AOL, LLC,

663 F.3d 1034 (9th Cir. 2011)............................ 6,8

Oetting v. Green Jacobson, P.C. (In re

BankAmerica Corp. Sec. Litig.),

775 F.3d 1060 (8th Cir. 2015).............................--- 8

Six (6) Mexican Workers v. Arizona Citrus

Growers,

904 F.2d 1301 (Oth Cir. 1990)................................ 8

Van Gemert v. Boeing Co.,

rn 7

TA :

TET dtiisniysitnibientsmmiabdneocncnnnanienaten 16

SR EE ee eee arene 16

N.C. GEN. STAT. § 1-267.10(D) ....................----ecceeeeeeees 16

I, BRU. GREE, Ft ccccccccccccccccccccssescccccacseseses 16

P.R. LAWS ANN. tit. 32A § 20.6(b) .......................2.2--- 16

S.D. CODIFTED LAWS § 16-2-57......................-ccceeeeeee00- 17

TENN. CODE ANN. § 16-3-821 ....................-..-seseeceeeeees 17

i ee SIE ccsnsccsicinissenecensnnbesninnnnenstinestinntee 17

OTHER AUTHORITIES:

2 HERBERT B. NEWBERG & ALBA CONTE,

NEWBERG ON CLASS ACTIONS § 10:17 (4th

OU TTA \iiccicesistdineindatiabinisetnnlenttinctitieddaanaimaneendendeetionds 8

v

ABA Consortium on Legal Services and the

Public, Legal Needs and Civil Justice: A

Survey of Americans (199A) ....................0c0ssc0eec00e0- 3

ABA Mission and Association Goals........................... 1

REESE Nesey Ee aN ok A Oa 2

ABA Resource Center for Access to Justice

Initiatives, Legislation and Court Rules

Providing for Legal Aid to Receive Class

PEEL Ei 16

American Law Institute’s Principles of Law

of Aggregate Litigation (2010) ..............000.0....... 7,8

Blynn, Daniel, Cy Pres Distributions: Ethics

& Reform, 25 GEO. J. LEGAL ETHICS 435

Boise, Wilber H. & Latonia Haney Keith,

Class Action Settlement Residue and Cy

Pres Awards Emerging Problems and

Practical Solutions, 21 VA. J. Soc. POL’y

re a ccaisiesevtanistes 10

Bone, Robert G., Justifying Class Action

Limits: Parsing the Debate over

Ascertainability and Cy

Pres, 65 U. KAN. L. REV. 913 (2017)....................... 8

es Slee Nc iy HII cichsdiantaliictinisdmnsateknbininsdantieescipasbincett 17

oe 8 TE ne eee 17

vi

Dep’t of Justice, WH-LAIR Case Study: Help

Veterans and Servicemembers ...........................- 12

Farmer, Susan Beth, More Lessons from the

Laboratories: Cy Pres Distributions in

Parens Patriae Antitrust Actions Brought

by State Attorneys General, 68 FORDHAM

Bip ee BE cats cerciendiginenithleniansbliniinemenensacenee 7

Fayard, Calvin C., Jr. & Charles S.

McCowan, Jr., The Cy Pres Doctrine: “A

Settling Concept,” 58 LA. B.J. 248 (2011)............ 13

SP ile Ses Oto SI tcepresinsvisnennencectsiniseupemepnenssurtnnonse 9

Glaves, Bob & Meredith McBurney, Cy Pres

Awards, Legal Aid and Access to Justice:

Key Issues in 2013 and Beyond, 27

MGMT. INFO. EXCH. J., 24 (2013).......................... 10

Ds ts EL SEI ct ciincennsassiasniccetincneennneeiesngbonconasnanets 17

Fe en oC iesrrivedrrenscunssenzencintenennevscneenen 17

Kaplan, Prefatory Note, 10 B.C. IND. & Com.

Bei HE I cai coseatininiatcnnscnspemiesininsiiniensstonensenen 9

RL ee 17

LAS. C. RULE XLII Part Q....................sccsecccessesssoeees 18

Legal Services Corp., The Justice Gap:

Measuring the Unmet Civil Legal Needs

of Low-income Americans (2017) ..................- 11,12

vii

Legal Services Corp., By the Numbers: The

Data Underlying Legal Aid Programs

SEITE ccanceecsbiscundecetonecsesienieanandendinabéndinneiaints 12, 14

BE, Be, Gs Bho Bi iccessocasteceinstcssdasinammiacmerasistanital 18

EE, Ba GR, Fo Ci cccsssvscsentctotmnsvintobioteinaaasinen 18

N.M. Distr. Cr. R. C.P. 1-O23(G)(B)............0cccccccccecesees 18

BB SB, aren ne SOP 18

oe fs 3 A: Ree 18

Press Release, Legal Services Corporation

Leaders Confident of Bipartisan Support

in Wake of Defunding Proposal. (Feb. 12,

UTE cccucsininsnieasatiienscciseedpilisbibiaiiissaltidiiaidustaseetaedaed 14

Press Release, LSC Receives $25 Million

Spending Boost from Congress (Mar. 23,

UTED cececsncansicnvisijidiiiiainniaitdaaidatiibadsialidaiatdibietinasaniaaliciaiin 14

Redish, Martin H. Redish, et al., Cy Pres

Relief and the Pathologies of the Modern

Class Action: A Normative and Empirical

Analysis, 62 FLA. L. REV. 617 (2010) ................. 6, 7

SE, Ts GRR, i Te cesininccishatetcbiitinnntetgidbiiastainitiiadantess 18

Shepherd, Stewart R., Comment, Damage

Distribution in Class Actions: The Cy

Pres Remedy, 39 U. Cui. L. REV. 448

GIT cscanscabctenttininsiantiaminndindsbinidepdaliitadeinaiumemaial 7

viii

Shiel, Cecily C., A New Generation of Class

Action Cy Pres Remedies: Lessons from

Washington State, 90 WASH. L. REV. 943,

RS 13

Van Horn, Danny & Daniel Clayton, /t Adds

Up: Class Action Residual Funds

Support Pro Bono Efforts, 45 TENN. BAR.

EE 13

nT 18

een 18

White House Legal Aid Interagency

Roundtable Case Studies ...............................0000 12

INTEREST OF AMICUS CURIAE

The American Bar Association (“ABA”) is the

leading national membership organization of the

legal profession. The ABA’s membership of over

400,000 spans all 50 states and includes attorneys in

private law (firms, corporations, nonprofit

organizations, government agencies, and

prosecutorial and public defender offices, as well as

legislators, law professors, and students. '

The ABA’s mission is “[t]o serve equally our

members, our profession and the public by defending

liberty and delivering justice as the national

representative of the legal profession.” Among the

ABA’s goals is to “[i}ncrease public understanding of

and respect for the rule of law, the legal process, and

the role of the legal profession at home and

throughout the world,” to “[a]jssure meaningful access

to justice for all persons,” and to “eliminate bias in

the . . . justice system.” ABA Mission and Association

Goals, available at

' Pursuant to Supreme Court Rule 39(6), the ABA certifies

that no counsel for a party authored this brief in whole or in

part, and that no party, no party's counsel, and no person or

entity, other than amicus, its members, or its counsel, has made

a monetary contribution to its preparation or submission.

Neither this brief nor the decision to file it should be

interpreted to reflect the views of any judicial member of the

American Bar Association. No inference should be drawn that

any member of the Judicial Division Council has participated \n

the adoption or endorsement of the positions in this brief. This

bnef was not circulated to any member of the Judicial Division

All parties have consented to the filing of this bref.

2

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In 2016, the ABA House of Delegates adopted a

resolution in support of cy pres awards advanced by

its Standing Committee on Legal Aid & Indigent

Defendants, Commission on Homelessness &

Poverty, and Commission on Interest on Lawyers’

Trust Accounts. The resolution provided, in full:

RESOLVED, That the American

Bar Association urges state,

local, territorial and _ tribal

jurisdictions to adopt court rules

or legislation authorizing the

award of class action residual

funds to non-profit organizations

that improve access to civil

justice for persons living in

poverty.

FURTHER RESOLVED, That

before class action residual

funds are awarded to charitable,

be made that such payments are

not feasible.

Resolution and Report to the House of Delegates,

— at

The ABA’s Standing Committee on Legal Aid

and Indigent Defendants also supports the growth

and development of state Access to Justice (ATJ”)

Commissions, collaborative entities that bring

together courts, the bar, civil legal aid providers, and

other stakeholders in an effort to remove barriers to

civil justice for low-income and disadvantaged people.

Sl en eg EE tema beet Gacteninn olth the

first ATJ Commission in 1994 (Washington State),

such entities have been developing all over the

country, engaging in a full range of activities and

strategies to accomplish their goals and objectives.

Id. In multiple states, ATJ Commissions have been

instrumental in pressing for statutes and rules that

authorize cy pres awards and providing educational

information for attorneys and judges regarding cy

pres awards.

Further, for decades, the ABA has been at the

forefront of assessing the ability of the indigent and

those with low or moderate income to use the justice

system to obtain assistance with legal problems. See,

e.g., ABA Consortium on Legal Services and the

Public, Legal Needs and Civil Justice: A Survey of

Americans (1994). It also collects state-by-state

reports that assess the legal needs of low-income

people and the economic impact provided by legal

services organizations. See generally

(collecting

The ABA also is the only organization that

tracks cy pres awards nationally. Its data reflects

that cy pres awards from federal and state class

action settlements provide an average of $15.5

million annually to legal services organizations.

The ABA’s expertise regarding cy pres awards

and their role in funding legal services organizations

is germane to this appeal. This brief amicus curiae

will demonstrate that legal services organizations are

appropriate recipients of cy pres awards in class

action settlements, which, if recognized by this Court,

will promote access to justice for underserved

populations.

SUMMARY OF ARGUMENT

The ABA takes no position on the precise

question before this Court — if and under what

circumstances can a court approve a settlement that

consists solely of a cy pres award with no direct relief

to class members based on a finding that such

payments are not feasible. Consistent with that

limited scope, the ABA will not argue the specifics of

whether the district court's decision should be

affirmed, reversed, or remanded. However, as an

amicus curiae, the ABA seeks to provide information

to this Court about the role of cy pres awards in class

actions, their importance in funding legal services to

low-income and indigent litigants, and the potential

impact on state statutes and rules providing for cy

pres awards. These are important considerations for

this Court as it considers for the first time the

5

specific standards that lower courts should apply in

considering if and under what circumstances they

should authorize cy pres awards in class action

settlements.

The cy pres doctrine, originally a creation of

trust law, has increasingly been used as a basis to

distribute residual funds from class _ action

settlements to nonprofit organizations or other third-

party beneficiaries with interests reasonably

approximate to those of the class members. This

equitable doctrine ensures that neither the defendant

nor class members receive windfalls when settlement

funds go unclaimed or distribution to class members

proves infeasible.

Cy pres is most commonly used in class actions

brought under Federal Rule of Civil Procedure

23(b)(3), which permits aggregate ciaims for

monetary damages. Such claims often involve small

individual recoveries, which may deter individual

litigants from pursuing claims and counsel from

taking on representations. Rule 23(b)(3), thus, serves

the purpose of improving the ability of class members

to obtain justice by aggregating their claims and

deterring wrongful conduct.

A similar purpose is served by the legal services

organizations that are often appropriate recipients of

cy pres awards. These organizations provide legal

services to low-income and indigent litigants who

otherwise would have no representation in civil

courts. This unity of purpose justifies cy pres awards

to legal services organizations, as both courts and

state legislatures have recognized. The ABA urges

this Court to do the same.

6

Finally, the ABA asks this Court to limit any

decision about cy pres awards to the question

presented and to avoid broad pronouncements about

the constitutionality of cy pres remedies in class

action settlements. Such a ruling would not only

impact federal class actions, but would potentially

disrupt state statutory schemes that provide for cy

pres awards to legal services organizations.

ARGUMENT

I. Cy Pres Serves Important Purposes in

Class Action Settlements.

Cy pres serves important purposes in class

action settlements, particularly in cases involving

small claims. The cy pres doctrine takes its name

from the Norman French term “cy pres comme

possible,” meaning “as near as possible.” Nachshin v.

AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011)

(internal quotation marks and citation omitted).

Originally used as an equitable means of distributing

trust fund assets when the trust’s original purpose

could not be achieved, the principles of cy pres have

been applied to modern class action settlements. /d.;

Martin H. Redish, et al., Cy Pres Relief and the

Pathologies of the Modern Class Action: A Normative

and Empirical Analysis, 62 FLA. L. REV. 617, 653-56

(2010) (hereinafter “Redish”).

Soon after the 1966 amendments to Rule 23 and

the ensuing expansion of class actions, a student

comment proposed that the equitable cy pres

principle in trust law could be employed when class

action settlements and awards could not be

7

distributed fully to the class members. Stewart R.

Shepherd, Comment, Damage Distribution in Class

Actions: The Cy Pres Remedy, 39 U. CHI. L. REV. 448,

448 (1972); In re Baby Prods. Antitrust Litig., 708

F.3d 163, 172 (3d Cir. 2013) (discussing development

of cy pres awards in class actions). Significant growth

of cy pres awards followed from approximately once

per year between 1974 and 2000 to approximately

eight per year between 2001 and 2008. Redish, 62

FLA. L. REV. at 653.

The cy pres doctrine is particularly appropriate

in class actions aggregating small claims. American

Law Institute’s Principles of Law of Aggregate

Litigation (2010), § 3.07, cmt. b (‘ALI Principles”).

Because class members with only small amounts at

stake seldom bother to claim their shares of a

settlement fund, residual funds may remain after an

initial effort to distribute it to the class. Courts then

face a dilemma over the distribution of the residual!

funds. Distributing the residual to class members

that have already received full compensation would

provide a windfall to those members. Susan Beth

Farmer, More Lessons from the Laboratories: Cy Pres

Distributions in Parens Patriae Antitrust Actions

Brought by State Attorneys General, 68 FORDHAM L.

REV. 361, 393 (1999) (citing Van Gemert v. Boeing

Co., 553 F.2d 812, 815 (2d Cir. 1977)). Returning

unclaimed settlement funds would be equally

inequitable. /d.; Mirfasihi v. Fleet Mortg. Corp., 356

F.3d 781, 784 (7th Cir. 2004) (by authorizing cy pres

awards, courts prevent defendants “from walking

away from the litigation scot-free because of the

infeasibility of distributing the proceeds of the

settlement [or] judgment”).

8

Cy pres “serves deterrence better than returning

funds to the defendant; it avoids windfalls to class

members, and it directs left-over funds in a ,. .y that

creates some benefit to the class.” Robert G. Bone,

Justifying Class Action Limits: Parsing the Debate

over Ascertainability and Cy Pres, 65 U. KAN. L. REV.

913, 943-44 (2017).

Cy pres awards in class action settlements were

envisioned to “put[] the unclaimed fund to its next

best compensation use, e.g., for the aggregate,

indirect, prospective benefit of the class.” Masters v.

Wilhelmina Model Agency, Inc., 473 F.3d 423, 436 (2d

Cir. 2007) (alteration in original) (quoting 2 HERBERT

B. NEWBERG & ALBA CONTE, NEWBERG ON CLASS

ACTIONS § 10:17 (4th ed. 2002)); accord Nachsin, 663

F.3d at 1038. Under rules proposed by the American

Law Institute’s Principles of Law of Aggregate

Litigation(, when feasible, undistributed residual

funds should be distributed to recipients “whose

interests reasonably approximate those being

pursued by the class... .” ALI Principles, § 3.07 cmt.

a (emphasis added). This “reasonable approximation”

test has been adopted by numerous courts in

determining the fairness of class action cy pres

awards. See, e.g., Oetting v. Green Jacobson, P.C. (In

re BankAmerica Corp. Sec. Litig.), 775 F.3d 1060,

1067 (8th Cir. 2015); In re Lupron Mkig. & Sales

Practice Litig., 677 F.3d 21, 33 (1st Cir. 2012); Klier

v. Elf Atochem N. Am., Inc., 658 F.3d 468, 474 (5th

Cir. 2011); Six (6) Mexican Workers v. Arizona Citrus

Growers, 904 F.2d 1301, 1305 (9th Cir. 1990).

9

Il. Legal Services Organizations That Serve

Low-Income and Indigent Litigants Are

Proper Recipients of Cy Pres Awards

Because They Share the Same Purpose as

Rule 23(b)(3) Class Actions.

A fundamental purpose of class actions is to

offer »ccess to justice for people who, on their own,

could not otherwise realistically obtain’ the

protections of the justice system. Legal services

organizations that represent poor and indigent

litigants serve the same fundamental purpose — to

provide access to the judicial system to people who

otherwise might be unable to litigate. With these

closely aligned purposes, legal services organizations

should in most cases be appropriate recipients of cy

pres awards.

1. Class actions often provide access to courts

for civil litigants that otherwise might forego judicial

relief. In most class actions seeking monetary relief,

certification requires a court to find that a “class

action is superior to other available methods for

fairly and efficiently adjudicating the controversy.”

FED. R. Civ. P. 23(b)(3).

As part of this superiority analysis, courts have

long recognized that claims that would result in

small individual recoveries are particularly amenable

to class action treatment. As this Court has

explained, “the Advisory Committee had dominantly

in mind vindication of ‘the nights of groups of people

who individually would be without effective strength

to bring their opponents into court at all.” Amchem

Prods. v. Windsor, 521 U.S. 591, 617, 117 S. Ct. 2231,

2246 (1997) (quoting Kaplan, Prefatory Note, 10 B.C.

10

IND. & Com. L. REV. 497, 497 (1969)). “The policy at

the very core of the class action mechanism is to

overcome the problem that small recoveries do not

provide the incentive for any individual to bring a

solo action prosecuting his or her rights.” /d. (quoting

Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th

Cir. 1997)). “A class action solves this problem by

aggregating the relatively paltry potential recoveries

into something worth someone's (usually an

attorney's) labor.” Jd.; see also Leyva v. Medline

Indus. Inc., 716 F.3d 510, 515 (9th Cir. 2013) (‘In

light of the small size of the putative class members’

potential individual monetary recovery, class

certification may be the only feasible means for them

to adjudicate their claims” and thus “is also the

superior method of adjudication.”).

Thus, a fundamental role of the class action

device is to provide a means of access for litigants

who might otherwise be unable to bring claims. As

Judge Posner explained, “(t]he realistic alternative to

a class action is not 17 million individual suits, but

zero individual suits, as only a lunatic or a fanatic

sues for $30.” Carnegie v. Household Int'l, Inc., 376

F.3d 656, 661 (7th Cir. 2004); see also Bob Glaves &

Meredith McBurney, Cy Pres Awards, Legal Aid and

Access to Justice: Key Issues in 2013 and Beyond, 27

MGmrT. INFO. EXCH. J., 24, 25 (2013) (‘[NJo matter

what the underlying issue is in the case, every class

action is always about access to justice for a group of

litigants who on their own would not realistically be

able to obtain the protections of the justice system.”);

Wilber H. Boies & Latonia Haney Keith, Class Action

Settlement Residue and Cy Pres Awards: Emerging

Problems and Practical Solutions, 21 VA. J. Soc.

11

POL’Y & L. 267, 291 (2014) (hereinafter “Boies”) (‘One

interest of every class member in any class action in

any area of the law is access to justice for a group of

litigants who, on their own, would not realistically be

able to seek court relief’).

2. Legal services organizations serve a similar

purpose as Rule 23(b)(3): They provide representation

to litigants that otherwise might be unable to protect

their interests in civil actions.

These organizations provide a vital service.

More than 60 million Americans live below the

poverty level. Legal Services Corp., The Justice Gap:

Measuring the Unmet Civil Legal Needs of Low-

income Americans (2017), at 16 (“Justice Gap”),

iceGap-FullReport.pdf In the Legal Services

Corporation’s (“LSC”) 2017 Justice Gap survey, 71%

of survey respondents reported having at least one

civil legal problem in the prior year, 54% faced at

least two such problems, and nearly a quarter had

experienced six or more civil legal problems. /d. at 21.

These problems often related to basic issues of

health, finances, rental housing, children and

custody, education, income maintenance, and

disability. Jd. at 21-23. Seventy percent of low-income

Americans who personally experienced a civil legal

problem in the past year, reported that at least one of

the problems has affected them “very much” or

“severely.” Id. at 25. Respondents reported to the

LSC survey that they sought the help of a legal

professional for only 20% of all of the civil legal

problems they face, and for only 24% of the problems

that affect them “very much” or “severely.” Jd. at 29.

12

LSC alone provides funding to organizations and

programs that helped approximately 1.8 million

people in 2016. LSC, By the Numbers: The Data

Underlying Legal Aid Programs, at 63 (2016)

(hereinafter “By the Numbers”). However, demand

for legal aid far outstrips the resources available. In

the most recent Justice Gap survey, LSC-funded

organizations could not assist on approximately 41%

of the eligible problems low-income Americans

presented to these organizations. Justice Gap, at 43.

Most of those problems were rejected due to limited

resources. Id.

The federal government also recognizes that

civil legal services organizations provide vital support

for federal efforts to serve the low-income and other

vulnerable populations. For example, the White

House Legal Aid Interagency Roundtable (“WH-

LAIR”) cites the role that legal services organizations

play in supporting veterans, including preventing

avoidable evictions and foreclosures, negotiating fair

child support orders, resolving credit report

problems, and assisting veterans secure government

benefits. Dep’t of Justice, WH-LAIR Case Study: help

Veterans and _ Servicemembers, available at

https://www.justi v/lai d.?

2 Other case studies reflect the Department of Justice's view

that civil legal services organizations support federal efforts in

numerous areas, including, inter alia, protecting consumers,

keeping children in school, preventing domestic violence,

helping people exit homelessness and stay housed, and assisting

Americans with disabilities. See generally WH-LAIR Case

Studies, available at https://www_.justice.gov/lair/wh-lair-case-

studies.

13

3. Because of this unity of interest between

the purpose of the class action mechanism and legal

services organizations, legal services organizations

should always be appropriate recipients of residual

class action settlement funds. Legal services

organizations that provide access to the courts satisfy

the reasonable approximation test for cy pres awards.

Boies, 21 VA. J. Soc. PoL’y & L. at 290-91 (“The

access to justice nexus falls squarely within ALI

Principles’ guidance that ‘there should be a presumed

obligation to award any remaining funds to an entity

that resembles, in either composition or purpose, the

class members or their interests.”).

Consistent with that reasoning, courts

authorizing cy pres awards consistently find legal

services organizations to be appropriate recipients of

class action residual funds. Cecily C. Shiel, A New

Generation of Class Action Cy Pres Remedies: Lessons

from Washington State, 90 WASH. L. REV. 943, 955-56

(2015) (discussing cases providing for distribution of

residual funds to legal services organizations); Daniel

Blynn, Cy Pres Distributions: Ethics & Reform, 25

GEO. J. LEGAL ETHICS 435, 438 (2012) (“there are

many cases in which judges grant cy pres

distributions to legal aid foundations and bar

associations”); Calvin C. Fayard, Jr. & Charles S.

McCowan, Jr., The Cy Pres Doctrine: “A Settling

Concept,” 58 LA. B.J. 248, 251 (2011) (citing cy pres

awards to local legal services organizations and the

Louisiana Bar Foundation); Danny Van Horn &

Daniel Clayton, It Adds Up: Class Action Residual

Funds Support Pro Bono Efforts, 45 TENN. BAR. J. 12,

13-14 (2009) (identifying federal cases that have

“awarded unclaimed class action settlement funds to

14

legal aid programs because, like class action lawsuits,

the programs provide a means to legal

representation’).

Indeed, recognizing this connection, many states

have enacted statutes or rules expressly directing

that residual funds from class action settlements be

distributed to nonprofit and state Bar-affiliated

organizations that provide civil legal services for low-

income residents. See, section III, infra.

This Court should similarly recognize that legal

services organizations are proper recipients of cy pres

awards in class action settlements.

4. To rule otherwise would risk depriving

legal services organizations of an important source of

funding. The ABA tracks cy pres awards nationally

and has determined that, an average of $15.5 million

in cy pres awards at the state and federal level are

government funding for these organizations has

decreased. See, e.g., LSC, By the Numbers, at 11-12

(reflecting decline in funding between 2010 and 2016

in inflation-adjusted dollars from $457 million to

$385 million).*

* In 2018, funding increased by $25 million to $410 million,

still significantly leas than the 2010 data. Press

Release, LSC Receives $25 Million Spending Boost from

(Mar 23, 2018), available at

receives-25-million-spending-boost-congress. The President's

proposed budget sought to eliminate spending for the LSC

altogether. Press Release, Legal Services Corporation Leaders

Confident of Bipartisan Support in Wake of Defunding Proposal.

15

Ill. States Laws and Rules Providing for Cy

Pres Awards in Class Action Proceedings

Could Be Imperiled by a Ruling Imposing

Constitutional or Other Strict Limitations

on Cy Pres Awards.

Petitioners briefly mention due process and

First Amendment concerns about cy pres awards, but

do not directly raise constitutional challenges to the

use of cy pres in class action settlements. However,

amici at the petition stage and courts have argued

that the use of cy pres awards may fail constitutional

scrutiny. See, e.g., Brief of the Cato Institute as

Amicus Curiae in Support of Petitioners, filed Feb. 7,

2018, at 11-19 (arguing the award in this action

violates due process); id. at 20-24 (arguing that cy

pres award compels class members to support speech

with which they do not agree in violation of the First

Amendment); Brief of Amicus Curiae Center for

Constitutional Jurisprudence in Support of

Petitioners, filed Feb. 7, 2018, at 7-10 (arguing that

cy pres awards violate due process, free speech, and

Article II]; Keepseagle v. Perdue, 856 F.3d 1039,

1071 (D.C. Cir. 2017) (arguing that cy pres awards

may raise Article III concerns) (Brown, J.,

dissenting). Should amici invite this Court to

consider the constitutional implications of cy pres

awards, the ABA urges this Court to decline the

invitation.

(Feb. 12, 2018), available at hittps://www.lec.gov/media-

Lior of er

-

s-UCUT po

16

A decision implicating the constitutionality of cy

pres awards would affect not just the distribution of

class action settlement funds in federal courts, but

would also undermine state laws directing cy pres

funds to legal services organizations.

Twenty-three states and Puerto Rico have

enacted laws or rules authorizing cy pres awards

from class action settlements to be distributed to

legal services organizations that provide services to

low-income residents. ABA Resource Center for

Access to Justice Initiatives, Legislation and Court

Rules Providing for Legal Aid to Receive Class Action

Residuals, available al

. .

httpe://www.amencanbar.org/content/danvaba/admin ive/legal aid indigent defendants/ATJR A

s_sclaid atj cypres.authcheckdam.pdf For instance,

by statute, California mandates that 25% of class

action residuals should be provided to the Equal

Access Fund of the Judicial Branch for distribution to

to the indigent.” CAL. CopE Civ. P. § 384. See also 735

[LCS 5/2-807 (providing that at least 50% of residual

funds must go to organizations eligible for funding

under the Illinois Equal Justice Act); NEB. REV. STAT.

25-319(2) (requiring distribution of residual funds to

the Nebraska Legal Aid and Services Fund); N.C.

GEN. STAT. § 1-267.10(b) (requiring “the unpaid

residue, to be divided and credited equally, to the

Indigent Person's Attorney Fund and to the North

Carolina State Bar for the provision of civil legal

services for indigents”); P.R. LAWS ANN. tit. 32A.

17

§ 20.6(b) (authorizing distribution of residual funds to

programs that provide legal representation to

persons of limited means in civil, administrative, and

family law proceedings); S.D. CODIFIED LAWS § 16-2-

57; (requiring at least 50% of residual funds go to the

South Dakota Commission on Equal Access to Our

Courts); TENN. CODE ANN. § 16-3-821 (authorizing

distribution of residual funds to the Tennessee

Voluntary Fund for Indigent Civil Representation);

Wisc. STAT. 803.08(10) (requiring that “not less than

50 percent of the residual funds shall be disbursed to

[Wisconsin Trust Account Foundation, Inc] to

support direct delivery of legal services to persons of

limited means in non-criminal matters”).

Other states have similar requirements by rule.

See Cou. R. Civ. P. 23(g) (‘not less than fifty percent

(50%) of the residual funds shall be disbursed to the

Colorado Lawyer Trust Account Foundation

(COLTAF) to support activities and programs that

promote access to the civil justice system for low

income residents of Colorado”); CONN. SuP. Cr. R. 9-

9(g)X(2) (residual funds [from class judgment or

settlement] shall be disbursed to the organization

administering the program for the use of interest on

lawyers’ client funds . . . for the purpose of funding

those organizations that provide legal services for the

poor in Connecticut”); HAw. Crv. P. R. 23(f) (court has

discretion to disburse residual funds to eligible

nonprofit tax exempt organizations that provide legal

services to the indigent); IND. R. TRIAL P. 23(F)(2) (at

least 25% of residual funds must be disbursed to the

Indiana Bar Foundation); Ky. Civ. R. 23.05(6)

(providing that at least 25% of residual funds be

distributed to legal aid organizations through the

18

Kentucky IOLTA Fund Board of Trustees); LA S. C.

RULE XLIII Part Q (authorizing residual funds to be

distributed to the Louisiana Bar Foundation); ME. R.

Civ. P. 23(f(2) (mandating that residual funds be

distributed to the Maine Bar Foundation); MAss. R.

Civ. P. 23(e) (permitting distribution of residual

funds “to support activities and programs that

promote access to the civil justice system for low

income residents”); N.M. Dist. Cr. R. C.P. 1-023(G)(2)

(authorizing distribution of residual funds to

“nonprofit organizations that provide civil legal

service to low income persons”); Or. R. Civ. P.

32(O)(1) (requiring at least 50% of residual funds to

be paid to the Oregon State Bar to fund legal services

to the poor); Pa. R. Civ. P. Ch. 1700 (requiring at

least 50% of residual funds to be paid to the

Pennsylvania I[OLTA Board to promote the delivery

of civil legal assistance); S.C. R. Civ. P. 23(e)

(requiring at least 50% of residual funds to be paid to

the South Carolina Bar Foundation “to support

activities and programs that promote access to the

civil justice system for low income residents”); WASH.

Civ. R. 23(f) (requiring distribution of at least 50% of

residual funds to the Legal Foundation of

Washington); W. VA. R. Civ. P. 23(f) (directing that

50% of residual funds be disbursed to Legal Aid of

West Virginia).

That so many states expressly mandate a

specific percentage of the residual funds be directed

to providing legal services to low income residents

only highlights the identity of interests between legal

services organizations and class members, as well as

the states’ considered judgment that residual funds

be used to promote access to justice. This Court

19

should consider that persuasive evidence of both the

unity of interest between cy pres awards and access

to justice, as well as the appropriateness of legal

services organizations as cy pres recipients.

Because the parties agree that the issue before

this Court is simply the proper course a court should

undertake in the event of residual funds exist after a

class action settlement, the case provides a poor

vehicle for the determination of the constitutionality

of cy pres more generally. On that issue, this Court

lacks the considered views of the lower courts.

Moreover, if this Court reaches beyond the limited

scope of the question presented and imposes

constitutional restrictions on cy pres awards, it will

imperil these state laws and potentially deprive legal

services organizations of critical funding and low-

income residents of legal representation. The

American Bar Association urges the Court to consider

the impact of its holding on the availability of legal

services for low-income persons.

20

CONCLUSION

For the foregoing reasons, amicus American Bar

Association requests that this Court recognize the

availability of cy pres awards in class action

settlements and legal services organizations as

appropriate recipients of residual funds.

Respectfully submitted.

Hilarie Bass

Counsel of Record

AMERICAN BAR

ASSOCIATION

Rex S. Heinke

Jessica Weisel

AKIN GUMP STRAUSS

HAUER & FELD LLP

Counsel for Amicus Curiae American Bar Association

July 16, 2018