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

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No. 17-961

In the Supreme Court of the United States

THEODORE H. FRANK, et ai.,

Petitioners,

Vv.

PALOMA GAOS, Individually and

on Behalf of All Others Similarly Situated, et a/.,

Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

BRIEF OF LEGAL AID ORGANIZATIONS AS

AMICI CURIAE IN SUPPORT OF RESPONDENTS

M. Miller Baker Wilber H. Boies

McDermort WIL. & EMERY Counsel of Record

500 N. Capitol Street, N.W. Timothy Kennedy

Washington, DC 20001 Rebecca Finkel

(202) 756-8233 McDermott WiLL & EMery

mbaker@mwe.com 444 W. Lake St.

Chicago, IL 60606

(312) 372-2000

bboies@mwe.com

Counsel for Amici Curiae

Becker Gallagher - Cincinnati, OH - Washington, D.C. - 800.890.5001

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..............005:. iv

INTEREST OF AMICI CURIAE ............... 1

SUMMARY OF THE ARGUMENT ............. 4

SIE & CSUN enéeerecurccveteunte decece 5

I. Federal Courts Have Long Recognized

Appropriate Use of Cy Pres Awards to

Advance the Fair and Efficient Resolution of

a 5

Il. Federal Courts Have Developed Appropriate

Limits to Narrow and Channel the Discretion

to Approve Cy Pres Awards .............. 8

A. Compensation of Class Members Should

SE TD ic evn cccecacncecess 8

B. Procedures and Limits Already in Place

Address Conflicts of Interest and Any

Appearance of Impropriety ........... 10

C. Cy Pres Distributions Should Reasonably

Approximate Class Action Relief, But

Overly Constricted Application of the

Cy Pres Doctrine in Class Actions Can

Produce Perverse Results ............ 13

Ill. Any Sweeping and Categorical Departures

From Traditional Practices Developed in the

Lower Courts For Cy Pres Awards Should

Come From the Advisory Committee on Civil

Rules or the Congress — But Both Have

Declined to Impose Any Such Restrictions . 17

A. The Advisory Committee on Civil Rules

Has Rejected Proposals to Amend Rule 23

to Limit Cy Pres Awards and this Court

Has Just Approved Their Rule 23

EE Newecbaccceacceces 17

B. The House Has Adopted Legislation to

Make Many Changes in Rule 23 Class

Actions, but That Legislation Does Not

Make Changes in Cy Pres Awards ..... 20

Petitioners’ Suggested Grounds for Reversal

Are Contrary to Settled Law ............ 23

A. Cy Pres Awards Are a Reasonable

Exercise of Discretion Where Cash

Distributions to Class Members Are Not

Pn... Genukh kedebe wis eae e seus 23

B. Courts Have Not Adopted Petitioners’

Broad Attacks on Cy Pres Awards ..... 24

Legal Aid Organizations Are Appropriate Cy

Pres Award Recipients ........ccccccees 26

A. Federal Courts Regularly Approve Cy

Pres Awards to Legal Aid Organizations

For Access to Justice ................ 26

B. State Statutes and State Court Rules

Provide For Cy Pres Awards to Legal Aid

PE ccuneks cGennacwoenses 28

C. This Court’s Opinion Should Recognize

the Access to Justice Connection

Between Class Action Settlements and

REE gc¥Us de cubebed UaUCoAS UUM 31

CONCLUSION

“ese eeeeeeeenereeeneeeeeeeeeeeeee

TABLE OF AUTHORITIES

CASES

In re Airline Ticket Comm’n Antitrust Litig.,

268 F.3d 619 (8th Cir. 2001) ............... 15

Amchem Prod., Inc. v. Windsor,

ri cad vebe eeteivnns 20

Amgen Inc. v. Conn. Ret. Plans & Tr. Funds,

i ccc c net Ge seb bavecdobas 22

In re Baby Prods. Antitrust Litig.,

708 F.3d 163 (3d Cir. 2013) ....... 5, 6, 7, 11, 25

In re BankAmerica Corp. Sec. Litig.,

775 F.3d 1060 (8th Cir. 2015) .............. 14

Carnegie v. Household Int'l, Inc.,

376 F.3d 656 (7th Cir. 2004) ............... 26

Dennis v. Kellogg Co.,

697 F.3d 858 (9th Cir. 2012) ............... 13

Evans ». Jeff D.,

ed aces edna vicbaen ake 5

In re Folding Carton Antitrust Litig.,

744 F.2d 1252 (7th Cir. 1984) .............. 16

In re Folding Carton Antitrust Litig.,

MDL No. 250, 1991 U.S. Dist. LEXIS 2553

Se EA GE cocceedecsteedseses 27

Girsh v. Jepson,

be ff ee) ee 5

Halo Elecs., Inc. v. Pulse Elecs., Inc.,

ls SE wivveuctescevcsees 8, 14

Hughes v. Kore of Indiana Enter., Inc.,

731 F.3d 672 (7th Cir. 2013) ............... 24

Jones v. Nat'l istillers,

56 F. Supp. 2d 355 (S.D.N.Y. 1999).......... 27

Keller v. State Bar,

EE 3 en iene s uu veesewetees 26

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

658 F.3d 468 (5th Cir. 2011) ........ 6,9, 10, 13

Lane v. Facebook, Inc.,

696 F.3d 811 (9th Cir. 2012) ............ 14, 16

Lessard v. City of Allen Park,

470 F. Supp. 2d 781 (E.D. Mich. 2007) ....... 27

In re Lupron Mktg. and Sales Practices Litig.,

677 F.3d 21 (Ist Cir. 2012) ......... 6, 7, 11,13

Masters v. Wilhelmina Model Agency, Inc.,

473 F.3d 423 (2d Cir. 2007) ................. 7

Miller v. Steinbach,

1974 US. Dist. LEXIS 12981

ss ks eo nccsevess 15

Mirfasihi v. Fleet Mortg. Corp.,

356 F.3d 781 (7th Cir. 2004) ............. 9,15

Molski v. Gleich,

318 F.3d 937 (9th Cir. 2003) ................ 9

Nachshin v. AOL, LLC,

663 F.3d 1034 (9th Cir. 2011) ........ 11, 12, 23

In re Pharm. Indus. Avg. Wholesale Price Litig.,

588 F.3d 24 (Ist Cir. 2009) ............... 6,9

Phillips Petroleum Co. v. Shutts,

SS eee 25, 26

Six Mexican Workers v. Arizona Citrus Growers,

904 F.2d 1301 (9th Cir. 1990) .............. 13

United States ex rel. Houck v. Folding Carton

Admin. Comm., 881 F.2d 494 (7th Cir. 1989)... 7

United States v. Walgreen, Co.,

846 F.3d 879 (6th Cir. 2017) ............... 18

STATUTES AND RULES

ET occa ddebedeaucsénivcdb seen 12

PE rs cs cebcawesskcenvhaane passim

Class Action Fairness Act. Pub. L. No. 109-2,

bon ete te bkde eee 0A 8 22

California Code of Civil Procedure § 384 ........ 29

i ccc neadeeeseebebseneeenes 29

Conn. Superior Ct. R.9-9 ................2205. 29

Hawaii Civil Procedure Rule 23(f) ............. 29

735 ILCS 5/2-807 (2008) .............--.0005- 29

By Oe EA PED noc cccccccvcceccencess 29

es cod énctdavased«eed ee 29

ah, Ge Gh MUG 6 ccc cwccsuccecece 29

A ee 29

PE CREED. cwdaccacouéecdnceces tu ue 29

| 8 kt Perr eee 29

Se SR A PD case ccsocsstanseccsesee 29

N.M. Dist. Ct. R. C.P. 1-O23(GX2) ............. 29

PEE Gh, BR BRED vcd cise cccscsueciasa 29

Ge ED o db cakeceb basen vasnaccunaeru 29

Pe, Ge Gk re Gs BU iv o.ceveccccoesctesuneche 29

Pe ey GRD ce écénacdicccucnsvenent 29, 30

ih AY & PPePPrrrvrrrorirrT ie 30

S.D. Codified Laws § 16-2-57 ................. 30

Tenn. Code Ann. § 16-3-821 ...............4.: 30

Washington Supreme Court Civil Rule 23(f ..... 30

Wis Ce LIED dccceces cocviseb susuusel 30

We SEED pc cascociccnsvansdebecss 30

OTHER AUTHORITIES

The American Law Institute’s Principles of Law of

Aggregate Litigation (2010)............ passim

Daniel Blynn, Cy Pres Distributions: Ethics &

Reform, 25 Geo. J. Legal Ethics 435 (2012) ... 31

Wilber Boies and Latonia Keith, “Class Action

Settlement Residue and Cy Pres Awards:

Emerging Problems and Practical Solutions,” 21

Va. J. Soc. Pol’y & L. 269 (2014), available at

Conte and Newberg, Newberg on Class Actions

i cgeaue stash eee 5, 10, 11, 24

Thomas A. Doyle, Residual Funds in Class Action

Settlements: Using “Cy Pres” Awards to Promote

Access to Justice, The Federal Lawyer, July 2010

Robert Draba, Motorsports Merchandise: A Cy Pres

Distribution Not Quite “As Near As Possible,” 16

Loy. Consumer L. Rev. 121 (2004) .......... 28

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

The Cy Pres Doctrine: “A Settling Concept,” 58

a cnn Con Gadbwedeese 31

Final Vote Results for Roll Call 148,” available at

http-//clerk. house.gov/evs/2017/roll148.xml ... 22

Theodore H. Frank, “Cy Pres Settlements,”

Statement before the House Judiciary

Committee on the Constitution and Civil Justice

Examination of Litigation Abuse, Mar. 13, 2013

PUR REGeRWEES4GS UESS On thee weeenesecce 20, 21

Henry Friendly, Indiscretion About Discretion, 31

a Py Sccosccvencccecececss 8

Bob Glaves & Meredith McBurney, Cy Pres Awards,

Legal Aid and Access to Justice: Key Issues In

2013 and Beyond, 27 Mgmt. Info. Exch. J. 24

GT chovudedie wads eacbannecastssseuess 28

House All Actions Report, available at

congress/house-bill/985/all-actions .......... 22

Introductory Materials, Rule 23 Subcommittee,

Advisory Committee on Civil Rules, Mini-

Conference on Rule 23 Issues, Sept. 11,2015 . 18

Francis McGovern, Distribution of Funds in Class

Actions — Claims Administration, 35 Journal of

PT eee 6

Proposed Amendments to the Federal Rules of Civil

Procedure, Rules 5, 23, 62, and 65.1, Slip Order

(U.S. Apr. 26, 2018),

414 iwwry¥ } ‘

Report of the Advisory Committee on Civil Rules,

Rule 23 Subcommittee, Mini-Conference on

Class Actions, Sept. 11,2015 ........... 18, 19

Report to the Standing Committee, Advisory

Committee on Civil Rules, at 25, December 11,

Dy cacubenecdckssencewastiekeeeacases 19

Danny Van Horn & Daniel Clayton, Jt Adds Up:

Class Action Residual Funds Support Pro Bono

Efforts, 45 Tenn. B.J. 12 (2009) ............. 32

Wright & Miller, 7B Fed. Prac. & Proc. Civ.

SPEED 6 Se ccccebesdeceesasescccesecenas 25

Wright & Miller, 7AA Fed. Prac. & Proc. Civ. (3d

Se ceandrdbnenectcendkb ined beeeenscebs

Submissions to the Rule 23 Subcommittee for the

September 11, 2015 Mini-Conference are

available online at

http://www .uscourts.gov/sites/default/files/rule

INTEREST OF AMICI CURIAE

This amicus brief is submitted by eight of the

nation’s leading legal aid organizations and

foundations.’ All amici provide legal aid to low-income

people and underserved communities or are

membership organizations and foundations which work

with and rely on public interest legal aid organizations

to carry out their legal services mission. All amici have

a substantial interest in ensuring that cy pres awards

are permitted in appropriate circumstances (including

awards to legal aid organizations).

The National Legal Aid and Defender Association

(“NLADA”) is the largest national legal aid

organization, with more than 700 program members

nationwide dedicated to ensuring access to justice for

the poor through the nation’s civil legal aid and

defender programs. NLADA’s members are civil legal

aid providers which are funded by a variety of sources,

including cy pres awards, to address the overwhelming

need for access to justice amoung the nation’s poor.

Association of Pro Bono Counsel (“APBCo”) is a

membership organization of over 232 partners, counsel,

and practice group managers who run pro bono

practices in more than 122 of the country’s largest law

firms. APBCo is dedicated to improving access to

justice by serving as a unified voice for the national law

firm pro bono community. The members of APBCo rely

' This brief is submitted pro bono, by counsel of record. No party

or any counsel for a party authored this brief in whole or in part,

nor did any party, party's counsel or any other person or entity

contribute money to fund the preparation or submission of this

brief. Petitioners and respondents have consented to the filing of

on the expertise of legal aid organizations to help

provide successful pro bono programs at the nation’s

largest law firms.

Legal Aid Association of California (“LAAC”) is a

statewide membership association of nearly 90 public

interest law nonprofits that provide free civil legal aid

to low-income people and communities throughout

California on a broad array of substantive issues and

serve a wide range of low-income and vulnerable

populations. Federal courts awarded more than $10

million in cy pres awards to California civil legal aid

providers from 2000 to 2017.

The National Association of ILOLTA Programs is a

membership organization for state Interest On

Lawyers’ Trust Account programs. Every state, along

with the District of Columbia, Puerto Rico, and the

Virgin Islands, operates an IOLTA program. These

programs pool interest earned on certain client funds

held by lawyers for clients and use the interest income

for grants to legal aid organizations.

Equal Justice Works creates opportunities for

lawyers to transform their passion for equal justice into

a lifelong commitment to public service. It runs the

nation’s largest postgraduate Fellowship program

supporting hundreds of lawyers who work at nonprofits

to provide legal services to underserved communities,

such as homeless veterans, the elderly and victims of

crime. Equal Justice Works launched the Fellowship

program in 1992 with a cy pres award made after $200

million in distributions to class members in In re

Folding Carton Antitrust Litigation. Many subsequent

cy pres awards have supported Fellows working on

specific issues related to the underlying litigation.

The Chicago Bar Foundation is an affiliate of the

Chicago Bar Association that operates a grant program

awarding over $2 million each year to legal aid

organizations and access to justice programs. Chicago

Bar Foundation receives cy pres awards and uses some

of those awards to operate courthouse “help desks” to

assist pro se litigants in the Northern District of

The Legal Foundation of Washington (“LFW”) is a

non-profit organization created in 1984 at the direction

of the Washington Supreme Court to distribute IOLTA

funds to legal aid organizations across the State of

Washington. The LFW receives cy pres awards

($300,000 in 2017) that are distributed to Washington’s

legal aid community through its grant program.

The Texas Access to Justice Foundation (TAJF) is

the leading funder of legal aid in Texas. The

Foundation, a 501(cX3) nonprofit organization, was

created by the Supreme Court of Texas in 1984 to

administer the Interest on Lawyers’ Trust Accounts

Program. TAJF has diversified its funding sources to

include state funding, cy pres funds, private donations,

and funding from other foundations. TAJF made

grants in 2017-18 to 37 organizations that provide free

civil legal assistance in civil matters, such as protection

from domestic violence and assistance with housing

issues, to more than 150,000 disadvantaged Texas

families.

SUMMARY OF THE ARGUMENT

This appeal challenges cy pres awards in class

action settlements where there is no distribution to

class members (the only question presented by the

petition for certiorari). Petitioners’ argument expands

to supposed larger problems and reasons for broader

limitations on cy pres awards. This amicus brief is

submitted to provide the Court with a more balanced

and realistic overview of the law and practice

concerning cy pres awards in class actions. In

particular:

Appropriate cy pres awards are part of the

recognized discretion of the courts to accomplish

fair and efficient resolution of Rule 23 class

actions;

There are appropriate limits in place on district

court discretion to approve cy pres awards;

Any changes in Rule 23 to limit cy pres awards

should come from the Advisory Committee on

Federal Rules or the Congress — which have

declined to make such changes;

. Petitioners’ suggested grounds for relief are

contrary to settled law; and

Legal aid organizations are appropriate cy pres

recipients.

ARGUMENT

1. Federal Courts Have Long Recognized

Appropriate Use of Cy Pres Awards to

Advance the Fair and Efficient Resolution

of Class Actions

It is well established that courts have considerable

discretion to approve class action settlements and to

fashion relief “on a case by case basis, in light of the

relevant circumstances” to accomplish the fair and

efficient resolution of class actions as provided by Rule

23 of the Federal Rules of Civil Procedure. Evans v.

Jeff D., 475 U.S. 717, 742 (1986). See generally Conte

and Newberg, Newberg on Class Actions § 13.47 (5th

Ed. 2014); Girsh v. Jepson, 521 F.3d 153 (3d Cir. 1975)

(appellate courts review district court decisions to

approve class action settlements for an abuse of

discretion).

One aspect of this remedial discretion is

determinations about the proposed disposition of

settlement funds. Jn re Baby Prods. Antitrust Litig.,

708 F.3d 163, 173-174 (3d Cir. 2013), describes the role

of the district court in class action settlement hearings

as follows:

The role of a district court is not to determine

whether the settlement is the fairest possible

resolution... The Court must determine whether

the compromises reflected in the settlement -

including those terms relating to the allocation

of settlement funds - are fair, reasonable, and

adequate when considered from the perspective

of the class as a whole.

One recurring problem in the allocation of settlement

funds is what to do with residual funds that are

unclaimed or cannot be distributed to the class

members. While the present case concerns a class

action settlement with no money distributed to class

members, such settlements are rare. In the usual class

action settlement, a settlement fund is distributed to

class members on an equitable basis, but some amount

often remains because not all class members can be

located and not all file claims or cash settlement

checks, or because the residual amount is so small that

the cost of distributing it would exceed the amount to

be distributed.’ See In re Baby Prods.,'708 F.3d at 169.

In such circumstances, a court has four principal

options: distribution of the excess funds to class

members who have already made a claim, reversion of

the remaining funds to the settling defendant, escheat

to the state or a court award to put the undistributed

residue to an appropriate use. Jn re Lupron Mktg. and

Sales Practices Litig., 677 F.3d 21, 33-33 (1st Cir.

2012). Courts have consistently exercised their

discretion to distribute residual funds through court-

approved awards rather than any of the other three

options. See, e.g., In re Lupron, 677 F.3d at 34-35

(approving cy pres award over class members’ request

for treble damages); Klier v. Elf Autochem N. Am., Inc.,

658 F.3d 468, 475 (5th Cir. 2011); In re Pharm. Indus.

Aug. Wholesale Price Litig., 588 F.3d 24, 34-36 (1st Cir.

2009). They have done so when none of the other three

options results in fair and efficient resolution of the

* Francis McGovern, Distribution of Funds in Class Actions —

Claims Administration, 35 Journal of Corporation Law 123-134

(2009).

class action. An additional distribution to class

members who have already recovered their claimed

damages affords them a windfall; reversion unjustly

rewards the defendant; and escheat would serve

neither the fairness nor the efficiency of the class

action resolution.

For these reasons, it is well-established in the

federal courts that a district court “does not abuse its

discretion by approving a class action settlement

agreement that includes a cy pres component directing

the distribution of excess settlement funds to a third

party to be used for a purpose related to the class

injury.” United States ex rel. Houck v. Folding Carton

Admin. Comm., 881 F.2d 494, 502 (7th Cir. 1989);

Masters v. Wilhelmina Model Agency, Inc., 473 F.3d

423, 436 (2d Cir. 2007); In re Lupron, 677 F.3d at 38-

39; In re Baby Prods., 708 F.3d at 172. The American

Law Institute’s Principles of Law of Aggregate

Litigation (“ALI Principles”) specifically recognize this

widely accepted appellate guidance: “many courts

allow a settlement that directs funds to a third party

when funds are left over after all individual claims

have been satisfied . . . [and] some courts allow a

settlement to require a payment only to a third party,

that is, to provide no recovery at all directly to class

members.” ALI Principles § 3.07 cmt. a (2010).

The factual scenario that this case presents — in

which the individual claims of class members for

monetary relief are so small that they would be

exceeded by the cost of distributing the funds — arises

far more rarely. But when it does arise, it is governed

by the same principles that the courts have developed

in the more common cases involving residual funds. As

will be shown, those principles guide and limit the

exercise of a district court’s discretion in a manner that

directly addresses the issues that petitioners have

raised.

Il Federal Courts Have Developed

Appropriate Limits to Narrow and Channel

the Discretion to Approve Cy Pres Awards

The courts of appeals have been careful to develop

and apply constraints on the use of cy pres awards - to

ensure that they advance the fair and efficient

resolution on class actions. As this Court recently said

about patent damages, a district court’s “discretion

should be exercised in the light of the considerations

underlying the grant of that discretion,” and, through

many years of discretionary awards and review by

appellate tribunals “the channel of discretion has

narrowed.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 1368.

Ct. 1923, 1932 (2016) (quoting Henry Friendly,

Indiscretion About Discretion, 31 Emory L.J. 747, 772

(1982)). That is precisely what the federal courts have

done with respect to cy pres awards. The limits that

the courts have developed are fully adequate to the

task of policing any potential risk of abuse in particular

cy pres awards.

A. Compensation of Class Members Should

Always Come First

Petitioners claim that cy pres awards are too often

and increasingly used instead of distributions to class

members. That argument ignores what actually

happens with most settlement funds in almost all class

action settlements, where there are already established

requirements and procedures for getting settlement

funds into the hands of class members whenever

feasible, with cy pres awards coming only from any

undistributed residue. The ALI Principles provide a

good description of this strict limitation:

If the settlement involves individual

distributions to class members and funds remain

after distribution (because some class members

could not be identified or chose not to

participate), the settlement should

presumptively provide for further distributions

to participating class members unless the

amounts involved are too small to make

individual distributions economically viable or

other specific reasons exist that would make

such further distributions impossible or unfair.

ALI Principles § 3.07(b).

Consistent with this limiting principle, appellate

courts have uniformly adopted a requirement that a

cy pres distribution is permissible only when it is not

feasible to make distributions to class members in the

first instance or to make further distributions to class

members. See, e.g., In re Pharm. Indus., 588 F.3d at

35. To enforce this requirement, appellate courts

appropriately reverse district court cy pres awards in

cases that fail to make feasible payments first to class

members. See Molski v. Gleich, 318 F.3d 937, 954-55

(9th Cir. 2003) (rejecting proposed settlement with

cy pres awards but no payments to known class

members who had significant disability

accommodations claims); Mirfasihi v. Fleet Mortg.

Corp., 356 F.3d 781, 784 (7th Cir. 2004) (rejecting a

settlement because it failed to compensate one subset

of class members); Klier, 658 F.3d at 479 (district court

abused its discretion by approving a cy pres

distribution of unused funds from one subclass instead

of distributing those funds to the members of a

different subclass).’? The application of this principle

ensures that the sort of situations on which petitioners

focus will not arise with frequency.

In some settlements, distributions are feasible for

one or more rounds of payments to class members, but

after that additional distributions to class members

could become a windfall or are economically inefficient.

The ALI Principles and the appellate courts recognize

that the district court has discretion to order a cy pres

distribution in these situations. /d. at § 3.07 (cmt. a).

See generally Newberg on Class Actions § 10:17 (“When

all or part of the common fund is not able to be fairly

distributed to class members, the court may determine

to distribute the unclaimed funds with a cy pres . . .

approach.”).

B. P ; 1 Limits Already in Pi

Address Conflicts of Interest and Any

Appearance of Impropriety

The lower courts have developed and applied limits

on the use of cy pres remedies in class actions that fully

address the concerns petitioners have raised about

conflicts of interest and judicial impropriety.

* While cited passim by petitioners and by the United States as

amicus, the Klier opinion actually did not reject cy pres awards in

class actions. Rather, the Fifth Circuit acknowledged that “|i)}n the

class-action context, a cy pres distribution is designed to be a way

for a court to put any unclaimed settlement funds to their ‘next

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

benefit of the class.” Id. at 474.

For example, if a district judge is concerned that

class counsel may lack incentives to vigorously pursue

compensation for class members, the court can and

should “subject the settlement [and the distribution

process] to increased scrutiny.” In re Baby Prods.,

708 F.3d at 173.

Other simple and effective procedures have long

been employed to prevent class action parties and their

counsel from steering unclaimed funds to recipients

that advance their own personal agendas. See In re

Lupron, 677 F.3d at 38; Nachshin v. AOL, LLC, 663

F.3d 1034, 1039 (9th Cir. 2011). Courts can and do

evaluate whether any of the parties or counsel involved

in the litigation has any significant affiliation with or

would personally benefit from the distribution to the

proposed cy pres recipients. To accomplish this, courts

may require that motions to approve class settlements

disclose the named parties’ and their counsels’

relationships, if any, to any proposed cy pres recipient.

Courts can then inquire into such relationships and

selection process at fairness hearings on motions to

approve class settlement, using the well-established

tests developed to review class action settlements. See

Newberg on Class Actions §13.48-61.

Courts have also developed standards to address

any concern arising out of the possible “appearance of

impropriety” arising out of “the specter of judges and

outside entities dealing in the distribution and

solicitation of settlement money.” Nachshin, 663 F.3d

at 1039. When parties or counsel (rather than the

court) propose the organizations to receive any cy pres

distributions, there will generally be no basis for

concern about judicial impropriety (perceived or real)

in proposing awards. To protect the objective role of

the district judge in considering cy pres awards

proposed by the parties at a fairness hearing, a limiting

rule is already spelled out in the ALI Principles: “{a|

cy pres remedy should not be ordered if the court .. .

recipients that would raise substantial questions about

whether the selection of the recipient was made on the

merits.” ALI Principles, § 3.07 cmt. b (emphasis

added). And, if necessary, the statutes governing

judicial recusal can be applied. For example, in

Nachshin, one objector attacked the district judge who

approved the parties’ settlement agreement because

her husband was one of fifty board members of the

proposed cy pres recipient. The Ninth Circuit firmly

rejected this attack, applying the test for recusal under

' » U.S.C. § 455(a) (“whether a reasonable person with

.aowledge of all the facts would conclude that the

judge’s impartiality might reasonably be questioned”)

and finding that “there is no reason to believe [the

judge’s husband] (as one of 50 volunteer board

members) would himself realize a significant benefit”

from the proposed award.”). Nachshin, 663 F.3d at

1041-42.

In short, while there are good reasons for careful

court review of what organizations are proposed to

receive cy pres awards, there are reliable procedures

already in place for conducting that review without

rewriting Rule 23.

When further distributions to class members are

not feasible, either because remaining funds cannot be

distributed cost-effectively or because of the minimal

value of the claims of individual class members, the

court must determine which entities are appropriate

recipients of a cy pres distribution. The ALI Principles

say recipients should be those “whose interests

reasonably approximate those being pursued by the

class” and, if no such recipients exist, “a court may

approve a recipient that does not reasonably

approximate the interests” of the class. ALI Principles

§ 3.07(c). This “reasonable approximation” test has

been adopted by numerous appellate courts for

determining the fairness of class action cy pres awards.

See, e.g., In re Lupron, 677 F.3d at 33; Klier, 658 F.3d

at 474; Six Mexican Workers v. Arizona Citrus Growers,

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

Recent decisions from the Eighth and Ninth Circuit

of Court of Appeals have used wording suggesting a

narrower limitation: that cy pres recipients must be

* Applying these principles, federal courts should and do reject

settlements that propose cy pres awards to organizations which

seem to be chosen at random — or seem to be merely favorite

charities of the counsel or parties. See, e.g., Dennis v. Kellogg Co.,

697 F.3d 858, 865 (9th Cir. 2012) (reversing and remanding cy pres

award for a food distribution program because “[njot just any

worthy recipient can qualify as an appropriate cy pres

beneficiary.”).

closely tied to the precise claims or relief sought in the

class action. See Lane v. Facebook, Inc., 696 F.3d 811,

819-20 (9th Cir. 2012) (cy pres awards should account

for “the nature of plaintiffs’ lawsuit, the objectives of

the underlying statutes, and the interests of the silent

class members”) and In re BankAmerica Corp. Sec.

Litig., 775 F.3d 1060, 1067 (8th Cir. 2015) (awards “as

near as possible to the objectives underlying the

lawsuit” and a recipient “that relates directly to the

injury alleged in this lawsuit.”)

While the discretion of district judges should be

channeled and limited, some limits would “unduly

confine the discretion of district judges to exercise the

discretion conferred on them” (Halo Elecs., 136 S. Ct. at

1932) (vacating Federal Circuit opinion creating and

applying new specific limits on awarding enhanced

patent damages). As with patent damages, overly

narrow or exact match tests for cy pres awards unduly

limit the discretion of district judges; such tests are

functional language of the ALI Principles applied by

most appellate decisions (awards to recipients “whose

interests reasonably approximate those being pursued

by the class”) and could even embroil district judges in

disputes about which particular organization does work

that most exactly matches the statutory claims alleged

in the case being settled.

A limit on judicial discretion that would narrowly

match cy pres recipients to the exact claims in a class

action fails to recognize how the cy pres doctrine is

being used in the class action context. The use of the

cy pres doctrine to dispose of settlement residue is

really just a convenient analogy borrowed from trusts

and estates law.° But in a class action settlement,

there is no underlying trust created by a deceased

settlor whose objective should be respected after a

specific bequest has become unfeasible; instead, courts

have borrowed the cy pres device to help resolve

practical questions about residual funds in class action

settlements and to facilitate the efficient

administration of complex class actions.© As the

Seventh Circuit pointed out in Mirfasihi v. Fleet

Mortgage Corp., the cy pres device is used in class

actions “for a reason unrelated to the trust doctrine” -

to prevent the defendant from “walking away from the

litigation scot-free because of the unfeasibility of

distributing the proceeds of the settlement.” 356 F.3d

at 784.

Punishment aside, adapting the cy pres doctrine to

a useful procedural device to solve the recurring

practical problem of what to do with undistributed

funds. In actual practice, far from matching an

impossible specific bequest in a will or trust, class

* The term cy pres derives from the Norman French phrase, “cy

pres comme possible,” meaning “as near as possible,” and the cy

pres doctrine is a rule of construction used to save a testamentary

gift that would otherwise fail. To honor the intent of the deceased

testator, the court would seek a new beneficiary as close as

possible to the beneficiary chosen by the testator. See Bogert’s

Trusts and Trustees § 438; Jn re Airline Ticket Comm'n Antitrust

Litig., 268 F.3d 619, 625 (8th Cir. 2001).

* In the first reported federal decision approving a settlement with

a cy pres award, the district court acknowledged that it was

“applying a variant of the cy pres doctrine at common law”: Miller

v. Steinbach, 1974 U.S. Dist. LEXIS 12981, at 3-4 (S.D.N_Y., Jan.

3, 1974).

action litigants are resolving a complex lawsuit by a

settlement in which disposing of residual funds is

typically only a small (albeit important) detail of

settlement administration. Plaintiffs’ counsel need a

simple and accepted method to dispose of residual

funds left after distributions by class action

administrators hired to locate and pay class members.

And while defendants are primarily interested in

concluding the case being settled, they also have a

legitimate interest in how residual funds they provide

are used.

In contrast to the widely accepted limit of cy pres

awards to reasonably approximate the settled class

to cy pres awards that appear unwise or unnecessary.

The settlement in the Ninth Circuit Facebook case was

widely criticized because the Court of Appeals approved

a settlement with no distribution to class members but

with a new “tailor made” computer user foundation

created to receive a large cy pres distribution. Lane,

696 F.3d 811 at 825. The simple explanation for the

new foundation device in the Facebook settlement is

that the settling parties were dealing with the 9th

Circuit’s overly narrow approach to who can receive cy

pres awards. Contrast that overly narrow matching

approach with In re Folding Carton Antitrust Litig.,

744 F.2d 1252, 1254-55 (7th Cir. 1984), where the

Court of Appeals held it was appropriate for the distric:

court to consider a cy pres award in an antitrust case

but firmly rejected a proposed new “Antitrust

Development and Research Foundation” as “carrying

coals to Newcastle” because numerous organizations

were already engaged in antitrust research.

Cy pres awards to legal aid organizations provide a

recognized and practical solution to avoid the problems

of awards to unsuitable recipients and awards that

would target settling defendants. While many legal aid

services do work that parallels particular class action

lawsuits, legal aid services will always reasonably

approximate class actions relief by providing access to

justice for those in need of legal help. This subject is

discussed in Section V below.

Ill, Any Sweeping and Categorical Departures

From Traditional Practices Developed in

the Lower Courts For Cy Pres Awards

Should Come From the Advisory

Committee on Civil Rules or the Congress —

But Both Have Declined tc Impose Any

Such Restrictions

The categorical limits on cy pres awards that

petitioners propose are inconsistent with the

traditional remedial discretion courts exercise and have

no basis in statutory law or the text of Rule 23.

Petitioners are essentially asking this Court to

legislate. This Court should reject petitioners’

invitation to rewrite Rule 23 where both the Advisory

Committee and the Congress have made considered

decisions not to do so.

A. The Advi C it Civil Rules H

Rejected Proposals to Amend Rule 23 to

Limit Cy Pres A 1 this Court H

Just Approved Their Rule 23

Recommendations

Petitioners are asking this Court to undo the work

of the Advisory Committee on Civil Rules that this

Court recently approved. On April 26, 2018, this Court

transmitted a proposed amendment of Rule 23 to

Congress that will go into effect on December 1, 2018.

See Proposed Amendments to the Federal Rules of Civil

Procedure, Rules 5, 23, 62, and 65.1, Slip Order

. yaa 26, oe

) LOC! . Cr Sv it’

v18 5924 pdf If allowed by Congress to go into effect,

the new Rule would make numerous changes in Rule

23 and class action practice, but will not restrict or

eliminate cy pres awards. Since the Advisory

Committee has just considered and expressly declined

to propose limits on cy pres awards that petitioners

pursue here, any consideration of changes in Rule 23

concerning cy pres awards should come from further

work of the Advisory Committee. As recently noted by

the Sixth Circuit, “loJnly by following the highly

reticulated procedures laid out in the Rules Enabling

Act can anyone modify the Civil Rules, whether in the

direction of relaxing them or tightening them.” United

States v. Walgreen, Co., 846 F.3d 879, 881 (6th Cir.

2017) (Sutton, J.) (declining to relax the pleading

standard established by Civil Rule 9(b)).

On September 11, 2015, the Rule 23 Subcommittee

of the Advisory Committee on Civil Rules held a mini-

conference on Rule 23 issues. One issue on the agenda

was “[g]uidance on handling cy pres provisions in class-

action settlements—Are changes to Rule 23 needed,

and if so, what should they include?” Introductory

on Civil Rules, Mini-Conference on Rule 23 Issues, at

2, Sept. 11, 2015. The Committee Report from the

September 11, 2015 mini-conference reports the overall

consensus that cy pres awards have been recognized by

courts as an appropriate use of residual class action

funds. Report of the Advisory Committee on Civil

Rules, Rule 23 Subcommittee, Mini-Conference on

Class Actions, Sept. 11, 2015, at 8-12. The vast

majority of submissions to the Subcommittee that did

address the issue were in favor of cy pres awards,

recommended best practices, and suggested either that

the Subcommittee should amend Rule 23 to adopt the

ALI’s Principles approach or that an amendment to

Rule 23 was unnecessary given the widespread

adoption of the ALI principles in federal and state

courts.

At the Advisory Committee’s November 2015

meeting, the Rule 23 Subcommittee presented three

issues from the September 11 mini-conference that it

did not favor retaining on its agenda. Report to the

Standing Committee, Advisory Committee on Civil

Rules, at 25, December 11, 2015. The issue of cy pres

awards was one of the three issues taken off of the

agenda." In short, the Advisory Committee process

ended by rejecting the idea of amending Rule 23 to

restrict cy pres awards, and this Court has just adopted

the Advisory Committee recommendations for a

’ Submissions to the Rule 23 Subcommittee for the September 11,

2015 Mini-Conference are available online at

conference materials. pdf

* “(Tlhe Subcommittee concluded that the combination of

(a) uncertainty about whether guidance beyond the ALI provision

and judicial adoption of it is needed, (b) the challenges of

developing specifics for a rule provision, and (c) concerns about the

proper limits of the rulemaking authority cautioned against

adopting a freestanding cy pres provision.” Id. at 26.

number of Rule 23 amendments that do not restrict cy

pres awards.

Objectors are asking the Court to ignore and depart

from this recent work by the Advisory Committee on

Federal Rules that was adopted by this Court. As this

Court has reminded lower courts:

{Olf overriding importance, courts must be

mindful that the Rule as now composed sets the

requirements they are bound to enforce. Federal

Rules take effect after an extensive deliberative

process involving many reviewers: a Rules

Advisory Committee, public commenters, the

Judicial Conference, this Court, the Congress.

See 28 U.S.C. §§ 2073, 2074. The text of a rule

thus proposed and reviewed limits judicial

inventiveness. Courts are not free to amend a

rule outside the process Congress ordered|.|

Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 620

(1997). Petitioners are in effect asking this Court to

ignore that constraint.

B. The House Has Adopted Legislation to Make

Cy Pres Awards.

Congress has been urged to legislate restrictions on

cy pres awards,” but the most recent proposed

* Petitioner Frank testified before the House Judiciary Committee

Subcommittee on the Constitution and Civil Justice Examination

of Litigation Abuse about the need to restrict cy pres settlements

on March 13, 2013. Frank’s testimony was much the same as the

broader arguments in petitioners’ opening brief. Theodore H.

legislation to revise Rule 23 that has passed the House

does not restrict cy pres awards in class action

settlements. On March 9, 2017, the House passed H.R.

985, the Fairness in Class Action Litigation and

Furthering Asbestos Claim Transparency Act of 2017.

The bill would impose several new requirements on

federal courts in certifying class actions: disclosures by

class counsel about conflicts of interest; attorney’s fees

limits; an accounting for disbursement of funds paid by

defendants; stay of discovery during of preliminary

motion practice; class counsel disclosures if any person

has a contingent right to receive compensation from a

settlement, and early appeals from orders granting or

denying class certification. H.R. 985, Fairness in Class

Action Litigation and Furthering Asbestos Claim

Transparency Act of 2017."° Rather than introducing

new restrictions on cy pres awards, the t/ouse report

for the bill recognizes that “the use of cy pres in class

action settlements has benefited numerous

organizations.” H.R. 115-25, Fairness in Class Action

Litigation Act of 2017, Mar. 7, 2017. The House bill

Frank, “Cy Pres Settlements,” Statement before the House

Judiciary Committee on the Constitution and Civil Justice

Examination of Litigation Abuse, Mar. 13, 2013.

° The report explains that sections of the bill that would require

disclosures of conflicts of interests and the names of third-party

beneficiaries will help Congress expose any abuses in the

allocation of class action settlement funds by requiring

transparency. Jd. The disclosure requirement would in no way

limit a court’s ability to approve cy pres awards.

was received in the Senate on March 13, 2017 and

referred to the Committee on the Judiciary.'' The

legislation has not been adopted by the Senate, but

adoption by the House demonstrates that Congress has

shown no interest in the sorts of restrictions on cy pres

awards suggested by the petitioners in this appeal. ”

Where Congress has seen the need to enact

legislation to restrict class actions, Congress has done

so — including the Class Action Fairness Act. Pub. L.

No. 109-2, 119 Stat. 4 (2005). But as this Court

recently recognized, this Court has “no warrant to

encumber |class action] litigation by adopting an

atextual requirement...that Congress, despite its

extensive involvement in the...field, has not

sanctioned.” Amgen Inc. v. Conn. Ret. Plans & Tr.

Funds, 568 U.S. 455, 477-478 (2013). Petitioners are

asking this Court to impose precisely such

requirements on Rule 23.

-“ See House All Actions Report, available at

“ Even the more conservative members of Congress have not been

persuaded to restrict cy pres awards. During the roll call vote on

March 9, 2017, 220 Republicans voted in favor of the bill, 14

Republicans voted against it, and 187 Democrats voted against it.

0 ee en, ee ao a Sawe available at

IV. Petitioners’ Suggested Grounds for

Reversal Are Contrary to Settled Law

While petitioners’ opening brief mounts a sweeping

attack on class action settlements, the only question

presented by this appeal is whether a class action

settlement with a cy pres award but no direct monetary

relief to class members satisfies the requirements of

Rule 23. Respondents (the plaintiff class

representatives and defendant Google) have addressed

the objectors’ arguments about the particular cy pres

awards in this case and about the supposedly “perverse

incentives” behind settlements with no distributions to

class members. This amicus brief will address only the

general law on this question presented.

It is a reality of class action litigation that cash

distributions to class members may not be feasible in

cases where there are small claimed individual

damages or a relatively small settlement of huge

claims. In Nachshin v. AOL, for example, a settlement

was approved where the defendant’s maximum liability

was $2 million, which meant that each of some 66

million class members would have been entitled a

recovery of only three cents, making any distribution to

the class members cost prohibitive. 663 F.3d at 1037.

In these uncommon cases, the ALI Principles and

leading appellate decisions recognize that district

courts should have discretion to approve cy pres awards

in class action settlements where plaintiffs allege that

defendants engaged in misconduct on a wide scale but

there are only de minimis claimed damages to

individual class members or a small proposed

settlement related to a huge class. The cy pres doctrine

provides “the best solution” for a court presented with

a proposed settlement in this situation. Hughes v. Kore

of Indiana Enter., Inc., 731 F.3d 672, 675 (7th Cir.

2013). See generally, ALI Principles § 3.07 cmt. a

(recognizing court authority to approve class action

settlements that provide for cash payments to third

parties with no direct cash recovery to class members).

Petitioners’ arguments fail to recognize that class

action settlements with no cash distribution to class

members can provide injunctive relief that benefits the

plaintiff class and the public. Injunctions aside, there

are important public policies served by cy pres awards

in these rare cases, including imposing a significant

cost on settling defendants; see Hughes, 731 F.3d at

676-77 (endorsing a cy pres award with no payments to

class members, because “class action litigation, like

litigation in general, has a deterrent as well as a

compensatory objective”). See also Newberg, supra

§ 1226, listing public benefits of class action

settlements where individual distributions “are, as a

practical matter, impossible,” including “finality and

repose to defendants.”

The only “question presented” in this appeal is

about a cy pres award of class action proceeds that

provides no direct relief to class members. Petitioners’

broader constitutional and statutory arguments

against cy pres awards are scattered throughout their

opening brief, the supporting amicus briefs and the

many articles and web postings cited on those briefs.

For good reasons, those arguments have not been

adopted by the lower courts (nor should they be

considered by this Court in this appeal). For an

analysis of those arguments and their defects, see

Wilber Boies and Latonia Keith, “Class Action

Settlement Residue and Cy Pres Awards: Emerging

Problems and Practical Solutions,” 21 Va. J. Soc. Pol’y

& L. 269 (2014), available at https://commons.cu-

portland.edu/lawfaculty/9/ addressing the various

arguments by cy pres award opponents claiming that

cy pres awards in class actions are unconstitutional or

violate the Rules Enabling Act — and explaining why

those arguments have never been adopted by the lower

courts. Also see In re Baby Prods., 708 F.3d at 173

(rejecting Rules Enabling Act argument against cy pres

awards).

The argument by petitioners and their amici about

class members’ First Amendment free speech rights is

a new approach. That argument - not addressed by the

district court or the 9th Circuit - ignores the

constitutional protections set out by this Court in

Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812

(1985) and provided by Rule 23. Phillips mandates

class action settlement notice to “describe the action,

and plaintiffs rights in it.” As this Court explained,

“due process requires at a minimum that an absent

plaintiff be provided with an opportunity to remove

himself from the class by executing and returning an

‘opt out’ or ‘request for exclusion’ from the court.” Id.

As Phillips requires, Rule 23 provides class members a

clear right to object to a proposed settlement, Wright &

Miller, 7B Fed. Prac. & Proc. Civ. § 1787 (3d ed.), and

class members who request exclusion or “opt out” of the

class thereby keep their claims and are not bound by

the settlement. Wright & Miller, 7AA Fed. Prac. &

Proc. Civ. § 1787 (3d ed.). Given these protections

23, particularly the right to opt out, there is no need to

rewrite Rule 23. See Keller v. State Bar, 496 U.S. 1, 16-

17 (1990) (compelled speech avoided by giving lawyers

the option to opt out of supporting bar political

activities).

V. Legal Aid Organizations Are Appropriate

Cy Pres Award Recipients

Within the appropriately constrained limits on

discretion to approve cy pres awards, courts should

retain their recognized discretion to approve cy pres

awards to legal aid organizations. “[N]o 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.” Carnegie

v. Household Int'l, Inc., 376 F.3d 656, 661, (7th Cir.

2004). Legal aid organizations — like the class action

device itself — exist to provide broad access to justice.

As a result (and as many courts have recognized), this

one category of cy pres recipients always has interests

that reasonably approximate the interests of class

members.

A. Federal Courts Regularly Approve Cy Pres

' is to Legal Aid O ‘eat F

Access to Justice

Federal and state courts throughout the country

have long recognized organizations that provide access

to justice for underserved and disadvantaged people as

appropriate beneficiaries of cy pres distributions from

class action settlements. See, e.g., Lessard v. City of

Allen Park, 470 F. Supp. 2d 781, 783-84 (E.D. Mich.

2007), (“The Access to Justice fund is the ‘next best’ use

of the remaining settlement monies in this case,

because both class actions and Access to Justice

programs facilitate the supply of legal services to those

who cannot otherwise obtain or afford representation

in legal matters.” (internal citation omitted); Jn re

Folding Carton Antitrust Litig., MDL No. 250, 1991

U.S. Dist. LEXIS 2553, at **7-8 (N.D. Ill. Mar. 5, 1991)

(approving a cy pres distribution to establish a program

to fund legal aid lawyers to help “those who might not

otherwise have access to the legal system”); Jones v.

Nat'l Distillers, 56 F. Supp. 2d 355, 359 (S.D.N.Y. 1999)

(listing multiple cases where a class action cy pres

distribution for legal aid was found appropriate). See

also Thomas A. Doyle, Residual Funds in Class Action

Settlements: Using “Cy Pres” Awards to Promote Access

to Justice, The Federal Lawyer, July 2010, at 26, 26-27

(examples of federal court class action cy pres awards

that improved access to justice for indigent persons.)

Many of these awards are to legal aid organizations

providing services that parallel the subject matter of

the settled class action; many others simply recognize

the access to justice nexus between all class actions and

This access to justice nexus for cy pres awards falls

squarely within one of the ALI Principles: “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.” ALI Principles § 3.07 cmt. b. Applying the

ALI Principles:

[Llegal aid or [access to justice] organizations

are always appropriate recipients of cy pres or

residual fund awards in class actions because no

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.

Bob Glaves & Meredith McBurney, Cy Pres Awards,

Legal Aid and Access to Justice: Key Issues In 2013

and Beyond, 27 Mgmt. Info. Exch. J., 24, 25 (2013); see

also Robert Draba, Motorsports Merchandise: A Cy

Pres Distribution Not Quite “As Near As Possible,” 16

Loy. Consumer L. Rev. 121, 122 (2004) (the rationale

for approving cy pres distributions to legal aid

organizations, like the purpose of the class action

device, is “to protect the legal rights of those would

otherwise be unrepresented”).

B. State Statutes and State Court Rules Provide

For Cy Pres Awards to Legal Aid

O ‘aati

In addition to the many federal and state court

decisions approving cy pres awards to legal aid

organizations, a growing number of states - now 24 -

have adopted statutes or court rules codifying the

principle that cy pres distributions to organizations

promoting access to justice are always an appropriate

use of residual funds in class actions."*

“ California Code of Civil Procedure § 384 (authorizing payment

of residual class action funds to California nonprofits that provide

civil legal services to low-income individuals); Co. R. Civ. P. 23(g)

(requiring 50% of class action residue go to Colorado [OLTA

Foundation); Conn. Superior Ct. R. 9-9 (establishing a process for

distribution of residual funds and absent such designation residual!

funds to go to Connecticut IOLTA administration); Hawaii Civil

Procedure Rule 23(f) (gives the courts discretion to approve

distribution of residual funds to [Jawaii nonprofits that provide

legal assistance to indigent individuals); 735 [LCS 5/2-807 (2008)

(requiring distribution of at least 50% of residual funds to

organizations that improve access to justice for low-income Illinois

residents); Ind. R. Trial P. 23(F2) (requiring distribution of at

least 25% of residual funds to the Indiana Bar Foundation); Ken.

Civ. R. 23.056) (directing 25% of residual funds to Civil Rule 23

Account maintained by the Kentucky IOLTA Fund Board of

Trustees); La. S. C. Rule XLITI Part Q. (promoting distribution of

residual funds to be the Louisiana Bar Foundation); Me. R. Civ. P.

2X(f) (2) (requiring that residual funds to the Maine Bar

Foundation); Mass. R. Civ. P. 23(e) (permitting distribution of

residual funds to Massachusetts nonprofits that provide legal!

services to low-income individuals); Minn. R. Civ. P. 23 (requires

notice be given to legal service providers when district court it

considering possible distribution of class action residue); Mon. R.

Civ. P. 23 (requiring not less than 50% of residual funds be

distributed to an Access to Justice Organization), Neb. Rev. Stat.

25-319 (requiring distribution of residual funds to the Nebraska

Legal Aid and Services Fund); N.M. Dist. Ct. R. C.P. 1-023%(G\2)

(permitting payment of residual funds to New Mexico nonprofits

that provide civil legal services to low-income individuals); N.C.

Gen. Stat. § 1-267.10 (requiring equal distribution of residual

funds between the Indigent Person’s Attorney Fund and the North

Carolina State Bar for the provision of civil services for indigents);

ORCP 23(O) (directing 50% of residual funds to Oregon Legal

Service Program); Pa. R. Civ. P. Ch. 1700 (directing distribution of

at least 50% of residual funds to the Pennsylvania IOLTA Board

to promote the delivery of civil legal assistance); P.R. R. Civ. P.

These state statutes and court rules begin with the

general premise that cy pres distributions of residual

funds are proper and useful, then specify appropriate

cy pres recipients including or limited to legal aid

organizations that promote access to justice for low-

income individuals. The majority of these state

statutes and rules actually require a minimum

distribution to legal aid organizations. Because these

state statutes and court rules establish a presumption

or requirement that residual funds will be distributed

to legal aid organizations, they make clear that legal

aid organizations have a particular connection to the

interests of class members. In other words, the

statutes and court rules all recognize the connection

between access to justice through legal aid and through

class action procedures and also demonstrate a clear

20.6 (providing that residual! funds shall be deposited in the Puerto

Rico Access to Justice Fund created to legal assistance to low

income individuals; S.C. R. Civ. P. 23 (requires not less than 50%

of residual funds be distributed to the South Carolina Bar

Foundation to support access to justice for low income persons);

S.D. Codified Laws § 16-2-57; (requires at least 50% of residual

funds be distributed to the South Dakota Commission on Equal

Access to Our Courts); Tenn. Code Ann. § 16-3-821 (authorizing

the distribution of residual funds to the Tennessee Voluntary Fund

for Indigent Civil Representation); Washington Supreme Court

Civil Rule 23(f) (requires distribution of at least 25 percent of

residual funds to the Legal Foundation of Washington to promote

access to the civil justice system for low-income residents); W. Vir.

R. Civ. P. 23 (directing that 50% of residual funds be distributed

to the Legal Aid of West Virginia), Wisc. Statute 803.08 (requiring

that 50% of residue go to the Wisconsin Trust Account Foundation

to support direct delivery of legal services to low income

public policy favoring cy pres awards to legal aid

organizations.

C. Thi —_ ,

This Court's Opinion Should Recognize the :

poy nee ey tion Settl , 1 Legal Aid

If this Court writes any guidelines concerning the

use of cy pres awards, this Court should endorse the

same approach as these 24 state statutes and rules

(and the federal court access to justice decisions cited

above) and recognize that legal aid providers are

appropriate organizations to receive cy pres awards.

Petitioners’ arguments that cy pres awards are a sham

are incorrect and certainly do not apply to cy pres

awards to legal aid organizations. Rule 23 class actions

exist to provide access to the courts for those who could

not otherwise afford to litigate a legitimate claim; legal

legal aid organizations exist to help those who would

otherwise not be able to obtain the protections of the

justice system. Legal aid organizations across the

country use cy pres awards to protect and preserve the

basic necessities of life — food, shelter, health care,

safety and education — for millions of Americans. See,

e.g., Daniel Blynn, Cy Pres Distributions: Ethics &

Reform, 25 Geo. J. Legal Ethics 435, 438 (2012) (cy pres

distributions to specific legal aid organizations have

advanced legal services); Calvin C. Fayard, Jr. &

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

Settling Concept,” 58 La. B.J. 248, 251 (2011) (cy pres

“* The same public policy is evident in the many state statues and

court rules providing that income earned in attorney trust

accounts (“IOLTA” funds) will be pooled and use to support legal

awards made to Louisiana legal aid organizations will

promote access to the courts); Danny Van Horn &

Daniel Clayton, Jt Adds Up: Class Action Residual

Funds Support Pro Bono Efforts, 45 Tenn. B.J. 12, 13-

14 (2009) (cy pres awards to legal aid organizations

benefit class members in a similar way to Rule 23 —

both provide access to the justice system). This Court

should use the opinion in this appeal to recognize this

important principle.

CONCLUSION

Rule 23 of the Federal Rules of Civil Procedure

provides a carefully delineated process for the

administration and settlement of class actions. In this

appeal, petitioners ask this Court to rewrite part of

that process - the well-established procedures and

limitations for administration of class action settlement

funds. While deciding the narrow question presented,

any opinion by this Court should recognize the body of

appellate decisions defining and setting limits on

district court discretion concerning cy pres awards,

recognize the positions of the Advisory Committee on

Federal Rules and the Congress accepting the use of cy

pres awards — and recognize that cy pres awards for

legal aid are an appropriate use of residual settlement

funds.

Respectfully submitted,