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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0805%3A40

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2018

## Text

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

i

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

ss

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

iv

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

Vv

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

vi

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

ix

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

1

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

2

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.

3

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.

4
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:

3.

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.

5

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.

6

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).

7

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

8

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

9

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

10

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.

11

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)

12

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.”).

14

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

15

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).

16

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.

17

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

18

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

19

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.

20

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.

21

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.

22

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

23

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

24

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.

25

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

26

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

27

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:

28

[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

29

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.

30

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

31

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

32

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.

33
Respectfully submitted,

M. Miller Baker Wilber H. Boies
MCDERMOTT WILL & 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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0805%3A40. Public record. Not legal advice.