NT Lakis lawyers have filed a “friend-of-the-court” brief with the U.S. Supreme Court urging it to affirm an appeals court ruling that allowed the parties to settle a class action lawsuit using a device known as “cy pres.” Under cy pres, settlement funds are allocated to third-party charities or foundations, which in turn commit to use the money for the benefit of class members. Cy pres is typically applied where distribution of settlement funds to class members is not feasible.
The device was applied by the courts in this case – Frank v. Gaos – because the large size of the class would have meant that as a practical matter individuals would have received less than a nickel apiece if the funds had been distributed to each class member.
In Frank, a federal trial court approved a cy pres settlement over the objections of two class members who argued that the device was an unacceptable remedy and that there were alternative distribution methods that would have more directly benefited class members. The trial court’s ruling was affirmed by the Ninth Circuit Court of Appeals, and the Supreme Court granted the plaintiffs’ request to review the lower court rulings.
Our brief in support of the lower court rulings argues that the cy pres device is an acceptable way to settle class action claims under the Federal Rules of Civil Procedure (FRCP), and can be beneficial both to class members and to defendants by resolving claims before they result in costly and time-consuming litigation with no predictable outcome. We also point out the cy pres device is not controversial, and has been used regularly by the lower courts as well as in the context of settlements of employment claims brought against employers by federal enforcement agencies.
A copy of our brief is available here.
Members of the Center for Workplace Compliance (CWC) can read more here.