The distribution of a class action settlement fund to class members usually ends up with undistributed residual funds because of missing class members, unfiled claims, and uncashed checks. Experienced class action lawyers know the simple solution to this practical problem: A settlement agreement provision that any undistributed residue will go to designated organizations as cy pres awards. But what happens when there is a trial, a judgment awarding damages to the plaintiff class, a distribution process leaving undistributed funds—and no settlement agreement saying who gets the money?
Krakauer vs. Dish Network L.L.C. No. 1:14-cv-00333, 2020 WL 6292991 (M.D.N.C. Oct. 27, 2020) provides an answer. The case went to trial on Telephone Consumer Protection Act (TCPA) claims about 50,000 unwelcome calls to 18,000 class members. The plaintiff won a judgment for statutory damages of $400 per call—trebled for willful violations to a total of $61 million. After a claims process and an award of counsel fees, it appeared that there would be more than $11 million in unclaimed funds. Not surprisingly, defendant Dish argued that all undistributed funds should revert to Dish. Class counsel argued that most of the unclaimed funds (for identified class members who did not submit claims) should escheat to state unclaimed property funds, while other unclaimed funds (from uncashed checks, missing contact information, denied claims) should be distributed in cy pres awards. The district judge, in a carefully organized opinion, rejected both arguments, holding that there would be no reversion to the defendant and no escheat to state governments. Instead, the court appointed a special master to recommend possible cy pres recipients before a further decision on cy pres awards or escheat to the federal government.