July 16, 2018

ABA urges U.S. Supreme Court to protect distribution doctrine for legal services organizations

CHICAGO, July 16, 2018 — The American Bar Association on Monday filed an amicus brief in the
U.S. Supreme Court, seeking to preserve cy pres awards in class-action suits because they are an important source of funding for legal services organizations that help provide access to justice.

In its upcoming term, the court will consider whether a class-action settlement in a suit against Google met requirements of federal law. At issue was whether the settlement met the requirement of Rule 23(e)(2) of the Federal Rules of Civil Procedure requiring proposed class action settlements to be “fair, reasonable and adequate.” In this case involving privacy claims, the cy pres award was directed to groups pledging to use the money to protect internet privacy, according to the cert petition filed by objectors to the settlement, which raised several other issues.

The ABA brief does not take a side in the case but urges the justices to preserve the cy pres doctrine, which it traces to 1974. These awards are particularly appropriate in class actions aggregating small amounts that have been found by a court to be undistributable, the brief said, and now provide an average of $15.5 million annually to legal services organizations.

“If this court reaches beyond the limited scope of the question presented and imposes constitutional restrictions on cy pres awards, it will imperil these state laws and potentially deprive legal services organizations of critical funding and low-income residents of legal representation,” the ABA brief said.

The ABA, the brief continued, “requests this court affirm the availability of cy pres awards in class-action settlements and recognize that legal services organizations are always appropriate recipients of residual funds” that cannot otherwise be distributed to class members.

The ABA’s amicus brief in Theodore H. Frank and Melissa Ann Holyoak v Paloma Gaos, on Behalf of Herself and All Others Similarly Situated, et al., is available here.

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