July 10, 2006

Reader Skip Oliva of the Voluntary Trade Council writes in an email:

Recently, a state court in New Mexico gave preliminary approval to a class action settlement against several manufacturers of "flavor enhancers", such as MSG, who were accused of antitrust violations. The proposed settlement fund is about $37 million. Apparently, not one dollar will go the actual plaintiffs -- "indirect purchasers" of flavor enhancers -- and the entire fund, minus costs and attorney's fees, will be distributed to charitable organizations selected by the plaintiff's counsel, roughly apportioned according to the states where the plaintiffs reside.

I have been interested for some time in the use of class action antitrust settlements to fund various academic and non-profit groups. One of the more prominent pro-antitrust groups regularly obtains funds this way. But for an entire settlement to go to non-profits? Is this common? And has anyone ever tried to track and calculate the non-profit windfall from class action settlements?

More on litigation slush funds here, here, here, here and here.