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The cy pres morass and In re BankAmerica Corp. Securities Litigation

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Facebook and (disappointingly) Public Citizen tell the Supreme Court that there's no dispute about cy pres in the courts that merits Supreme Court intervention. (Earlier.)

I wish the district courts knew that. In EasySaver, the district court thought nothing about awarding $3 million to local universities (including class counsel's alma mater) in a national class action, even though the class was receiving only $225,000 and worthless coupons.

And just this summer, a district court made an appalling cy pres award in BankAmerica Corp. Securities Litigation. Though the class of shareholders received less than a nickel on the dollar for their alleged damages (and claimants ended up being paid less than a dime on the dollar), the Missouri district court refused to distribute $2.7 million to the class, instead ordering that a local legal aid society that serves only the St. Louis area get the money. CCAF wasn't involved at the district court level, but the class representative retained us as appellate counsel, and last week, we filed a brief in the Eighth Circuit appealing the decision. If the law of cy pres were clear, this wouldn't be remotely a close case, but the district court rejected the correct result out of hand.

At least Cato filed a strong amicus brief in the Facebook case. And some district courts are getting it right: the Northern District of California refused to approve problematic cy pres in a problematic settlement; a Kansas federal court demanded that cy pres recipients be identified in the class notice—something the Third Circuit refused to do in Baby Products.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

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The Manhattan Insitute's Center for Legal Policy.