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Justices call for additional briefs in dispute about “cy pres” class-action settlements

It looks like we’ll have to wait a little longer than expected to find out what the justices think about “cy pres” class-action settlements: On Tuesday afternoon the justices called for additional briefing in Frank v. Gaos, a case argued last week in which the Supreme Court could address the propriety of those settlements. As I explained in my preview, a “cy pres” settlement is a common device in class actions that award trivial sums to a large class of plaintiffs. Specifically, when the costs of identifying class members and distributing proceeds make it difficult to identify all the plaintiffs, courts commonly distribute all or a portion of the settlement proceeds to some public-interest recipient thought to serve the interests of the plaintiffs in the class action. The court granted review in this case to consider the propriety of those arrangements.

As I wrote in my post about the argument, discussion on the merits was in large part superseded by the justices’ concern that the plaintiffs in this case may not have “standing” to bring the class action under the Supreme Court’s 2016 decision in Spokeo v. Robins. The Spokeo court held that a plaintiff in federal court cannot establish standing by alleging a violation of a federal statute; the plaintiff must identify some cognizable real-world harm. The district court’s order approving the settlement in this case was issued before the decision in Spokeo; the court found that the plaintiffs had standing solely because of the allegation that the defendants had violated a federal statute. Thus, the district court did not identify any cognizable harm that would make the case justiciable in a post-Spokeo regime.

Although the parties did not raise the problem, the solicitor general’s amicus brief emphasized it and suggested that the justices might wish to send the case back to the court of appeals for consideration of the issue. At the argument, all seemed to agree that the district court’s reasoning could not withstand scrutiny under Spokeo. The point of disagreement seemed to be whether there was any prospect that the plaintiffs could identify some new argument that would satisfy Spokeo at this late date. Some of the justices (including Justice Samuel Alito, the author of the court’s opinion in Spokeo) seemed to think the allegations could not possibly satisfy Spokeo, and that the Supreme Court might dismiss the case on that basis. Others (including Justice Ruth Bader Ginsburg) suggested that the lack of briefing made the question sufficiently doubtful to warrant sending the case back to the lower courts for further consideration.

Yesterday’s brief order (issued without dissent) suggests that the justices compromised: They will neither dismiss the case out of hand nor send it back to the lower courts for further deliberation. Rather, they decided to call for additional briefs on the question of justiciability, which would help to ensure that they are fully informed before addressing the question in the first instance. They did not call for reargument, though, as they did last week in Knick v Township of Scott. That means that the case will be ripe for decision as soon as the new briefs arrive. Because the new round of briefing will be complete before Christmas, the justices should have plenty of time to come to a decision before the end of the term next June.

Cases: Frank v. Gaos

Recommended Citation: Ronald Mann, Justices call for additional briefs in dispute about “cy pres” class-action settlements, SCOTUSblog (Nov. 6, 2018, 8:36 PM),