SCOTUS Punts in Cy Pres Case
“This decision simply delays the day of reckoning for this unfair practice,” said Ted Frank, Director of Litigation and Senior Attorney at the Hamilton Lincoln Law Institute.
“This decision simply delays the day of reckoning for this unfair practice,” said Ted Frank, Director of Litigation and Senior Attorney at the Hamilton Lincoln Law Institute.
In the original settlement with Lenny & Larry’s, the DOJ estimated only $350,000 in cash went to the class members, and suggested that fees should be in the range of $228,000 to $463,000. The government was particularly critical of a provision that gave potentially $3.15 million in free cookies to General Nutrition Centers Inc. and The Vitamin Shoppe in the event that not enough class members make claims.
In January 2019, CCAF will become part of the new Hamilton Lincoln Law Institute, a free-market nonprofit public-interest law firm created by CEI/CCAF litigators Ted Frank and Melissa Holyoak.
"We think the court got it half right," attorney Adam Schulman, who argued the CEI's position before the appeals court, told the Northern California Record, adding that the remanding of the attorney fees was welcome, but it still allowed millions of dollars to be disbursed to non-class members. The institute objects to the way the "cy pres" doctrine is used in class actions.
Today the U.S. Supreme Court heard arguments in a landmark case brought by the Center for Class Action Fairness (CCAF) challenging an unfair class action settlement in which lawyers and their hand-picked universities and pet causes got millions while class members got nothing.
No one has a precise count of the class action settlements that include cy pres payments, and Frank said many may be included in quiet agreements that are never disclosed to the class. Federal courts dispose of about 275,000 cases a year, with 350 of them class actions.
"This case is really about attorneys selling out their clients," Holyoak told the Washington Free Beacon. "We are arguing that this is unfair, and this is an abuse of the class action system, and an abuse of the cy pres system."
The who, what, why, and how of CCAF's Supreme Court argument.
Enter Ted Frank and Melissa Holyoak, who objected to the settlement. They argued that the distribution of funds violates the federal rule for civil procedures that a class-action settlement be “fair, reasonable, and adequate.” The class counsel must also “fairly and adequately represent the interests of the class.”
"The fact that legal aid organizations do good things and could use the money doesn't justify the means," said Frank, who is also director of the Center for Class Action Fairness at the Competitive Enterprise Institute.