Docket numbers: 22-554 (S.Ct.);
21-2292 (8th Cir.); 19-cv-102-BP (W.D. Mo.)
Anna St. John of the Hamilton Lincoln Law Institute objected to a settlement over Roundup brand weed killer. The Roundup settlement provides 98% of class members with nothing, but pays attorneys $9.88 million while diverting $16 million to third party organizations instead of the class. This practice of diverting class recovery to third parties, called cy pres, was the subject of HLLI’s Supreme Court argument in Frank v. Gaos, which was remanded without a decision on the merits due to jurisdictional questions.
St. John appealed the cy pres issue to the Supreme Court, but the court denied the petition to hear his case on May 15, 2023.
Background
The underlying settlement resolved claims that Monsanto misleadingly marketed Roundup as targeting “an enzyme found in plants, but not in people or pets.” In fact, gut microorganisms in humans contain similar enzymes. The settlement and fee request provide only 30% of the funds to class members, 25% to attorneys, 5% to the settlement administrator and about 40% or $16 million to third party organizations. This occurs because the claims process caps claimant recovery at amounts much lower than the retail price actually paid by class members, and the excess money goes to charities selected by the settling parties.
The cap on recovery violates precedents requiring that settlements pay injured class members rather than third parties whenever recovery is feasible. Objector St. John contends that the settlement must be rejected unless the settling parties modify it to put the interests of class members first.
St. John also objects to the $9.88 million fee award requested by the attorneys. The award would be grossly disproportional if the settlement is not modified to pay class members. Even if it is modified, the fee award appears to be a windfall to attorneys, who don’t even say how much time was spend on the case. In the district court, St. John filed a motion to review the billing claimed by attorneys to ensure that excessive hours and rates are not rewarded. An excessive award would be especially inappropriate where class counsel agreed to give more money to third parties than their own putative clients.
A fairness hearing about the proposed settlement was held on March 11, 2021. The district judge ordered the attorneys to submit a lodestar supplement so that it could evaluate the fee request. The attorneys’ three page lodestar supplement showed that they were requesting $1.25 million for time expended in separate, unsuccessful litigation. The attorneys also asked to be compensated at a blended hourly rate that exceeded $600/hr (well above the $450/hr market rate). Accordingly, St. John filed a supplemental objection that demonstrated how the attorneys’ requested fee was excessive.
On May 13, 2021, the district court approved the settlement and granted the fee award. Objector St. John appealed. Oral argument was held in the Eighth Circuit on February 17th and can be accessed here.
On June 29, 2022, a three-judge panel of the Eighth Circuit issued its opinion affirming the settlement and fee award.
On July 13, St. John filed a petition for rehearing en banc before the entire Eighth Circuit because the panel’s decision cannot be reconciled with the controlling BankAmerica precedent, which permits parties to divert money to third party cy pres recipients only when distribution to the class is infeasible. The petition was denied on August 16.
On December 14, 2022, St. John filed a petition for writ of certiorari with the Supreme Court. Attorneys representing Montana and 15 other states filed an amicus brief in support of the cert petition, as did the Manhattan Institute, Buckeye Institute and Center for American Progress. The amici agree that the Supreme Court should hear the case. HLLI and St. John await the Supreme Court’s decision on whether to hear the case.
HLLI’s Cert Petition in Yeatman
HLLI simultaneously petitioned the Supreme Court to review approval of another cy pres settlement from the Second Circuit, Yeatman v. Hyland. As in this case, the amount of money diverted to third-parties hand-picked by the settling parties dwarfs actual class recovery (which is $0 in Yeatman). Both cases follow up on HLLI attorneys’ Supreme Court argument in Frank v. Gaos, which vacated approval of a cy pres settlement, but did not reach the merits of the practice because of jurisdictional questions about the underlying litigation. Neither Yeatman nor St. John presented similar jurisdictional questions, and the two petitions together show that cy pres settlements are not an endangered species like the Frank v. Gaos plaintiffs argued. Without clarity in this area, plaintiffs’ attorneys will continue to seek approval for the dubious “benefit” of diverting money to organizations that the settling parties select—often winning accolades for essentially giving away client money.
On April 17, 2023 the Supreme Court denied cert for Yeatman, and on May 15 denied cert in St. John.
HLLI hopes that the Supreme Court someday review of cy pres settlements, which Justice Roberts noted ten years ago raise “fundamental concerns.” Marek v. Lane, 571 U.S. 1003, 1006 (2013). The Supreme Court should decide “when, if ever, such relief should be considered; how to assess its fairness as a general matter; whether new entities may be established as part of such relief; if not, how existing entities should be selected; what the respective roles of the judge and parties are in shaping a cy pres remedy; how closely the goals of any enlisted organization must correspond to the interests of the class; and so on.” Id.
Case Documents