The Supreme Court might take up a case involving cy pres, the policy of handing class action suit settlement fund “leftover” money to third parties. It’s especially used where the number of plaintiffs in the class is huge.
In privacy or data-breach cases, where the number of potential plaintiffs reaches into the millions, the majority of a settlement can go to cy pres recipients.
A 2015 class-action settlement involving Alphabet that centered on its Google subsidiary would have led, after the lawyers’ cut, to four-cent checks being sent to each of nearly 130 million plaintiffs, for instance.
Cy pres also becomes a player when the bulk of the funds are distributed and the remainder is impractical to distribute (“impractical” generally is determined by the court involved, or by the court’s acceptance of an agreement between plaintiffs and defendant(s)).
The Court should take the case and strike the practice. Part One of a better answer, which the Court can impose, is to reduce the permissible per centage of the total payout that can go to the lawyers. That would leave more money for the payout and reduce, if only by a little, one of the problems: the pennies distributed were all the monies disbursed to the plaintiffs.
Part Two of the better answer is a political decision, and so it’s beyond the reach of the Court; although, the Justices can, and should, inveigh Congress to address the matter. That political decision is to bar the leftover monies from going to third parties. By definition, those entities were not victims of the misbehavior that led to the payout, and so they should not receive any of it. Instead, the leftovers should be delivered to the Federal or State Treasury, depending on whether the case was a Federal or State one.
Part Two-a of the better answer likely would find the most use in those privacy or data-breach cases, where all of the plaintiffs might each get impractically small payouts. In this sort of case, all of the settlement funds should go to the Federal or State Treasury.
