Another Major Decision on the Class Action Cy Pres Doctrine

Last November, we discussed two major class action rulings from the Fifth and Ninth Circuits on the cy pres doctrine in class actions. Under that doctrine, courts may approve distribution of leftover class action settlement funds to charities, sometimes after an initial distribution to class members and other times before (and in lieu of) any distribution to class members. The Fifth Circuit had held a cy pres distribution impermissible because the money should have gone to the class members (who had received some money, but had not been fully compensated). The Ninth Circuit had rejected a cy pres distribution because there was insufficient subject-matter nexus between the underlying lawsuit and the chosen cy pres recipients. Now, In Rohn v. Dana Farber, the First Circuit has affirmed a cy pres award to charities largely because the circumstances there were different from those in the Fifth and Ninth Circuit cases -- the class members who made claims, the court said, had been fully compensated, and the charitable receipients' interests "reasonably approximated" the interests being pursued in the underlying lawsuit. Rohn rejects the suggestion in Judge Jones' concurring opinion in the Fifth Circuit that leftover money should presumptively revert to the defendant (though the First Circuit's ruling in this regard is arguably dicta because the settlement agreement in Rohn expressly provided that leftover money would go to charity). Although the result in Rohn is unlikely to spark controversy, its wide ranging discussion of the cy pres doctrine is worth a look.