Supreme Court asked to review cy pres settlements

We have often reported on controversies over cy pres class action settlements, in which part or all of a settlement fund goes to charities, universities, advocacy groups, or other unrelated institutions as opposed to actual victims of the sued-over conduct. Most appeals courts have agreed that cy pres raises distinctive issues that call for judicial oversight, yet the various federal circuits have marched off in different directions as to the appropriate nature and extent of such oversight, leading to inconsistency at least, and perhaps also to forum-shopping by lawyers seeking lenient standards.

Now figures well known to many of our readers — Ted Frank of the Center for Class Action Fairness, and David Rifkin and Andrew Grossman of Baker & Hostetler — have petitioned the Supreme Court for certiorari in a case arising from a privacy suit against Facebook over its Beacon program that eventuated in a cy pres settlement. “More than $6 million of [the] money was directed to the establishment of a new Internet privacy foundation with an advisory board that includes a Facebook representative and a plaintiffs’ lawyer from the case.” [Alison Frankel; Ted Frank/PoL; CCAF] Related: the “real problem with cy pres has never been that it is too costly. The real problem is that it creates an incentive for class counsel to act against the interests of the class.” [Andrew Trask]

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