Supreme Court Hears Arguments in Class Actions Case

On October 31st, The Supreme Court heard oral arguments in Frank v. Gaos, a case in which CIR filed a supporting (amicus) brief. At issue in Gaos is the abusive  use of a feature of some class action settlements, known as cy pres awards, in which lower courts award funds to third party charities. Thanks to cy pres, plaintiffs in these class actions sometimes never see a dime of recovery.

CIR’s brief in the case argued that the Court should end cy pres awards because they violate the First Amendment. At oral argument, Justice Alito seemed to be concerned with this very issue. He repeatedly questioned attorneys about who decides where the money is finally awarded and if there is ever any attempt made to “determine whether every absent class member or even most of the absent class members regard the beneficiaries of the cy pres award as entities to which they would like to make a contribution.”

Frank was quick to reply that “if class members want to send their money to charity, they can do it without the intermediary of class counsel.” If the rules are reformed, plaintiffs will have the power to decide for themselves how to spend their money.

A decision in the case is expected sometime next year.