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Phil Pillari

Publication Date

Fall 10-6-2024

Abstract

Class actions play an important role in civil litigation, but they suffer from a serious problem. No matter how many plaintiffs are in the class, the individual claims are often miniscule, which can make distributing the inevitable settlement futile. Very few people make a claim, and it often costs more to mail the check than the check is worth. To solve this problem, Steven Shepherd proposed importing the cy pres doctrine (a trusts and estates device that allows courts to rewrite an unenforceable trust) into the class actions context. Shepherd’s framework instructs courts to devise the next best alternative for distributing the funds from a class action settlement. Oftentimes, this will involve donating the money to a charity whose work aligns with the policy goals of the statute creating the cause of action.

Courts across the country have adopted this framework with open arms, and the doctrine has developed a mind of its own. Courts are now bending over backwards to approve these cy pres settlements, often overlooking clear legal errors, glaring public policy concerns, and flagrant ethical violations to justify them. But there is a more fundamental problem: cy pres is unconstitutional. Rule number one of federal jurisdiction is that plaintiffs must satisfy the “irreducible constitutional minimum” of Article III standing to sue. Plaintiffs lack standing when the requested remedy would not redress the harm, and cy pres settlements do not redress the harm the class has suffered.

This Note argues courts should replace cy pres with an escheatment scheme that ensures class actions redress the plaintiffs’ harms. Escheatment serves the twin goals of both ensuring the class members receive their money (thereby satisfying the redressability requirement) while also preventing the egregious misconduct many attorneys engage in while negotiating these settlements.

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