- A “claims-made” fund of $2.75 million where class members able to prove their purchases could get up to $15 (three boxtops) in refunds. Anything left over would be distributed cy pres to “charities chosen by the parties and approved by the court.” Id. at *2.
- An in-kind cy pres distribution of “$5 million worth” of the defendant’s food “to charities that feed the indigent,” with valuation apparently left to the defendant (although this is not clear). Id.
- The defendant would refrain from making the challenged claim for three years, but would be allowed to make a related claim of “11% better attentiveness” proven by “clinical studies.” Id.
- Counsel fees for class counsel of $2 million. Id.
Used in lieu of direct distribution of damages to silent class members, this [cy pres] alternative allows for aggregate calculation of damages, the use of summary claim procedures, and distribution of unclaimed funds to indirectly benefit the entire class.
2012 WL 2870128, at *4. That's "indirectly" as in "not at all."
Cy pres started out with residual − so-called “unclaimed” − funds, such as the remaining $1.95 million in the “refund” pot in Dennis. But the doctrine has metastisized to include the practice of simply giving class funds to charities from the get-go (in Dennis the $5 million in in-kind food) without any pretense of it ever belonging to the supposed plaintiffs in the class.
Not just any worthy recipient can qualify as an appropriate cy pres beneficiary. To avoid the many nascent dangers to the fairness of the distribution process, we require that there be a driving nexus between the plaintiff class and the cy pres beneficiaries.
2012 WL 2870128, at *4 (citations and quotation marks omitted).
What was the supposed nexus between cereal buyers and feeding the indigent?
According to class counsel food is food is food. That was too much, even for the liberal Ninth Circuit:
[C]ounsel frequently asserted that donating food to charities who feed the indigent relates to the underlying class claims because this case is about “the nutritional value of food.” With respect, that is simply not true, and saying it repeatedly does not make it so. The complaint nowhere alleged that the cereal was unhealthy or lacked nutritional value. And no law allows a consumer to sue a company for selling cereal that does not improve attentiveness.
Id. at *6.
Thus, appropriate cy pres recipients are not charities that feed the needy, but organizations dedicated to protecting consumers from, or redressing injuries caused by, false advertising.
2012 WL 2870128, at *6.
Amazing. What the court suggests as “appropriate” is that class action lawyers divert client funds to supposed charities “dedicated to . . . redressing injuries caused by false advertising.” Heck, in the rest of the country class action lawyers at least have to pay for their own advertising. After Dennis they can found non-profits and use money ostensibly belonging to their purported clients to bring in more business − a self-perpetuating litigation machine.
Although the cy pres doctrine originated in the area of wills as a way to effectuate the testator’s intent in making charitable gifts, federal courts now frequently apply it in the settlement of class actions where the proof of individual claims would be burdensome or distribution of damages costly.
Dennis, 2012 WL 2870128, at *4. "Frequently." But as Dennis pointed out "saying it repeatedly does not make it so."
Even more essentially fatal to his motion for certification under (b)(2) is that Plaintiff only seeks to enjoin Defendant from making representations to future potential [product using] patients; i.e., to individuals who are not members of the class as defined.
Id. at *20 (emphasis original).
For their efforts, Class counsel seek $4.5 million in attorneys' fees, costs, and incentive awards to certain class representatives. Specifically, Class counsel request $3.2 million in fees, $1.3 million in costs, and $55,000 in incentive awards to nine named Class representatives.
2012 U.S. Dist. Lexis 89767, at *20.