Westlaw covers CEI’s Supreme Court case Frank v. Gaos. CEI Director of Litigation Ted Frank will be arguing the case before the court and representing himself, along with fellow class member CEI Senior Attorney Melissa Holyoak.
Ted Frank of the Competitive Enterprise Institute is going to make history at the U.S. Supreme Court next term in Frank v. Gaos.
If he wins the case, which presents the question of whether class action settlements can consist only of payouts to charity without any direct benefits to class members, he’ll dramatically shift incentives for plaintiffs’ lawyers purporting to represent million-member classes. In a merits brief filed Monday, Frank is asking for no less than a holding from the Supreme Court that class actions can’t be certified unless there’s a way to pay class members directly.
Frank has long contended that cy pres-only settlements warp incentives for class counsel. Instead of prioritizing payments to class members, Frank argues, plaintiffs’ lawyers agree to cy pres contributions to defendants’ pet charities, then claim attorneys’ fees based on the inflated charitable contributions. “When courts treat a dollar of cy pres as equivalent to a dollar of direct class recovery, class attorneys’ natural preference will be to favor their favorite charities and causes over thousands or millions of anonymous class members,” his brief said.
Frank is asking the court to ban cy pres-only settlements as inconsistent with the federal rule on class actions. If the justices allow cy pres to be used at all in class actions, he argued, “there should be strict restrictions against the payment of money to recipients with any significant current or prior relationship with the parties, attorneys or judge.” And at the very least, the Supreme Court should require trial judges to discount the value of cy pres settlements when they’re awarding fees to class counsel.
Read the full article at Westlaw.