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Justice Department, With Regret, Backs $380M 'Cy Pres' Settlement at Supreme Court

The U.S. Justice Department tells the Supreme Court it doesn't need any guidance about "cy pres" settlements—not after U.S. Attorney General Jeff Sessions last year adopted a new policy that would preclude such provisions in future deals.

The National Law Journal at talks to Ted Frank about Frank v. Gaos, the cy pres challenge before the Supreme Court: 

Ted Frank, director of litigation and the Center for Class Action Fairness at the Competitive Enterprise Institute, said he was not surprised by the government's insistence the justices not take up the dispute. The Justice Department, he said, is “locked in, and the vehicle problems here are so immense." Frank took issue with the Justice Department’s claim that the government doesn’t need any guidance from the Supreme Court about cy pres settlements. "Just because Jeff Sessions implemented a policy in 2017 doesn't mean President Oprah's attorney general won't reverse the policy in 2021," he said. "I also was a little concerned they did it this way because legislation pending in Congress [on cy pres settlements] probably won't go anywhere now because they no longer see it as a bipartisan issue."

Frank is pursuing his own cy pres challenge in the Supreme Court in Frank v. Gaos, which stems from the $8.5 million cy pres-only settlement of claims by about 129 million people that Google illegally shared the search queries of its users. Of the $8.5 million settlement, about $3.2 million was set aside for legal fees, administrative costs and incentive payments to the named plaintiffs. The remaining $5.3 million was allocated to six third-party recipients. The district court held that the cy pres-only settlement was appropriate because the settlement fund was non-distributable. In August, a three-judge panel of the Ninth Circuit affirmed that decision. Andrew Grossman, partner at Baker & Hostetler, represents Frank in the Supreme Court. The response by Google is due March 9.

Google is represented by Mayer Brown partner Donald Falk. Sellers said he reads the Justice Department's new policy to mean the department will not enter into—except in rare circumstances—settlements that provide for cy pres. "They don't say that they might not choose, under the Class Action Fairness Act, to come in non-federal government cases and question the use of cy pres," Sellers said. "It doesn’t foreclose them from challenging cy pres and they may be invited in by private parties. We're going to have to see." Frank said if the justices take his challenge, he would encourage the Justice Department to participate. "We would go to the solicitor general and say, 'Your brief is already written.' We would love to have the government's support," he said.

Read the full article here.