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Supreme Court Case To Decide Issue Of Class Action Funds Directed To 'Pet Causes'

Citations

Legal News Line cited CEI's Senior Attorney Ted Franks and Senior Attorney Melissa Holyoak on Frank v. Gaos.

The U.S. Supreme Court on Oct. 31 will hear arguments in what could become a landmark case to decide whether attorneys in class action lawsuits can send class funds under the cy pres doctrine to the causes of their choosing.

Attorneys for the Competitive Enterprise Institute (CEI) and its Center for Class Action Fairness (CCAF) called for reform of cy pres settlements in the Frank v. Gaos case on appeal before the Supreme Court.

“The settlement at issue in Frank vs. Gaos epitomizes cy pres abuse in class actions, where money is funneled to a slush fund for lawyers to send to their alma maters and pet causes rather than their clients,” CEI Senior Attorney Melissa Holyoak told Legal Newsline. 

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The CEI is a nonprofit Libertarian think-tank organization based in Washington D.C. The CCAF was founded in 2009 by Ted Frank and is tasked with representing class members against unfair class action procedures and settlements. 

Frank has been a leading proponent of cy pres reform and a critic of abuse in class action settlements. He said in a July CEI update if he wins the case asking the Supreme Court to hold that class actions can’t be certified unless there’s a way to pay class members directly, it will shift the current incentive for plaintiff lawyers.

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