BankAmerica Corporation Securities Litigation
After money from the settlement of a securities class action was distributed to the nationwide shareholder class, $2.7 million was left over. Instead of redistributing that remaining money to the shareholder class, class counsel proposed a cy pres distribution to a legal aid organization in St. Louis.
CCAF represented an objecting class representative on appeal. The Eighth Circuit adopted all of CCAF’s arguments.
The court held that charitable donation of class monies was inappropriate and that cy pres payments should only be used if further distribution to the class is not feasible. In addition, the court criticized the choice of the cy pres recipient because the St. Louis legal aid society was unrelated to the securities injuries alleged in the lawsuit.