Class Actions and the Problem of Unclaimed Funds: Defeating Objections and Avoiding Multiple Rounds of Administration

This CLE webinar will guide both class counsel and defense counsel through the problem of dealing with undistributed settlement funds after payments to class members. The panel will discuss issues including (1) how the problem arises and the reasons for undistributed residue, (2) three options for dealing with the issue, (4) cy pres awards as recommended in Section 3.07 of the American Law Institute's Principles of Law on Aggregate Litigation, (5) the importance of making all feasible distribution efforts as part of settlement administration, (6) the state court rules governing residual funds in state class action settlements, (7) appropriate language about cy pres proposals for motions, orders, and class notices, (8) making a record about distribution efforts and cy pres recipients at fairness hearings, and (9) how to anticipate complications and objections at the fairness hearing and on appeal.

The focus of this program is on anticipating and avoiding problems with undistributed funds in class action settlements. Judges faced with unexpected undistributed funds may require the parties to go through a further distribution process just when the parties thought the case was concluded. And failing to provide for unclaimed funds or proposing disfavored, ambiguous, impractical, or incomplete methods of distribution are red flags to judges and can create lingering problems for counsel.

The three options for dealing with undistributed funds present different issues: reversion may be appealing to defendants but is generally disfavored by judges; escheat is impractical and a bad fit. Making cy pres awards is preferred, but courts evaluate proposed cy pres awards in light of the ALI principles, and counsel will need to make an adequate record to support their proposals. When a proposed settlement agreement includes a provision for cy pres awards, judges will still want to be satisfied that class members will receive whatever can readily be distributed to them. And recommending appropriate cy pres recipients can be complicated and contentious.

Listen as this experienced panel of class action attorneys and settlement administrators offers guidance to both plaintiff and defense counsel about how to address undistributed settlement funds after payment to class members and how to avoid missteps that can send the parties back to the drawing board or off to an appeal.