On October 31, the Court heard arguments in Frank v. Gaos. The case presents the issue of whether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and complies with the requirement that a settlement binding class members must be “fair, reasonable, and adequate.” The doctrine of cy pres (from a French phrase for “as close as possible”) allows courts to interpret wills or charitable gifts to fulfill the giver’s intention as closely as possible when they are unable to implement the terms precisely. Ted Frank, an attorney, is challenging an $8.5 million settlement of a class action against Google, which alleged that Google had violated its users’ privacy. About $5 million of the settlement went to groups that work on privacy-related issues and the plaintiffs’ lawyers’ alma maters.

Frank argued that because the class members were not the primary beneficiaries of the settlement, the settlement was neither fair nor reasonable and therefore violated Rule 23. The settlement was particularly abusive, he argued, because it was feasible to distribute the money to class members, but instead the class’s counsel agreed to direct the money from the settlement elsewhere. Class members are capable of donating their money to charity themselves if they so wish, instead of having their lawyers do so, he noted. Jeffrey Wall argued for the United States, a non-party, and stated the plaintiffs lacked standing when the district court entered the judgment and that lower federal courts should enforce limits on fee proportionality so those limits are not reduced to “paper tigers.” Attorney Andrew Pincus argued on behalf of Google that nothing in Rule 23 or the Rules Enabling Act strictly prohibits settlements in which the money goes only to third parties. Pincus agreed with the government that there is a “serious question about whether this action was ever properly in federal court.”  Jeffrey Lamken argued on behalf of the respondents (the plaintiffs against Google) that Rule 23(e)’s fairness standard is better met when courts give large amounts of the settlement money to institutions for particular uses than when courts give small amounts close to zero to individual class members. Lamken argued that it is “critical” that the class members’ lawyers, not Google’s lawyers, determined the recipients.

For more commentary on this case, check out The New York Times and MarketWatch.   

On the same day, the Court heard arguments in Jam v. International Finance Corporation. The case presents the question of whether the International Organizations Immunities Act (IOIA), which gives international organizations the “same immunity” from lawsuits that foreign governments have, confers the same immunity on such organizations as foreign governments have under the Foreign Sovereign Immunities Act (FSIA).

International Finance Corporation loans money to private businesses for projects in developing countries. In 2008, the IFC loaned $450 million to Coastal Gujarat Power Limited to partially fund the construction of a power plant in India. The plaintiffs/petitioners are mostly farmers and fishermen whom the plant has harmed.

Jeffrey Fisher argued on behalf of the petitioners that the IOIA’s plain text, structure and drafting history clearly give international organizations the same immunity as the FSIA. Fisher argued that the IOIA incorporates the immunity of the FSIA as of the moment of the filing of the lawsuit against the IFC, not the level of immunity that was applicable when Congress enacted the statute in 1945.  Assistant to the Solicitor General Jonathan Ellis argued on behalf of the United States, a nonparty. Ellis argued that the IOIA “provides a whole host of immunities” by setting “a fixed rule of immunity” and by setting the immunity by reference to foreign governments.” Donald Verrilli argued on behalf of the IFC that Congress enacted IOIA to fulfill the obligations imposed by treaties which commit the courts to give “virtually absolute immunity” to international organizations, a step beyond the immunity given to foreign states.

[Disclosure: Chicago-Kent College of Law’s Center for Information, Society and Policy is one of the designated cy pres recipients at issue in Frank v. Gaos, as reported here.)

This post was written by ISCOTUS Fellow Bridget Flynn, Chicago-Kent Class of 2019, and edited by ISCOTUS Editorial Coordinator Matthew Webber, Chicago-Kent Class of 2019, and ISCOTUS Co-Director and Chicago-Kent Faculty Member Christopher W. Schmidt.