Home > Uncategorized > Judges Take Note: MacArthur Foundation Declines Facebook Loophole Settlment

Judges Take Note: MacArthur Foundation Declines Facebook Loophole Settlment

December 19, 2013

MUSIC • TECHNOLOGY • POLICY

As Judge Jon Tigar recently held in another Northern District of California case, 9th Circuit judges must follow precedent on class action settlements (even in San Jose).  When it comes to the shady business of using class actions to funnel money to the defendant’s favorite charity/lobbying group/alumni organization (aka the cy pres loophole), the rule is as cited by Judge Tigar in rejecting the proposed cy pres payouts (at page 12):

“A cy pres award must be guided by (1) the objectives of the underlying statute(s) and (2) the interests of the silent class members, and must not benefit a group too remote from the plaintiff class.” Dennis v. Kellogg Co. 697 F.3d 858, 865 (9th Cir. 2012) (citation and internal quotation marks omitted). “To ensure that the settlement retains some connection to the plaintiff class and the underlying claims . . . a cy pres award must qualify…

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