STEIN v. MARSHALL (2022)

ORDER

Pending before the Court is Plaintiff David Stein's Motion for Order Directing Cy Pres Distribution of Residual Settlement Funds. (Doc. 244.)

I.

In his Motion, Plaintiff explains that $96,755.77 remains in the class settlement fund since the second distribution to class claimants nearly three decades ago. In Plaintiff's estimation, distributing this remaining amount to claimants lacks practicality. He projects that another distribution will cost $24,791.64 in administrative fees, rendering the value of each individual payment at $20.31. It is also likely, he reasons, that claimants will not deposit a check at this (low) value. Due to the passage of time, moreover, many checks will be returned as undeliverable.

For these reasons, Plaintiff proposes that the Court exercise its authority and order the remaining settlement amount distributed to the Arizona Center for Law in the Public Interest (the “Center”). Plaintiff's Motion describes the Center as a “highly-respected Arizona-based not-for-profit law firm dedicated to equal justice, providing civil legal services to Arizona residents with respect to clean air and water, education and school finance reform, open government and democracy, foster care protections, health care, consumer rights, and the protection of public lands and natural resources.” (Doc. 245.)

II.

The Court understands why Plaintiff considers the Center worthy of receiving a cy pres donation. The Motion, however, makes no attempt to satisfy the basic standards justifying a cy pres distribution under well-established Ninth Circuit law. For example, in Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir. 2011), the Ninth Circuit held, “[c]y pres distributions must account for the nature of the plaintiffs’ lawsuit, the objectives of the underlying statutes, and the interests of the silent class members, including their geographic diversity.” Id. at 1036; see also Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990). The court also observed that—

When selection of cy pres beneficiaries is not tethered to the nature of the lawsuit and the interests of the silent class members, the selection process may answer to the whims and self interests of the parties, their counsel, or the court. Moreover, the specter of judges and outside entities dealing in the distribution and solicitation of settlement money may create the appearance of impropriety.

Id. at 1039.

As mentioned, the Motion does not recite this standard or make any attempt to explain why its proposal satisfies it. For these reasons, the Motion will be denied without prejudice to refiling. Should Plaintiff choose to refile, he is best advised to consider the following observations and unresolved issues:

1. This case is 33-years old. Prior to the filing of this Motion, the last docket entry is dated February 1995. The Court lacks institutional knowledge of this case. Compounding that problem, none of the ancient filings are available on the Court's Electronic Case Filing system. They must be retrieved from an out-of-state storage facility. Plaintiff should take care to explain the nature of this case and attach any helpful filings.

2. Plaintiff should identify, with specificity, what authority in the record—i.e., where in the Orders attached to the McGuire Declaration (Doc. 258)—supports the Court's ability to order a cy pres distribution of the remaining settlement assets. If there is no such record support, Plaintiff should provide legal authority supporting the proposition that the Court may grant the requested relief absent authority in the underlying settlement orders.

3. Considering the duties owed to the settlement class, Plaintiff should discuss the specific procedure for the Court to follow in distributing the remaining settlement funds. For example, is notice to claimants and a hearing required?

4. In Nachshin, the Ninth Circuit reversed a nationwide class action settlement that directed funds to local charities. Here, Plaintiff's Motion describes the Center as an “Arizona-based” nonprofit that provides “civil legal services to Arizona residents.” (Doc. 245 at 3.) Any renewed Motion must convincingly explain how Ninth Circuit law supports distributing the remaining settlement funds in this case to the Center.

5. Any other matter that will be helpful or useful to the Court.

III.

Accordingly,

IT IS ORDERED that the Motion for Order Directing Cy Pres Distribution of Residual Settlement Funds is denied without prejudice. (Doc. 244.)

Michael T. Liburdi, United States District Judge