Amicus Brief: St. John v. Jones and Yeatman v. Hyland
Two petitions filed by class-action super-lawyer Ted Frank now pending before the U.S. Supreme Court present the same issues regarding the propriety of collusive “cy pres” settlements, in which third-party nonprofits (typically left-wing or the judge’s alma mater) get a windfall, class and defense counsel get paid handsomely, and class members get worthless coupons at best.
In 2018, the Court granted cert in Frank v. Gaos on the question of the legality of such settlements but ultimately failed to reach the issue because of standing questions. Now come two cases without such defects.
Jones v. Monsanto affirmed a $39.5 million class-action settlement where about $16 million will be diverted to left-wing charities, even though over 97% of the class will go uncompensated. The Eighth Circuit rejected a class-member intervenor’s First Amendment argument about compelled speech because class members had no rights to the class proceeds, creating a circuit split.
Meanwhile, Hyland v. Navient Corp. affirmed a class-action settlement where the class will receive no pecuniary compensation and the entirety of the proceeds will go to a new organization affiliated with the American Federation of Teachers, which funded the lawsuit. The Second Circuit held there that the First Amendment wasn’t implicated because approval of class-action settlements isn’t state action—so, again, the class-member intervenor was out of luck.
Drake Law professor Jeremy Kidd spearheaded MI’s amicus brief supporting requests that the Supreme Court review the cases with a view to reining in class-action settlements that implicate both due-process and compelled-speech concerns, while making sweetheart deals for lawyers. The Court can correct serious flaws in the class-action mechanism by demanding that lower courts engage meaningfully in the settlement-approval process, rigorously analyzing the proposed settlement with an eye to alternative solutions—such as dismissing weak claims, disbursing unclaimed funds to class members, and reverting excess damages to defendants.
Ilya Shapiro is a senior fellow and director of Constitutional Studies at the Manhattan Institute. Follow him on Twitter here.
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