New class action settlement decision: In re Microsoft I-IV Cases

On Monday, January 9, 2006, the Court of Appeal (First Appellate District, Division One) affirmed the trial court's order giving final approval to a billion-dollar settlement agreement with Microsoft, which settled a group of over 20 class actions seeking relief under the Cartwright Act and the UCL. In re Microsoft I-V Cases, ___ Cal.App.4th ___ (Jan. 9, 2006). The opinion is noteworthy because the settlement included a significant cy pres component, which professional objectors challenge more frequently than other types of settlements, such as all-cash settlements. There is always a greater degree of risk in including a cy pres component in your settlement agreement, but sometimes that's the only feasible way to ensure that the defendant disgorges its ill-gotten gains to the benefit of, if not the class members directly, then the public as a whole. The term "cy pres," according to the Court, "derives from the Norman French cy près comme possible, literally, 'as near as possible.'" Slip op. at 9 n.8 (quoting Note, The Consumer Trust Fund: A Cy Pres Solution to Undistributed Funds in Consumer Class Actions (1987) 38 Hastings L.J. 729, 730).