New Ninth Circuit class settlement decision: Nachshin v. AOL, LLC

In Nachshin v. AOL, LLC, ___ F.3d ___ (9th Cir. Nov. 21, 2011), the Ninth Circuit confirmed the propriety of cy pres distributions in class action settlements, but rejected the particular cy pres distribution plan before it:

The cy pres doctrine allows a court to distribute unclaimed or non-distributable portions of a class action settlement fund to the “next best” class of beneficiaries.  See Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1307-08 (9th Cir. 1990).  Cy 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.   See id.  The cy pres distributions here do not comport with our cy pres standards.  While the donations were made on behalf of a nationwide plaintiff class, they were distributed to geographically isolated and substantively unrelated charities.

Slip op. at 20288-89.  The Ninth Circuit remanded for the parties to propose and the district court to approve cy pres distributions to different charities.  See id. at 20295-97.