In Re Motorsports Merchandise Antitrust Litigation

160 F. Supp. 2d 1392, 2001 U.S. Dist. LEXIS 12040, 2001 WL 940257
CourtDistrict Court, N.D. Georgia
DecidedAugust 16, 2001
DocketMDL 1212, No. CIV.A.1:97CV2314TWT
StatusPublished
Cited by19 cases

This text of 160 F. Supp. 2d 1392 (In Re Motorsports Merchandise Antitrust Litigation) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Motorsports Merchandise Antitrust Litigation, 160 F. Supp. 2d 1392, 2001 U.S. Dist. LEXIS 12040, 2001 WL 940257 (N.D. Ga. 2001).

Opinion

ORDER

THRASH, District Judge.

This is a consolidated class action antitrust case transferred to this Court by the Judicial Panel on Multidistrict Litigation. It is before the Court on the Plaintiffs’ Motion for Approval of Plan of Allocation [Doc. 265]. In an order dated January 17, 2001, the Court approved Plaintiffs’ distribution plan as to the coupon portion of the class settlement. The Court, however, reserved ruling on the portion of Plaintiffs’ plan of allocation which proposed distribution of excess settlement funds to charity. That part of the class settlement is addressed in this order. The Court approves and directs the distribution of settlement funds to the charities as set out below.

I. BACKGROUND

In this action, Plaintiffs allege a combination and conspiracy among Defendants to fix prices of NASCAR race souvenirs. On August 25, 2000, after an extended period of litigation, this Court approved settlement agreements between Plaintiffs and the Defendants. The settlement agreements required Defendants to pay more than $5.6 million in cash and issue more than $5.7 million in coupons to the class. According to the terms of the settlement, the precise plan of allocation would be submitted to the Court after the deadline for submitting claims. Claims-were submitted for substantially less than the cash amount of the settlement. After the deadline for submitting claims, Plaintiffs proposed that the net cash be allocated and used as follows:

A. To pay incentive awards of $5,000 in cash to each of the- seven named class representatives;
B. To return ticket stubs, photographs, and other souvenir-type proof of qualifying purchases that were sent by claimants to the Claims Administrator;
C. To pay cash awards to claimants in the amount of 100% of their claimed purchases; and
D. To make cy pres awards to charitable organizations

In addition, Plaintiffs proposed to mail to all claimants coupons in amounts equivalent to their cash awards, and to pay additional coupon incentive awards to the named class representatives in the face amount of $1,000 each. Some of the Defendants object to the proposed cy pres distribution, arguing instead that the unclaimed settlement funds should be returned pro rata to the Defendants.

II. DISCUSSION

It is not uncommon in consumer class actions to have funds remaining after payment of all identifiable claims. As a result, a fairly extensive body of caselaw has developed on the subject of their appropriate disposition. “[N]either the class members nor the settling defendants have any legal right to unclaimed or excess funds.” Powell v. Georgia-Pacific Corp., 843 F.Supp. 491, 495 (W.D.Ark.1994); Wilson v. Southwest Airlines, Inc., 880 F.2d 807, 812 (5th Cir.1989); In re Folding Carton Antitrust Litigation, 744 F.2d 1252, 1254 (7th.Cir.1984). Where no legal claim to settlement benefits exists, a court can exercise its equitable powers to distribute the remaining funds. Powell, 843 F.Supp. at 495. In general, the courts have considered four options when faced *1394 with unclaimed settlement funds: cy pres distributions; pro rata distribution to class members; escheat the funds to a governmental body; and reversion to defendant. Id.; 2 Herbert B. Newberg & Alba Conte, Newberg on Class Actions §§ 10.13 to 10.25 (3d ed.1992).

Where settlement funds remain after distribution to class members, courts have approved charitable donations to organizations geared toward “combating harms similar to those that injured the class members. Such a donation may serve the cy pres principle of indirectly benefitting all class members.” Jones v. National Distillers, 56 F.Supp.2d 355, 358 (S.D.N.Y.1999); see also, West Virginia v. Chas. Pfizer & Co., 314 F.Supp. 710 (S.D.N.Y.1970). Courts have expanded the cy pres doctrine to also permit distributions to charitable organizations not directly related to the original claims. Superior Beverage Co. v. Owens-Illinois, 827 F.Supp. 477, 478-79 (N.D.Ill.1993). “The absence of an obvious cause to support with the funds does not bar a charitable donation.” Jones, 56 F.Supp.2d at 359. Although the “use of funds for purposes closely related to their origin is still the best cy pres application, the doctrine of cy pres and the courts’ broad equitable powers now permit the use of funds for other public interest purposes by educational, charitable, and other public service organizations.” Id., (quoting Superior Beverage, 827 F.Supp. at 478-79). In fact, courts have approved charitable donations to nonprofit groups unrelated to the plaintiffs’ original claims. See e.g., Superior Beverage Co., 827 F.Supp. at 478-79 (approving grants from unclaimed class settlement funds to legal aid bureau, various law school programs, a museum, a public television station, and other charities); In re Folding Carton Antitrust Litigation, 1991 WL 32867 (N.D.Ill. Mar.5, 1991) (distributing unclaimed antitrust class settlement funds to National Association for Public Interest Law (NAPIL) for fellowships unrelated to antitrust law).

The Defendants who oppose the plan of allocation object to the distribution of settlement funds to charity. Instead, they argue that the funds should be returned, pro rata, to the Defendants who contributed to the settlement. Specifically, a small group of “itinerant vendors” assert that because they could not afford to mass the resources of other litigants, they had to ride the coat-tails of the larger Defendants. Now they argue that the Plaintiffs have been overcompensated and that use of the settlement funds to make charitable contributions is patently unfair. They argue that because the settlement documents do not address the issue of distribution of excess settlement funds, the Plaintiffs have served their intended purpose, and the Court should use its equitable powers to return the surplus. The Defendants cite to §§ 10.20 and 11.17 of Newburg on Class Actions in support of this proposition. Section 10.20 is not applicable to the current case as it addresses cy pres distributions in an adjudicated class action context. The case cited by Newburg in § 10.20, Eisen v. Carlisle & Jacquelin, 479 F.2d 1005 (2d Cir.1973), reversed a district court decision that granted class certification on a fluid recovery or cy pres theory. A fluid recovery or cy pres system is utilized where the individuals injured are not likely to come forward and prove their claims or cannot be given notice of the case. Simer v. Rios,

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Bluebook (online)
160 F. Supp. 2d 1392, 2001 U.S. Dist. LEXIS 12040, 2001 WL 940257, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-motorsports-merchandise-antitrust-litigation-gand-2001.