Whether the cy pres award that provides no direct relief or benefit to class members comports with the Rule 23(e) requirement that a settlement binding class members must be 'fair, reasonable, and adequate'

QUESTION PRESENTED Rule 23(e)(2) of the Federal Rules of Civil Procedure requires that the district court approve class-action settlements only if a settlement is “fair, reasonable, and adequate.” The limitations that this language of Rule 23(e) places on the approval of cy pres settlements are presently before this Court in Frank v. Gaos, No. 17-961 (argued Oct. 31, 2018), on a writ of certiorari to the Court of Appeals for the Ninth Circuit. In this case, the Ninth Circuit applied the same circuit precedent at issue in Gaos to sustain a class settlement that resulted in a mere $225,000 in cash refunds to 3,000 class members out of a class of 1.3 million (plus a mostly worthless $20 coupon to each class member). That $225,000 paid to class members is, however, dwarfed by settlement provisions that paid $8.85 million to class counsel and directed approximately $3 million in cy pres to three local schools, including the alma mater law school of several of the attorneys. This cy pres is being paid to third parties even though it is “technically feasible” to pay the class (Pet. App. 22a): every class member is known from defendants’ records and is receiving a distribution. Those cy pres awards will quite likely be increased substantially because the court of appeals below reversed the district court’s refusal to apply the Class Action Fairness Act, 28 U.S.C. § 1712(a), to the $20 credits, and remanded for a recalculation of fees under that Act. Under the settlement, any decrease in fees serves only to increase the cy pres awards, with nothing going to the class. The question presented in this case is similar to that presented in Gaos: (i) ll Whether, or in what circumstances, a cy pres award that provides no direct relief or benefit to class members comports with the Rule 23(e) requirement that a settlement binding class members must be “fair, reasonable, and adequate.” Depending on how the Court decides the Rule 23 issue presented in Gaos, this case may well warrant summary relief in the form of an order that grants the petition, vacates the Ninth Circuit’s decision below, and remands for further proceedings consistent with the Court’s decision in Gaos. However, at issue in Gaos is the standing of the plaintiffs to bring the underlying suit and this Court’s Article ITI jurisdiction to reach the Rule 23 cy pres issue presented. The parties and the United States have submitted extensive, post-argument briefing on that issue. In contrast, this case does not present any such jurisdictional questions. Accordingly, should the Court decline to reach the merits of the cy pres issue in Gaos, plenary review should be granted in this case to address the recurring abuse of Rule 23 class-action settlements that contain substantial cy pres awards, and to resolve a circuit split where the Ninth Circuit stands alone in leaving cy pres at the discretion of the settling parties with little required scrutiny.