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The U.S. Supreme Court on Monday declined to consider the case of an action against Bayer AG’s Monsanto Co that could restrict typical settlements in class action lawsuits in which funds are distributed to third-party charities and other parties not connected to the lawsuit.
The justices rejected an appeal filed by Anna St. John, a lawyer who opposed an agreement with Monsanto that requires it to pay more than $39m to settle claims that it falsely labeled specific Roundup herbicides. The lower courts ruled against the challenge brought by St. John, who opposed the settlement because between $14 and $16 million would go to non-profit consumer groups and a prestigious university that did not suffer any harm from the company’s misconduct allegations.
In this case, are cy pres awards in class action cases that direct money that can remain unclaimed or not be effectively distributed to the class members to non-related entities so long as it is believed to be in the best interest of the class members?
The criticisms of these awards are that they are a source of frivolous lawsuits and excessive fees paid to attorneys for class action cases who might be seeking to advance their interests rather than. The advocates have said that these settlements could put low-value awards per individual to use for groups who work for the public benefit or assist in funding underfunded entities.
It was reported that the Supreme Court in 2019 sidestepped in deciding a case challenging the cy pres award in a case that involved Google. Conservative justice Clarence Thomas, dissenting in the case, deemed settlements based on cy pres “unfair and unreasonable.”
The plaintiffs filed suit in 2019 to support a mass class of consumers who purchased certain companies’ Roundup weedkiller products with false branding. Monsanto and the plaintiffs have defended the settlement, as both sides have made efforts to contact all consumers who might be eligible to make a claim, even boosting compensation to create additional claims. However, any money left over would be utilized to distribute cy pres.
The class members filed over 240,000 lawsuits, which amounted to over 13 million dollars. The settlement envisioned three cypres beneficiaries that include three organizations: the National Consumer Law Center, the National Advertising Division of the Better Business Bureau, and the Center for Consumer Law & Economic Justice located at the University of California, Berkeley.
St. John, the only person who opposed the settlement, is an attorney with Hamilton Lincoln Law Institute’s Center for Class Action Fairness, that will also represent her in the matter. Monsanto has named this group a voice against what it believes are unfair class action procedures, a “serial objector to class-action settlements.”
The plaintiffs’ group stated in court documents that additional actions could have been considered to award the settlement to the class members. It also said the distribution of the cypres could infringe on St. John’s constitutional right of freedom of speech under the U.S. Constitution’s First Amendment since the beneficiaries chosen would be subsidizing “left-leaning organizations” that “work against her political beliefs.”
A federal judge ruled in favor of St. John’s arguments and endorsed the settlement, an order that was affirmed by St. Louis, Missouri-based 8th U.S. Circuit Court of Appeals upheld in the past.
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