Frank v. Gaos, 2018 WL 4215072 (2018) 2018 WL 4215072 (U.S.) (Appellate Brief) Supreme Court of the United States. Theodore H. FRANK, et al., Petitioners, v. Paloma GAOS, Individually and on Behalf of All Others Similarly Situated, et al., Respondents. No. 17 - 961 . August 29, 2018. On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit Brief for Class Respondents Kassra P. Nassiri, Nassiri & Jung LLP, 47 Kearny St., Suite 700, San Francisco, CA 94108, (415) 762-3100, [email protected]. Jeffrey A. Lamken, Michael G. Pattillo, Jr., James A. Barta, William J. Cooper, MoloLamken LLP, The Watergate, Suite 660, 600 New Hampshire Ave., N.W., Washington, D.C. 20037, (202) 556-2000, [email protected], for Class Respondents. Michael Aschenbrener, KamberLaw, LLC, 201 Milwaukee St., Suite 200, Denver, CO 80206, (303) 222-0281, [email protected]. Justin B. Weiner, Jordan A. Rice, MoloLamken LLP, 300 N. LaSalle St., Chicago, IL 60654, (312) 450-6700. *i QUESTION PRESENTED Federal Rule of Civil Procedure 23(b)(3) permits representatives to maintain a class action where so doing “is superior to other available methods for fairly and efficiently adjudicating the controversy,” and Rule 23(e)(2) requires that a settlement that binds class members must be “fair, reasonable, and adequate.” The question presented is: Whether, or in what circumstances, a class-action settlement that provides a cy pres award of class-action proceeds but no direct relief to class members comports with the requirement that a settlement binding class members must be “fair, reasonable, and adequate” and supports class certification. West Headnotes (1) Deposits in Court Disposition under judgment or order of court In what circumstances, if any, does a class-action settlement that provides a cy pres award of class-action proceeds but no direct relief to class members comport with the requirement that a settlement binding class members must be “fair, reasonable, and adequate” and support class certification? © 2018 Thomson Reuters. No claim to original U.S. Government Works. 1 Frank v. Gaos, 2018 WL 4215072 (2018) Cases that cite this headnote *iii TABLE OF CONTENTS Introduction ........................................................................................................................... 1 Statement ................................................................................................................................ 3 I. Legal Framework ............................................................................................................... 3 A. The Federal Rules Process ................................................................................................ 3 B. Rule 23's Requirements for Class Actions ......................................................................... 4 C. Rule 23's Protections Governing Settlements .................................................................... 5 D. Congressional Revisions to Class-Action Procedures ........................................................ 6 E. Judicial and Congressional Consideration of Cy Pres Settlements ..................................... 7 II. Proceedings Below ............................................................................................................. 11 A. Proceedings Before the District Court ............................................................................... 11 1. The Complaints and Resulting Motions ............................................................................ 11 2. Uncertainty and Mediation Drive the Parties to Settlement ............................................... 12 3. The Selection of Cy Pres Recipients .................................................................................. 14 4. District Court Approval ..................................................................................................... 16 B. Proceedings in the Court of Appeals ................................................................................. 18 Summary of Argument ........................................................................................................... 20 Argument ............................................................................................................................... 23 I. The Federal Rules and Relevant Statutes Do Not Prohibit Cy Pres Settlements ................ 25 *iv A. The Text, Structure, and History of Rule 23 Do Not Support Petitioners' 25 Prohibition on Cy Pres Settlements ....................................................................................... 1. Petitioners' Categorical Ban Defies Rule 23(e)'s Clear Text ................................................ 25 2. Petitioners' Categorical Ban Ignores Rule 23(e)'s Structure and History ............................ 28 B. Federal Courts Have Identified the Limited Contexts Where Cy Pres Settlements Might 31 Satisfy Rule 23(e) ................................................................................................................... B. Rule 23(b)(3)'s “Superiority” Requirement Does Not Preclude Cy Pres Resolution .......... 35 D. Petitioners' and Their Amici's Remaining Arguments Fail ................................................ 37 1. Petitioners' First Amendment Argument Is Waived and Meritless 37 *********************************************** ......................................................... 3. Cy Pres Raises Neither Redressability Nor Rules Enabling Act Concerns ......................... 38 II. Petitioners' Proposed Attorney's Fees Rules Are Misplaced and Unfounded .................... 40 A. Petitioners' Attorney's Fees Proposals Are Not Properly Before the Court ....................... 40 B. Petitioners' Fee Rules Defy Text and History ................................................................... 41 *v III. Petitioners' Policy Arguments Fail ............................................................................ 43 A. Existing Standards Address Petitioners' Concerns ............................................................. 43 B. Petitioners' Accusations Are Unfounded 47 *********************************************** ......................................................... IV. This Settlement Complies with Rule 23 ........................................................................... 48 A. The Settlement Provides Valuable Prospective Relief To Prevent Violations ..................... 48 B. The District Court Properly Found the Cash Component Adequate and Non- 49 Distributable ........................................................................................................................... C. The District Court Did Not Abuse Its Discretion in Approving Recipients ....................... 52 V. The Government's Jurisdictional Argument Counsels Dismissing the Petition as 54 Improvidently Granted ........................................................................................................... Conclusion .............................................................................................................................. 56 Appendix A - Federal Rule of Civil Procedure 23 ................................................................. 1a Appendix B - AARP Foundation Proposal ........................................................................... 9a Appendix C - Berkman Center for Internet & Society at Harvard University Proposal .......... 20a Appendix D - Carnegie Mellon Proposal ............................................................................... 48a Appendix E - Center for Information, Society and Policy at IIT Chicago-Kent College of 86a Law Proposal ......................................................................................................................... Appendix F - Stanford Law School's Center for Internet and Society Proposal ..................... 114a © 2018 Thomson Reuters. No claim to original U.S. Government Works. 2 Frank v. Gaos, 2018 WL 4215072 (2018) *vi Appendix G - World Privacy Forum Proposal ............................................................... 167a *vii TABLE OF AUTHORITIES CASES Adarand Constructors, Inc. v. Mineta, 534 U.S. 103 (2001) ........... 54, 55 In re Airline Ticket Comm'n Antitrust Litig., 268 F.3d 619 (8th 44 Cir. 2001) ..................................................................................... In re Airline Ticket Comm'n Antitrust Litig., 307 F.3d 679 (8th 7 Cir. 2002) ..................................................................................... Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) ................... passim Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455 (2013) . 3, 24, 30 Arizona v. Hicks, 480 U.S. 321 (1987) .......................................... 56 ATD Grp. v. Frank, No. 16-2850, 2017 WL 4014951 (2d Cir. Mar. 47 29, 2017) ....................................................................................... In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir. 2013) ..... passim In re BankAmerica Corp. Sec. Litig., 775 F.3d 1060 (8th Cir. 31 2015) ............................................................................................. Bay Area Laundry & Dry Cleaning Pension Tr. Fund v. Ferbar 37 Corp. of Cal., Inc., 522 U.S. 192 (1997) ........................................ In re Bayer Corp. Litig., No. 09-md-2023, 2013 WL 12353998 44 (E.D.N.Y. Nov. 8, 2013) .............................................................. Beastie Boys v. Monster Energy Co., 983 F. Supp. 2d