Frank v. Gaos (17-961)
argument 17-961Frank v. Gaos
Supreme Court of the United States
1h 2m
6 speakers
8 chapters
transcribed 5 days ago
official recording ↗
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the core fairness issue with the settlement’s indirect benefits to class members?
We'll hear argument first this morning in case 17961, Frank v. Gauss, individually and on behalf of all others similarly situated. Mr. Frank.
Thank you, Mr. Chief Justice, and may it please the Court. Amchem instructs that courts should interpret Rule 23 with the interests of absent class members in close view. The best way to interpret Rule 23's text requiring settlements be fair and reasonable is to align class counsel's interests with those of the absent class members. In Deposit Guarantee v. Roper, at page 339, this Court called it an abuse when class members were not the primary beneficiaries of a class action. How can it be fair and reasonable for a Court to endorse such an abuse?
Why is it an abuse? Because practically the class members would get nothing, nothing at all. And here at least they get an indirect benefit.
Well, the indirect benefit is even less than nothing. It was feasible to distribute money to class members, and instead class council chose to agree to a settlement that directed that money elsewhere.
How much would it have come to for each class member?
Each claiming class member probably could have gotten between $5 and $10 with typical claims rates. If, for example, in the Fraley v. Facebook settlement, the court rejected an all-Sci-Praise settlement.
Sorry, there's an amicus brief that talked, who laid out pretty thoroughly the costs associated with first identifying the class and second, preparing the mailing, third, executing the mailing, and then processing the claims that came up with a figure of 67 cents. Now, putting aside that there may be a question about whether the trial court adequately determined feasibility, but assuming it did, why would it have been an abuse of discretion for the court to believe that That processing 67 cents didn't make sense because the cost would outweigh what they would pay.
Well, the district court applied the wrong legal standard. But —
No, no. I know your standard of feasibility is, can we give 10 percent of the class something even if nobody else gets anything? Meaning what you would like to do is select 10 percent of the class and pay them a loan and do nothing for everybody else.
Well, no, we would like to give everybody in the class the opportunity to make a claim. And in practice, a very small minority of the class would not be indifferent to the opportunity.
Everybody else would receive not even an indirect benefit.
No, they would receive the opportunity to make a claim.
They always have that opportunity.
They don't have that opportunity here. As a class member, class members were deprived of that opportunity.
They could opt out.
They could opt out in AMChem also, but that didn't make the settlement fair.
But I go back to my point, which is, are you disputing the finding of fact that under the normal application of feasibility, whether cost outweighs the payment or cost far exceeds whatever could be given out, is that — are you disputing that?
The Court never made that finding. The Court applied the Ninth Circuit's de minimis test under Lane v. Facebook. which required it to divide by the entire denominator of the entire class. In reality, settlements settle all the time for well under a dollar per class member and then successfully distribute that money to the class because most class members are just simply indifferent to the opportunity for these small sums.
And then is it all right to have some kind of a secret operation? For all the class members who don't make any claim?
I don't understand the question, Justice. I apologize.
Suppose the class members are notified and only 10 percent of them make a claim. What happens to the rest of the amount that was agreed upon as a settlement?
First of all, in practice, I just want to let the Court know that 10 percent is an extraordinarily high claim rate. The claims rate is typically below 1 percent. But — And then the 99 percent. Absolutely. In the typical settlement, it's a pro rata distribution. You have a fund — of a few million dollars. That's tens of millions of class members have the opportunity to make a claim.
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Chapters
8 chapters
1
What is the core fairness issue with the settlement’s indirect benefits to class members?
0:00–8:47
2
How much money could each class member have received if the settlement had been distributed directly?
8:47–17:38
3
Why do the parties argue that a “feasibility” test allows indirect benefits instead of direct cash payments?
17:38–25:34
4
What are the arguments surrounding residual funds and the possibility of a “secret” operation?
25:34–32:14
5
How does the Court evaluate standing when the alleged injury is the disclosure of private search data?
32:14–39:32
6
Why do the parties claim that attorney fees are disproportionate to the actual class benefit?
39:32–47:24
7
Is a lottery‑style claim process more reasonable than giving money to third‑party charities?
47:24–54:47
8
What is the “Cy‑Pre” doctrine and how does it affect the fairness analysis under Rule 23(e)?
54:47–1:02:19