In July, we wrote about the Ninth Circuit's rejection of a settlement of claims that Kellogg's had misrepresented that kids could improve their attentiveness in school by nearly 20 percent by eating Frosted Mini Wheats for breakfast. The court held that the cy pres was not properly related to the claims and the class, and that the attorney fees were too high. This week, the Ninth Circuit issued a revised opinion. In addition to reorganizing parts of the earlier opinion, the court omitted the separate discussion of attorney fees. Instead, it says that its decision to strike down the settlement on its merits moots the fee issue. On the other hand, the court suggests that, if the $5.5 million cy pres is not of value to the class, then the valuation of the settlement's common fund ($10.64 million) is in fact half, making the attorney fee award excessive. The revised opinion also adds to the discussion of cy pres and its background and continues to emphasize that the cy pres in the settlement may not benefit a single member of the class.
In a case argued before the Ninth Circuit last October, our office represented an objector challenging the cy pres in a settlement of claims concerning Facebook's Beacon program. So look for another Ninth Circuit decision on cy pres sometime soon.
Cy pres can be very useful and appropriate. I have some concern, though, that cases in which cy pres is criticized or misused get more attention than cases in which it is used well. As a result, I worry that judges may be increasingly skeptical about cy pres, even where the proposed cy pres is appropriate and the best use of the award.
UPDATE: Read this detailed article by Amanda Bronstad regarding the Ninth Circuit's revised opinion.