All v. All
645 F.3d 329
5th Cir.2011Background
- Settlement funds in Lease Oil antitrust case allocated to identified plaintiffs; many uncashed or undeliverable checks left over.
- District court used cy pres to distribute remaining funds to the Center for Energy and Environmental Resources at the University of Texas.
- Texas asserted unclaimed-property rights to funds allocated to Texas plaintiffs and to investment income thereon.
- Settlement administrator held the funds; Texas sought custody under Texas Unclaimed Property Act.
- District court denied Texas's intervention and ordered funds to cy pres distribution; Texas appealed.
- This appeal centers on whether Texas law governs unclaimed funds despite federal class-action settlement framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Unclaimed Property Act apply to funds held by a settlement administrator in a federal class action? | Texas: Act applies; administrator is holder of property. | Appellees: Act does not control in federal context; cy pres allowed by Rule 23(e). | Act applies; administrator is holder; state law controls. |
| Does Rule 23(e) preclude application of the Unclaimed Property Act? | Rule 23(e) allows cy pres; does not preclude state law. | Rule 23(e) overrides state law in administering settlements. | Rule 23(e) does not preclude Act; no blanket preemption. |
| Under Erie, is the Act substantive and thus applicable over federal administration rules? | Twin aims analysis favors state law; equitable administration harmed if cy pres favored. | Twin aims analysis supports federal discretion to approve settlements. | Act is substantive; governs distribution to Texas-plaintiff funds. |
| Are unclaimed funds allocated to Texas plaintiffs subject to the Act after settlement approval? | Texas retains property rights and income under Act. | Fund distribution governed by federal settlement terms and cy pres. | Texas funds subject to Act; district court erred. |
Key Cases Cited
- In re Lease Oil Antitrust Litig., 570 F.3d 244 (5th Cir. 2009) (discussed unclaimed funds and cy pres context)
- Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431 (S. Ct. 2010) (twin aims of Erie and class-action framework)
- Burlington Northern Railroad Co. v. Woods, 480 U.S. 1 (U.S. 1987) (conflict between state rule and federal discretionary rule)
- Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415 (U.S. 1996) (Erie touchstones for substance vs. procedure)
- Byrd v. Blue Ridge Rural Electric Coop., Inc., 356 U.S. 525 (U.S. 1958) (bound up with state-substantive rights and inequitable administration)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (U.S. 1938) (foundation of substantive vs. procedural conflict analysis)
- Hall v. GE Plastic Pac. PTE Ltd., 327 F.3d 391 (5th Cir. 2003) (twin aims and Erie considerations in context)
- Newby v. Enron Corp., 394 F.3d 296 (5th Cir. 2004) (six-factor framework for evaluating settlements)