David Oetting v. Green Jacobson, 775 F.3d 1060

Background

NationsBank and BankAmerica merged in 1998; multiple shareholder class actions were consolidated and settled in a $490 million global settlement approved in 2002.
Four plaintiff classes were certified (two NationsBank, two BankAmerica); NationsBank classes originally allocated $333.2 million of the settlement.
After distributions in 2004 and 2009, approximately $2.44 million remained in the NationsBank settlement fund.
Class counsel (Green Jacobson) moved to terminate the NationsBank matter, sought $98,114.34 in additional fees, and asked the court to distribute remaining funds cy pres to local charities, with the district court selecting Legal Services of Eastern Missouri (LSEM).
Objector and class representative David Oetting appealed, arguing further distribution to class members was feasible and that LSEM was an improper, unrelated cy pres recipient; he also challenged the supplemental fee award.

Issues

Issue	Plaintiff's Argument (Oetting)	Defendant's Argument (Green Jacobson / District Court)	Held
Whether cy pres distribution was permissible instead of another distribution to class members	Further distribution to class is feasible; funds belong to class and must be distributed to class members first	Further distribution is impractical/costly; remaining funds may be directed cy pres per settlement/district discretion	Reversed: cy pres improper because further distribution was feasible and settlement discretion could not override legal standards
Whether LSEM is an appropriate "next best" cy pres recipient	LSEM is unrelated to nationwide securities claims; court must choose recipient approximating class interests	LSEM serves fraud victims in the St. Louis area and is an appropriate local charity given geographic ties	Reversed: LSEM not adequately shown to approximate the interests of the class; district must consider recipients tied to securities-fraud interests and thoroughly investigate alternatives
Whether notice to class of proposed cy pres was required	Class members should be given notice and opportunity to object when cy pres is not de minimis	District court process and local submissions were sufficient; no effective objection to LSEM below	Majority: district should make cy pres proposal public and permit class input unless amount is de minimis (remanded without resolving whether notice was given)
Whether supplemental attorneys’ fees should stand	Fee award improper if counsel prioritized cy pres over maximizing direct class distribution; fee determination premature while fund administration incomplete	Counsel performed compensable post-settlement work and is entitled to reasonable fees	Vacated as premature: fee award to be redetermined after district conducts additional distributions consistent with opinion

Key Cases Cited

Powell v. Ga.-Pac. Corp., 119 F.3d 703 (8th Cir. 1997) (approved cy pres only where individual distributions infeasible)
In re Airline Ticket Comm’n Antitrust Litig., 268 F.3d 619 (8th Cir. 2001) (cy pres permissible where class members hard to identify; geographic and subject-matter tailoring required)
In re Airline Ticket Comm’n Antitrust Litig., 307 F.3d 679 (8th Cir. 2002) (reiterating need to tailor cy pres to lawsuit’s objectives)
Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir. 2011) (cy pres allowed only when further distribution to class members is not feasible)
In re Lupron Mktg. & Sales Practices Litig., 677 F.3d 21 (1st Cir. 2012) (review of cy pres standards and limits)
Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir. 2011) (cy pres recipient must reasonably approximate class interests)
In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir. 2013) (criticized cy pres where direct distributions feasible; emphasized notice and class input)
In re Katrina Canal Breaches Litig., 628 F.3d 185 (5th Cir. 2010) (cy pres must be for indirect class benefit and consistent with underlying action)
Consol. Beef Indus., Inc. v. N.Y. Life Ins. Co., 949 F.2d 960 (8th Cir. 1991) (standard of review for fee awards)