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What Can a Court Do With Leftover Class Action Funds? Almost Anything

NCJ Number
Judges' Journal Volume: 35 Issue: 3 Dated: (Summer 1996) Pages: 19-23,44
K M Forde
Date Published
6 pages
At the conclusion of many class action lawsuits, it is common to have funds that cannot be distributed to class members technically entitled to their funds, and the question arises as to what should be done with these excess funds.
The prospect of excess or undistributed funds raises the possibility that such funds should "escheat" to the state as unclaimed property. Even if not required, escheat to the state is a disposition method within the court's discretion. On the other hand, numerous Federal and State courts have distributed excess funds to educational institutions and charities, apparently without regard to escheat statutes. Further, several cases have rejected government escheat as controlling nondistributed funds. Other ways of distributing excess funds include establishing a trust fund to which disposition is provided according to the settlement agreement, allowing broad discretion in fund distribution, and returning excess funds to defendants. Clearly, courts have the discretion to disburse undistributed class action settlement funds in a variety of ways. The best way to distribute funds is to provide for such distribution in the settlement agreement. In this way, no one can question the court's power to order that terms of the settlement agreement be fulfilled. 35 footnotes


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