Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_94-cv-00153/USCOURTS-caed-2_94-cv-00153-1/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1391 Personal Injury

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

MOORE, et al., 

Plaintiffs, 

v. 

STATE OF CALIFORNIA, et al.

Defendants.

_______________________________

PRICE, et al., 

Plaintiffs, 

v. 

STATE OF CALIFORNIA, et al.

Defendants.

 CIV. S-94-153 DFL GGH

MEMORANDUM OF OPINION

AND ORDER

CIV. S-94-154 DFL GGH

MEMORANDUM OF OPINION

AND ORDER

Plaintiffs Leslie Price, et al. move for a cy pres

distribution of unclaimed funds resulting from a class action

settlement with the State of California (“State”), California

Department of Corrections (“CDC”), and the California Department

of Mental Health (“CDMH”). Plaintiffs Jones M. Moore, et al.

move for a cy pres distribution of unclaimed funds resulting from

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a class action settlement with the State and the California

Department of Youth Authority (“CDYA”). All plaintiffs seek to

distribute the unclaimed settlement funds to the Legal Aid

Society-Employment Law Center (“LAS-ELC”). For the reasons

discussed below, plaintiffs’ motions are DENIED. The funds shall

escheat to the State. 

I.

A. Price

On January 28, 1994, the Price plaintiffs filed a class

action against the State, the CDC, and the CDMH for failure to

pay overtime wages required by the Fair Labor and Standards Act

(“FLSA”). Approximately 7,104 individuals opted to join the

class. (Price Mot. at 2.) On October 10, 1996, the parties

entered into a settlement agreement. (Id. Ex. A.) 

The settlement agreement provided for a $10,129,500.00 award

from the CDC and a $97,500.00 award from the CDMH. (Id. at 5.) 

As part of the settlement, plaintiffs’ attorney Gary Messing

received $450,000.00 in statutory attorney’s fees. (Id. at 7.) 

The fee agreement between the Price plaintiffs and Messing

obligated him to distribute 75% of these fees, or $337,500.00, to

the class members. (Price Messing Decl. ¶ 7.) Messing held this

amount in trust until defendants determined the number of

eligible employees. (Id.) 

On December 20, 1996, all claims were settled and defendants

determined that 6,855 employees were eligible to receive a

portion of the award. (Id.) Messing distributed the $337,500.00

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from his trust fund to the eligible employees by sending each one

a check for $48.50. (Id.) As of July 14, 2005, 392 checks had

been returned or remained uncashed. (Id.) As a result,

Messing’s trust account contains $19,012.00 in unclaimed funds. 

(Id.) 

B. Moore 

Also on January 28, 1994, the Moore plaintiffs filed a class

action against the State and the CDYA for failure to pay overtime

wages. Approximately 1,106 individuals opted to join the class.

(Moore Mot. at 2.) On July 3, 1996, the parties entered into a

settlement agreement. (Id. Ex. A.) In addition to other relief,

the settlement agreement provided eligible employees with

“liquidated damages” equaling 32 hours of paid work time. (Id.

at 3.) The State and the CDYA paid these awards directly to

Messing. (Moore Messing Decl. ¶ 7.) After withdrawing his

share, Messing sent each eligible employee a check for the

remainder. (Id.) 

Around October 1999, Messing concluded that several

employees had not cashed these checks. (Id.) Despite Messing’s

efforts to find and compensate these class members over the past

several years, sixteen remained unlocated as of July 14, 2005. 

(Id. ¶¶ 7, 8.) As a result, Messing’s trust account contains

$3,435.81 in unclaimed funds. (Id. ¶ 7.) 

II.

There are just over $22,400 in unclaimed funds in these two

litigations and the question for resolution is what to do with

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the funds. In Six Mexican Workers v. Ariz. Citrus Growers, 904

F.2d 1301, 1307 (9th Cir. 1990), the Ninth Circuit recognized

that “[m]ost class actions result in some unclaimed funds.” The

panel held that the district court which certified the class

action “was required to formulate a procedure for distributing

unclaimed funds.” Id. The panel identified three alternatives:

“1) cy pres or fluid distribution, 2) escheat to the government,

and 3) reversion to defendants.” Id. The panel stated that a

court’s decision should be “guided by the objectives of the

underlying statute and the interest of the silent class members.” 

Id. However, “[f]ederal courts have broad discretionary powers

in shaping equitable decrees for distributing unclaimed class

action funds.” Id.

Plaintiffs move to distribute the funds to the LAS-ELC under

the cy pres doctrine. (Price Mot. at 6-8.) A cy pres

distribution must provide the “next best” result for the

unlocated class members. Six Mexican Workers, 904 F.2d at 1308. 

In Six Mexican Workers, the Ninth Circuit reversed the district

court’s decision to distribute unclaimed funds to a non-profit

organization because the class members would not likely benefit

from the distribution. Id. at 1309. The court declared that a

proper cy pres distribution will narrowly target the class

members. Id.

 A cy pres distribution to the LAS-ELC is not as likely to

benefit class members as permitting the funds to escheat to the

State. The LAS-ELC is a non-profit public interest law firm in

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San Francisco devoted to employment issues. (Graff Decl. ¶ 6.) 

It would use the award to fund representation of low-income

workers in the San Francisco Bay Area. (Id. ¶ 11.) Conversely,

the unlocated class members in these actions are middle-income

state workers scattered throughout California. Thus, a

distribution to the LAS-ELC would not likely benefit class

members in any reasonably direct fashion. 

By comparison, permitting the funds to escheat to the State

offers the distinct possibility that the funds eventually will be

claimed by the class members who own the funds. It is important

to remember that both of these class actions were “opt in”

classes in which identifiable plaintiffs took the affirmative

step of including themselves in the actions. Although the court

does not agree with defendants that Cal. Civ. Proc. Code § 1518

is controlling in a federal action, the court finds that the

escheat mechanism under § 1518 is the solution most in the

interest of class members who have yet to claim their share of

the settlement. Escheated funds are deposited to the State

Controller’s Office. The Controller must mail and publish notice

to the owners. Id. § 1531. Any owner may reclaim the money upon

proving ownership. Id. §§ 1501.5, 1560(b). The Controller has

access to addresses and databases that have not been available to

the parties; in addition, the Controller maintains a web site

that persons can visit to determine whether the State is holding

any unclaimed funds that belong to them. Although this is not a

perfect solution, it is the best one in the circumstances and the

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one most likely to benefit the actual owners of the funds. 

Plaintiffs argue that Six Mexican Workers forbids the court

from ordering the funds to escheat to the State because that

would be equivalent to returning the funds to defendants. 904

F.2d at 1308. However, under § 1518, defendants do not acquire

title to the funds. Although the Controller can use the money

until it is claimed, escheat to the State ultimately increases

the probability that the unlocated class members will receive

their awards. The court finds that the increased likelihood of

compensating the class members outweighs the concerns plaintiffs

raise. 

III.

Plaintiffs’ motion for a cy pres distribution of unclaimed

funds to the Legal Aid Society-Employment Law Center is DENIED. 

The funds shall escheat to the State under Cal. Civ. Proc. Code §

1518. 

IT IS SO ORDERED. 

Dated: 11/21/2005

DAVID F. LEVI

United States District Judge

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