# United States Court of Appeals **For the Eighth Circuit**

___________________________ No. 13-2620

___________________________ In re: BankAmerica Corporation Securities Litigation

------------------------------ David P. Oetting, Class Representative

lllllllllllllllllllll Plaintiff - Appellant

v. Green Jacobson, P.C.

lllllllllllllllllllll Appellee National Legal Aid and Defender Association; Association of Pro Bono Counsel; Missouri Lawyer Trust Account Foundation

lllllllllllllllllllll Amici on Behalf of Appellee

____________ Appeal from United States District Court for the Eastern District of Missouri - St. Louis

____________ Submitted: September 10, 2014 Filed: January 8, 2015

____________ Before WOLLMAN, LOKEN, and MURPHY, Circuit Judges.

____________ LOKEN, Circuit Judge.Following the 1998 merger of NationsBank and BankAmerica to form Bank of America Corporation, shareholders file d multiple class actions around the country alleging violations of federal and state securities laws. The cases were transferred by the Judicial Panel on Multidistrict Litigation to the Eastern District of Missouri. That court certified four plaintiff classes, two classes of NationsBank shareholders and two classes of BankAmerica shareholders. The tr ansferred cases were resolved when the court approved a $490 million global se ttlement, overruling an objection by NationsBank class representative David P. Oetting that allocating $333.2 million to those classes was inadequate because their claims had greater me rit than the claims of the BankAmerica Classes. In re BankAmerica Corp. Sec. Litig. , 210 F.R.D. 694, 704-05, 714 (E.D. Mo. 2002), and 227 F. Supp. 2d 1103 (E.D. Mo. 2002).
After an initial December 2004 distribution, approximately $6.9 million remained in the NationsBank settlement f und. The district court ordered a second distribution of $4.75 million to NationsBank claimants in April 2009. After that distribution, $2,440,108.53 remained. In September 2012, class counsel for the NationsBank Classes, appellee Green Jacobson, P.C., filed a motion to terminate the case with respect to the NationsBank Cla sses, to award class counsel $98,114.34 in attorneys’ fees for work done after the distribution in December 2004, and to distribute cy pres the remainder of the “surplus settlement funds” to three St. Louis area charities suggested by class counsel. Th e district court granted the motion over Oetting’s objections and ordered “that the balance of the NationsBank Classes settlement fund shall be distributed cy pres to the Legal Services of Eastern Missouri, Inc.” (LSEM). In re Bank of America Corp. Sec. Litig. , No. 4:99-MD-1264, 2013 WL 3212514, at *5-6 (E.D. Mo. June 24, 2013) (“Bank of America ”).

Oetting appeals the cy pres distribution and the award of attorneys’ fees. As to the former, he argues the district court abused its discre tion in ordering a cy pres

-2-distribution because a further distribution to the classes is feasible, and in any event LSEM is unrelated to the classes or the litigation and is therefore an inappropriate “next best” cy pres recipient. 1 We agree and therefore reverse. As our disposition results in the case not being terminated, we vacate the award of additional attorneys’ fees as premature, leaving th at issue to be resolved, consistent with this opinion, when administration of the NationsBank Classe s settlement fund can be terminated.

I.

In recent years, federal district courts have disposed of unclaimed class action settlement funds after distributions to the class by making “ cy pres distributions.” 2

1 Green Jacobson argues that Oetting lack s standing to contest the manner in which the remainder of the NationsBank settle ment fund is distributed because he did not cash his initial distribution check and therefore has no personal interest in the issues on appeal. This contention is frivolous. As class representative, Oetting “assume[d] a position of a fiduciary character” such that he is not only entitled to represent the interests of the class, but ha s a duty to do so. Cohen v. Beneficial Indus. Loan Corp. , 337 U.S. 541, 549 (1949). Therefore, Oetting has standing to ensure that the remainder of the fund -- now some $2.7 million -- is distributed in a manner that is most beneficial to the class. Indeed, not only representative class plaintiffs but also non-named class members who have timely objected may appeal a district court’s order of a cy pres distribution of settlement funds. SeeIn re Lupron Mktg. & Sales Practices Litig. , 677 F.3d 21, 29 (1st Cir. 2012); Nachshin v. AOL, LLC , 663 F.3d 1034, 1037-41 (9th Cir. 2011) (objecting cla ss members successfully challenged the district court’s choice of cy pres recipient on appeal).

2 “The term ‘cy pres’ is derived from the Norman French expression cy pres comme possible , which means ‘as near as possible. ’ The cy pres doctrine originated as a rule of construction to save a testamentary charitable gift that would otherwise fail, allowing ‘the next best use of the funds to satisfy the testato r’s intent as near as possible.’” In re Airline Ticket Comm’n Antitrust Litig. , 268 F.3d 619, 625 (8th Cir. 2001) (“Airline Tickets I ”) (quotation omitted).

-3-Such distributions “have been controversial in the courts of appeals.” Powell v. Ga.- Pac. Corp. , 119 F.3d 703, 706 (8th Cir. 1997). Indeed, many of our sister circuits have criticized and severely restricted the practice. See, e.g. , Ira Holtzman, C.P.A. v. Turza , 728 F.3d 682, 689-90 (7th Cir. 2013); In re Baby Prods. Antitrust Litig. , 708 F.3d 163, 172-73 (3d Cir. 2013); In re Lupron , 677 F.3d at 29-33; Nachshin , 663 F.3d at 1038-40; Klier v. Elf Atochem N. Am., Inc. , 658 F.3d 468, 473-82 (5th Cir. 2011); In re Katrina Canal Breaches Litig. , 628 F.3d 185, 196 (5th Cir. 2010); Masters v. Wilhelmina Model Agency, Inc. , 473 F.3d 423, 434-36 (2d Ci r. 2007); Wilson v. Sw. Airlines, Inc. , 880 F.2d 807, 816 (5th Cir. 1989). Th ese contrary authorities were not even acknowledged by Green Jacobson in urging a cy pres distribution in this case, nor by the district court in ordering the requested distribution. Recently, echoing these views, Chief Justice Roberts noted“fundamental concerns surrounding the use of such remedies in class action litigation” while nonetheless agreeing with the denial of certiorari in Marek v. Lane , 134 S. Ct. 8, 9 (2013).

The American Law Institute addressed the issue of Cy Pres Settlements in § 3.07 of its published Principles of the La w of Aggregate Litigation (2010). The ALI recommended:

A court may approve a settlement that proposes a cy pres remedy . . . . The court must apply the following criteria in determining whether a cy pres award is appropriate:
(a) If individual class members canbe identified through reasonable effort, and the distributions are sufficiently large to make individual distributions economically viable, settlement proceeds should be distributed directly to individual class members.
(b) If the settlement involves individual distributions to class members and funds remain after distributions (because some class members could not be identified or chose not to participate), the settlement should presumptively provide for further di stributions to participating class

-4-members unless the amounts involved are too small to make individual distributions economically viable or other specific reasons exist that would make such further distributions impossible or unfair.
(c) If the court finds that individual distributions are not viable based upon the criteria set forth in subsecti ons (a) and (b), the settlement may utilize a cy pres approach . The court, when feasible, should require the parties to identify a recipient whose interests reasonably approximate those being pursued by the class. If, and only if, no recipient whose interest reasonably approximate those being pursued by the class can be identified after thorough investigati on and analysis, a court may approve a recipient that does not reasonably approximate the interests being pursued by the class.

We have approved cy pres distribution of unused or unc laimed class action settlement funds in two cases. In both, the distributions met each of the criteria in ALI § 3.07, even though our decisions antedated the ALI’s work. See Powell , 119 F.3d at 706-07; Airline Tickets I , 268 F.3d at 626; In re Airlin e Ticket Comm’n Antitrust Litig. , 307 F.3d 679, 682-84 (8th Cir. 2002) (“Airline Tickets II ”). Similarly, the First Circuit approved a substantial cy pres distribution, concluding it was appropriate in part because the district court’s actions were “entirely congruent” with the then-proposed ALI § 3.07. In re Pharm. I ndus. Avg. Wholesale Price Litig. , 588 F.3d 24, 35 (1st Cir.2009). By contrast, class counsel and the district court entirely ignored this nowpublished ALI authority.

Given the substantial history of districtcourts ignoring and resisting circuit
court cy pres concerns and rulings in class ac tion cases, we conclude it is time to clarify the legal principles that underlay our Powell and Airline Tickets decisions:

First, we agree with the Fifth Circuit that, “Because the settlement funds are the property of the class, a cy pres distribution to a third party of unclaimed settlement funds is permissible ‘ onlywhen it is not feasible to make further distributions to class

-5-members’. . . . except where an additional distribution would provide a windfall to class members with liquidated-damages claims that were 100 percent satisfied by the initial distribution.” Klier , 658 F.3d at 475 (quoting AL I § 3.07; emphasis added). Here, from the perspective of administrative cost, a further distribution to the class was clearly feasible. Class counsel advised the district court, “Claims Administrator would distribute, free of charge, the re maining Settlement Fund in the amount of $2,445,248.07, for which the administration fee is estimated to be $27,000.”

Class counsel nonetheless cont ended, and the district c ourt agreed, that “further identification of members for additional distribution would be difficult and costly, considering the time that has passed since the initial distribution.” Bank of America , 2013 WL 3212514, at *3. We disagree. As the Claims Administrator’s cost estimate confirms, lists of NationsBank class members who received and cashed prior distribution checks exist and would form the basis of a further distribution to the classes. The district court previously orde red that no further search need be made for class members whose checks were retu rned undelivered, so that potentially burdensome expense n eed not be incurred. 3 The district court erred in finding that further distributions would be so “costly and difficult” as to preclude a further distribution; that inquiry must be based primarily on wh ether “the amounts involved are too small to make individual distribu tions economically viable.” ALI § 3.07(a). The court’s ultimate conclusion thatit was appropriate to order a cy pres distribution to unrelated third party charities was therefore an error of law. 4

3 Class members who received but did not cash prior distributions might be included in a further distribution, becau se attitudes and financial conditions may change over ten years. Obvious ly, we leave the details of the further distribution, and the question how to dispose of any unclaimed funds after that distribution, to the discretion of the district court.

4 The separate BankAmerica settlement fund had $1,376,000 remaining after the second distribution. Counsel for the BankAmerica Classes moved to distribute that

-6-Class counsel also argues that a further distribution to the class is inappropriate because it would primarily benefit large in stitutional investors, who are less worthy than charities such as LSEM. We flatly reject this conten tion. It endorses judicially impermissible misappropriation of monies gathered to settle complex disputes among private parties, one of the “opportunities for abuse” that make it “inherently dubious” to apply the cy press doctrine from trust law “to the entirely unrelated context of a class action settlement.” Klier , 658 F.3d at 480 (Jones, C.J., concurring).

The district court also relied on cla ss counsel’s contention that “a third distribution simply would not inure to the benefit of those actually harmed; institutional investors would be the primary recipients of the distribution, and beneficial ownership of the [Bank of America] shares has shif ted over time.” Bank of America , 2013 WL 3212514 at *3. This is simply irrelevant. Though the beneficial ownership of outstanding Bank of America shares changes often, no doubt daily, the identity of the NationsBank class members entitled to receive the settlement funds does not change. The possibility that distributing a private settlement to class members long after the events that gave ri se to their claims may not “inure to the benefit of those actually harmed” does not give the court presiding over class action litigation power to confiscate the settlement proceeds.

Second, a cy pres distribution is not authorized by declaring, as class counsel and the district court did in this case, that “all class members submitting claims have been satisfied in full.” Id. at *3. It is not true that class members with unliquidated

money to class members who cashed checks in the 2009 distribution and would receive at least $100 in this final distribution. Class counsel also moved for an award of attorneys’ fees and requested that f unds remaining after the final distribution be distributed cy pres in four equal parts to LSEM , the Federal Bar Foundation, MFY Legal Services, Inc. in Ne w York charities, and the Kathryn A. McDonald Education Advocacy Project of the New York Legal Aid So ciety. The district court has not ruled on this motion.

-7-damage claims in the underlying litigation ar e “fully compensated” by payment of the amounts allocated to their clai ms in the settlement. SeeKlier , 658 F.3d at 479 (“the fact that the members of [one subclass] have received the payment authorized by the settlement agreement does not mean that they have been fully compensated”); Masters , 473 F.3d at 434-35 (district court in ordering cy pres distribution failed to consider that full restitution to antitrust plaintiffs includes treble damages); ALI § 3.07, cmt. b (“few settlement s award 100 percent of a cla ss member’s losses, and thus it is unlikely in most cases that further di stributions to class members would result in more than 100 percent recovery for those class members”).

In this case, the shareholder lawsuits were filed when, after the merger, Bank of America reported that it had written off $372 million of old BankAmerica loans, and its stock closed down $5.87 that day. 210 F.R.D. at 696-97. The district court approved a global settlement inwhich plaintiffs would r ecover “only a percentage of the damages that they sought,” but whic h was “neither meager nor inadequate, particularly in light of the many hurdles pl aintiffs would face if they chose to proceed to trial.” Id. at 701. The April 2002 settlement noti ce to the class stated: “the settling parties disagree as to both liability and damages, and do not agree on the average amount of damages per share that would be recoverable by any of the Classes.” Thus, the notion that class members were fully compensated by the settlement is speculative, at best.

Third, we reject Green Jacobs on’s contention that the cy pres distribution must be affirmed because the district court and this court are bound by language in the settlement agreement stating that the balance in the settlement fund “shall be contributed” to non-profit organizations “determined by the court in its sole discretion.” 5 In the first place, the agreement and order stating that a cy pres

5 The contention is factually inaccurate , as the settlement agreement only permitted distribution of remaining funds to charities at the court’s sole discretion.

-8-distribution would be made in the district court’s “sole discretion” was contrary to our controlling decisions in Airline Tickets I and Airline Tickets II ; that provision was void ab initio . See In re Lupron , 677 F.3d at 38 (“Distribution of funds at the discretion of the court is not a traditional Article III function.”). More importantly, we agree with the Ninth Ci rcuit that “[a] proposed cy pres distribution must meet [our standards governing cy pres awards] regardless of whether the award was fashioned by the settling parties or th e trial court.” Nachshin , 663 F.3d at 1040. In arguing to the contrary, Green Jacobson misstates the holding of Klier , which overturned the district court’s cy pres award because “a cy pres distribution to a third party of unclaimed settlement funds is permissible only when it is not feasible to make further distributions to class members.” 658 F.3d at 475. (Quite properly, the district court did not rely on the “sole discretion” la nguage in its earlier distribution order.)

Fourth, Oetting argues that the award must be reversed because Green Jacobson did not notify the class of its motion for a cy pres distribution. We agree that, unless the amount of funds to be distributed cy pres is de minimis, the district court should make a cy pres proposal publicly available and allow class members to object or suggest alternative recipients before the court selects a cy pres recipient. This gives class members a voice in choosing a “nex t best” third party and minimizes any appearance of judicial overreaching. See In re Baby Prods. , 708 F.3d at 180; ALI § 3.07(c), cmt b (encouraging courts to “so licit[] input from the parties” regarding cy pres recipients). As we are vacating the cy pres award on other grounds, we need not

The district court’s June 2004 order authorizing an initial distribution improperly went further, stating that funds remaining “ by reason of returned or unpaid checks or otherwise” would be paid to “Authorized Cl aimants” in a second distribution, and any remaining funds “shall be contributed to non-sectarian, not-for-profit, 501(c)(3) organization(s) as determined by th e court in its sole discretion.”

-9-address whether class member s were denied this opportunity and if so, the question of an appropriate remedy. 6

Fifth, when a district court concludes that a cy pres distribution is appropriate after applying the foregoing rigorous standards, such a distribution must be “for the next best use . . . for indirect class benef it,” and “for uses consistent with the nature of the underlying action and with the j udicial function.” In re Katrina , 628 F.3d at 196 (quotations omitted); accordKlier , 658 F.3d at 474; Nachshin , 663 F.3d at 1040; Holtzman , 728 F.3d at 689-90; ALI § 307(c) (“a r ecipient whose interests reasonably approximate those being pursued by the class” ). As we said in Airline Tickets II , 307 F.3d at 682, “the unclaimed funds should be distributed for a purpose as near as possible to the legitimate objectives underlying the lawsuit, the interests of class members, and the interests of those similarly situated.” 7

Applying this standard, it is clear that LSEM, though unquestionably a worthy charity, is not the “next best” recipient of unclaimed settlement funds in this nationwide class action seeking damages for vi olations of federal and state securities laws. In approving LSEM, the district c ourt found that “there is no immediately apparent organization that will indirectlybenefit NationsBank and BankAmerica class

6 We also do not address the distinct ques tion whether Rule 23(e) of the Federal Rules of Civil Procedure requires a district c ourt to identify proposed recipients of any cy pres distribution of unclaimed funds in the original notice of a proposed class settlement. CompareIn re Baby Prods. , 708 F.3d at 180, withIn re Katrina , 628 F.3d at 198; see generally Petrovic v. Amoco Oil Co. , 200 F.3d 1140, 1153 (8th Cir. 1999) (notice at this stage “need only satisfy th e broad reasonableness standards imposed by due process”).

7 Because Oetting objected generally to the proposed cy pres distribution, we may review whether the district court corr ectly interpreted and applied our precedent in Airline Tickets I and II . See Lebron v. Nat’l R.R. Passenger Corp ., 513 U.S. 374, 379 (1995).

-10-members,” and that LSEM su fficiently approximated the in terests of the class because it serves victims of fraud. Bank of America , 2013 WL 3212514, at *4-5. But it is not sufficient to find that no “next-best” recipi ent is “immediately apparent.” Rather, a district court must carefully weigh all considerations, including the geographic scope of the underlying litigation, and make a “thor ough investigation” to determine whether a recipient can be found that most closely approximates the interests of the class. ALI § 3.07, cmt b; see Airline Tickets I , 268 F.3d at 626. The court must look for a recipient that “relate[s] directly to the [] injury alleged in th is lawsuit and settled by the parties.” Airline Tickets II , 307 F.3d at 683. At oral argument, it became apparent there are non-profit organizations devoted to preventing and aiding the victims of securities fraud, such as the SEC Fair Funds . Those alternatives must be thoroughly explored before concluding that a totally unrelated charity such as LSEM is an acceptable “next best” recipient.

On remand, if any settlement funds remainafter an additional distribution to the class, and if the district court c oncludes after proper inquiry that a cy pres award is appropriate, it must select next best cy pres recipient(s) more closely tailored to the interests of the class and the purposes of the underlying litigation.

II.

Oetting argues the award of supplementa l attorneys’ fees must be vacated because Green Jacobson may not seek anadditional award when it was already awarded eighteen percent of the NationsBank fund. SeeIn re BankAmerica Corp. Sec. Litig , 228 F. Supp. 2d 1061, 1066 (E.D. Mo. 2002) . In general, post-settlement monitoring is a compensable activity for whic h counsel is entitled to a reasonable fee. Powell , 119 F.3d at 707. Here, the district c ourt found that the complexities of the case were unforeseeable at the time of the first award and that Green Jacobson was

-11-entitled to compensation for its additional work in this case. Bank of America , 2013 WL 3212514, at *6. The record on appeal gives us no reason to disagree.

On the other hand, the fee award was made in an order that accepted class counsel’s suggestion of a cy pres distribution, which was c ontrary to the interests of the NationsBank Classes, and terminated th e case with respect to those Classes. “Where a district court has reason to be lieve that [class] counsel has not met its responsibility to seek an award that adequate ly prioritizes direct benefit to the class, we therefore think it appropriate for the court to decrease the fee award.” In re Baby Prods. , 708 F.3d at 178. Evaluating whether attorneys’ fees should be reduced for this reason may require the court “to withhold all or a substantial part of the fee until the distribution process is complete.” Id. at 179, quoting Manual for Complex Litigation § 21.71 (4th ed. 2008). The factual context he re is far different than in Baby Products , and we certainly do not mean to suggest th at the final fee award be reduced for this reason. But it may be a relevant factor, and we therefor conclude that review of the award is premature. Accordingly, we v acate the award of supplemental attorneys’ fees, to be redetermined in the exerci se of the district court’s discretion upon completion of the additional distribution(s) to the NationsBank Classes that result from this decision. SeeConsol. Beef Indus., Inc. v. N.Y. Life Ins. Co. , 949 F.2d 960, 966 (8th Cir. 1991) (standard of review).

The Memorandum and Order of the district court dated June 24, 2013, is vacated and the case is remanded for furthe r proceedings not inconsistent with this opinion. We deny the pending F.R.A.P. 10(e) motion.

MURPHY, Circuit Judge, dissenting.

I respectfully dissent because the record does not warrant the post hoc imposition of a new rule to this case. The district court's cy pres order grew out of its

-12-active supervision of this consolidated litigation and was not inconsistent with our then existing precedents. Section 3.07 of the American Law Institute's Principles of Aggregate Litigation, on which the majority relies, had neither been argued in the district court nor yet adopted by our court.

I.

In February 1999 the Judicial Panel on Multidistrict Litigation consolidated some 24 complaints that had been filed in four different districts in the fall of 1998 and then transferred them fo r case management to the United States District Court for the Eastern District of Missouri. The c onsolidated case was assigned to one of the district's most experienced trial judges, the Honorable John F. Nangle, for his oversight and development. After several years of management Judge Nangle approved a $490 million global settlement agreement in September 2002 and lead counsel's application for attorney fees in the next month.

NationsBank class representative Davi d Oetting had objected to the proposed settlement in May 2002, claiming problems with the mediation process, the amount of the settlement, and payment of the settlement in cash rather than stock. He raised these issues in an appeal from the district court order approving the settlement. At that time Oetting did not raise any objection to either the fee award or to the provision that settlement funds remaining after one or two distributions "may be contributed as a donation to one or more non-sectarian, not-for-profit 501(c)(3) organizations as determined by the Court in its sole discretion " (emphasis added). We affirmed the district court's approval of the settle ment. In re BankAmerica Sec. Litig. , 350 F.3d 747, 752 (8th Cir. 2003).

On June 14, 2004 Judge Nangle authorizedthe claims administrator to begin distributing the settlement funds. The distribution process was not without

-13-difficulties. Many class memb ers had missed the initial deadline for filing complaints. The district court ordered class counsel to use a locator service to find some class members and made exceptions to allow several thousand late claims to be filed. The court observed that the NationsBank classes had had more problems with misidentified and late claims than the BankAmerica classes. Because many claimants failed to cash their checks on time, the court ordered that checks amounting to a total of over $1 million be reissued for good cause. Most of the reissued checks were for class members who had been customers of an investment management company which had failed to report their claims accurately.

Even after these exceptions in the distribution process, new problems surfaced. One year after the final clai ms filing deadline had passed, a brokerage firm discovered it had neglected to include in the claims notification process five million NationsBank shares held on behalf of its c lients. After the district court declined to provide another exception to the final distribution deadline, class counsel negotiated an arrangement for the brokerage firm to pay its clients what they would have received from the settlement had their claims been timely. As Judge Nangle observed, the claims distribution process had been "inundated with inefficiency."

The district court ordered a second distribution on June 16, 2008 involving $4.75 million remaining in the settlement fund. During that same month, a substantial fraud on the settlement fund was discovered involving an accountant formerly employed by the claims administrator, amounting to a total loss of $5,879,073.36. The district court stayed the second di stribution on August 6, 2008 pending further investigation. Judge Nangle unfortunately died on August 24, 2008. The consolidated case was briefly transferred to two other judges; no recorded proceedings occurred during that period. Then on December 1, 2008 the case was reassigned to United States District Judge Carol Jackson.

-14-After the fraud investigation was comple ted, Judge Jackson lifted the stay on April 15, 2009. She then oversaw the sec ond distribution, which included orders to reissue various settlement checks for good cau se. After restituti on had been ordered in the criminal fraud case, class counsel were notified in March 2011 that immediate recovery for the settlement fund would beless than $300,000. The fund eventually received $295,290.27 in January 2013. The administrative cost for the second distribution amounted to $336,611.41, l eaving $2.4 million remaining in the settlement fund.

Class counsel then moved in September 2012 for a cy pres distribution of the remaining funds and for additional attorn ey fees; Oetting opposed these motions. On June 24, 2013 the court ordered a cy pres distribution of th e remaining settlement funds to Legal Services of Eastern Miss ouri, a legal aid organization whose work includes representing victims of fraud. It also awarded $98,114.34 in additional attorney fees to class counsel.

II.

We have explained that cy pres awards are appropriate "where class members 'are difficult to identify or where they change constantly,' or where there are unclaimed funds." In re Airline Ticket Comm'n Antitrust Litig. , 268 F.3d 619, 625 (8th Cir. 2001) ("Airline Tickets I ") (quoting Powell v. Georgia-Pacific Corp. , 119 F.3d 703, 706 (8th Cir. 1997)). In Powell , we reviewed for clear error a district court's factual findings about such circumstances. 119 F.3d at 706.

The record in the case now before our court shows that the identification of class members for the two earlier distributi ons had been difficult, and that a good part of any additional distribution would have to be made to institutional investors holding stock on behalf of clients. Prior distribution efforts had encountered difficulties in

-15-locating and correctly processing claims fo r such class members. Meanwhile, years had passed since the settlement was reach ed, and $2.4 million remained in the settlement fund because some class memb ers had failed to cash their checks and interest had accumulated on these unclaimedfunds. Oetting himself had offered no evidence to show that a further distributi on to the class would have been feasible at that time. On this record, th e district court did not clearly err in determining that the remaining funds had been unclaimed and th at individual members of the class were difficult to identify.

The district court found that additional factors favored a cy pres distribution. The parties' settlement agreement, approved by the district court more than ten years earlier, provided that unclaim ed funds remaining after one or two distributions "may be contributed as a donation to one or more non-sectarian, not-for-profit 501(c)(3) organizations as determined by the Court in its sole discretion." There was no objection to this provision by any party or counsel at the time of settlement.

Class members who had submitted cl aims had already received the full compensation due under the settlement agreement, as in Powell , 119 F.3d at 705, where "each class member ha d been fully compensated acco rding to the terms of the consent decree." Many of those who wereharmed by the underlying fraud had been beneficial owners of stock held by mutual funds and other institutional investors. Given that the beneficial ownership of su ch shares changes constantly and some 15 years had passed after the secu rities violations, the districtcourt reasonably concluded that another distribution would not likely reach those who had been actually harmed. All these factors support the district court's determination that the required circumstances for a cy pres distribution ex isted and that such a distribution would not be unwise or unfair to any party.

-16-Counsel were involved in th e consideration of an appropriate recipient for a cy pres distribution. Class counsel ha d suggested a distribution among three organizations: Legal Services of East ern Missouri (LSEM), the Mathews Dickey Boys' and Girls' Club of St. Louis, and The Backstoppers. In his response in the district court, Oetting opposed the suggested distributions to the Boys' and Girls' Club, a youth services organization, and Th e Backstoppers, a group supporting families of fallen police officers, firefighters, and emer gency medical technicians. Oetting argued that the work of these char ities was not related to the s ubject matter of the case before the court. Nothing in the record at th at stage, however, reflects any objection by Oetting to LSEM which was the third suggested recipient. 8

In its cy pres order the district cour t carefully considered Oetting's objections and the circuit precedent requiring it to "consider the full geographic scope of the case" as well as to "tailor[] a cy pres di stribution to the nature of the underlying lawsuit." In re Airline Ticket Comm'n Antitrust Litig. , 307 F.3d 679, 683 (8th Cir. 2002) ("Airline Tickets II "). Finding that the "multi-district litigation was transferred to this district because much of the harm suffered by the cla ss was felt by individuals in the St. Louis region," the district court found that distribution to an organization serving that area would be proper. Counsel had also pointed out that a St. Louis bank was a major predecessor in interest to NationsBank and that many of the individual stockholders of NationsBank resi ded in eastern Missouri. The district court found that a final distribution to LSEM would also be c onsistent with the nature of this securities fraud lawsuit since that organization serves victims of fraud. No party suggested any organization that would benefit class memb ers more directly inthese circumstances where the majority of shares were held by large investment firms. The district court

8 Oetting did offer belated suggestions of potential cy pres recipients in a surreply never accepted for filing. He also failed to raise any issue before the district court about notice to class members of the proposed cy pres distribution.

-17-found that distributions to the Boys' a nd Girls' Club or The Backstoppers would not be appropriate because their work did not focus on fraud.

We review the district court's selection of LSEM as the reci pient of the cy pres distribution for abuse of discretion. Powell , 119 F.3d at 707. The district court's careful application of existing precedent to the facts of this case shows no abuse of its discretion. Unlike the decision we reversed in Airline Tickets I , the district court here "carefully weighed all the [applicable] considerations" and made findings that supported its decision. 268 F.3d at 626. A ll parties were given an opportunity for comment and the district court provided ade quate reasons for selecting LSEM as the cy pres recipient based on the nature of its work as well as its s itus in the area where many class members were located when thei r losses occurred. The district court appropriately "tailor[ed] [the] cy pres di stribution to the nature of the underlying lawsuit," as our precedent requires. Airline Tickets II , 307 F.3d at 683.

III.

Circuit courts which have adopted the American Law Institute's preference for pro rata distributions to class members also recognize that cy pres awards are appropriate in certain cases. The First Ci rcuit, for example, endorsed the Institute's recommendation in In re Lupron Marke ting and Sales Practices Litigationwhile also affirming a cy pres distribution of surplus funds as provided in a settlement agreement. 677 F.3d 21, 25-26, 31 (1st Cir. 2012). In reversing a cy pres distribution of surplus funds in Klier v. Elf Atochem North America, Inc. , the Fifth Circuit acknowledged that such distributions are appropriate when contemplated in the parties' agreement or when the class has already been ad equately compensated. 658 F.3d 468, 475-76 (5th Cir. 2011). While the Third Circuit agrees with the Institute that "cy pres distributions are most appr opriate where further individual distributions are economically infeasible," it has not so limited them and has recognized their

-18-potential role in settlements. In re Baby Prods. Antitrust Litig. , 708 F.3d 163, 172-73 (3d Cir. 2013).

Here, the district court's decision to or der a cy pres distribution was supported by the principles outlined in these cited ci rcuit cases. Problems with the first two distributions made the feasibility of a thir d distribution doubtful. Moreover, the court found that class members who had submitte d claims had been fully compensated according to the settlement ag reement. Unlike in Klier , 677 F.3d at 477-78, this record does not show that a particularsubclass was seriou sly undercompensated. Moreover, this settlement agreement had not only been approved by the district court, but also by our circuit court. In re BankAmerica Sec. Litig. , 350 F.3d at 752. The settlement agreement authori zed a cy pres distribution of unclaimed settlement funds remaining after one or two distributions to the class, and no objection was raised to that provision at the time of settlement.

The American Law Institute principles support the district court's selection of LSEM as the remainder cy pres recipient. The Institute recommends that cy pres distributions be awarded to a recipient "w hose interests reasonably approximate those being pursued by the class." In applying the Institute's recommendation, the First Circuit cited our preceden t in Airline Tickets I and Airline Tickets IIin examining whether or not a cy pres recipient reflected the geographic scope and subject matter of the litigation. In re Lupron , 677 F.3d at 33, 36.

In the case now before our court, the district court similarly selected a recipient whose geographic location related to the underlying securities fraud and whose mission included combating fraud. LSEM re lated "as nearly as possible, to the original purposes of the class action and its settlement," taking into account "the amount of the remaining unclaimed funds and the costs of searching for another qualified recipient." SeeAirline Tickets II , 307 F.3d at 683.

-19-On this record the district court di d not abuse its discretion by applying such criteria and selecting LSEM as a cy pres recipient.

IV.

For all these reasons, I respectfully disse nt. The district court's decision to distribute the remaining settlement funds cy pres to LSEM should be affirmed, as well as the award of additional attorney fees to the Green Jacobson law firm warranted by unforeseeable complexities in the settlement distribution.

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