United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 96-3531

___________ Waymon Powell, Claudell Smith, * Willie Griffin, Hershel Ward, Odell * Lawson; International Woodworkers * of America, AFL-CIO, CLC; and * Local 5-475, * * Appellants, * Appeal from the United States * District Court for the Western v. * District of Arkansas. * Georgia-Pacific Corporation, * * Appellee. * *

__________________ * * International Woodworkers of * America, AFL-CIO, CLC, and Its * Local 5-475, Roy Matheny, Jr., * and Others, * * Appellants, * * v. * * Georgia-Pacific Corporation, * * Appellee. *The Honorable H. Franklin Waters, Chief Judge, United States District Court 1 for the Western District of Arkansas. -2- ___________ Submitted: April 17, 1997 Filed: July 11, 1997

___________ Before LOKEN, MAGILL, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

___________ MORRIS SHEPPARD ARNOLD, Circuit Judge.
The pl aintiffs appeal from an order disposing of a large sum of money in th e distr ict court's registry. The facts important to an understanding of the case are se t forth in detail in Powell v. Georgia-Pacific C orp. , 843 F. Supp. 491 (W.D. Ark. 1994). We affirm the district court. 1

I. The plaintiffs filed this class-action race discrimination case over twenty years ago. After several years of litigation, the district court found that the Georgia-Pacific Corpo ration (GP) had violated Title VII by systematically discriminating against th e class members at its Crossett, Arkansas, f acilities. Id. at 492. The parties later settled the remedy aspects of the lawsuit and entered into a consent decree that directed GP to dep osit $2,666,667 into the court's registry " 'in full and final settlement of th e money c laims of the plaintiffs and members of the class.' " Id. The consent decre e furth er indicated that the class members were entitled to interest earned on thi s settleme nt

fund. Id. The parties set aside $350,000 as a "contingency fund fo r 'inadvertently e xcluded class members, underpayments, [and] computational errors.' " Id. The plaintiffs' counsel was named as the trustee for the contingency fund and was giventhe power to distribute funds from it, although court approval was required for-3-

any distrib ution over $500. Id. Finally, the parties agreed that the court shoul d determine how to dispose of any money remaining i n the registry after distribution. Id. at 493.

In the c onsent decree, the parties agreed that distribution should procee d accordin g to a "point system" designed to determine the amount of back pay due t o each class memb er. Id. at 492. They further agreed that GP would use its payrol l records to identify the eligible class, would calculate individual damages, and would distribute the settlement fund accordingly. Id. at 492 -93. By March, 1984, the amount of money in

the registry had grown to over $2.9 million. Id. at 493. At that time, the par ties agreed to distribute $2,461,400 according to the point system, an amount that repres ented the total fund less the $350,000 contingency fund and "specia l circumstances" damages to named plai ntiffs. Id. By the time that distribution actually
occu rred several months later, however, the settlement fund had accrued severa l hundredthousand dollars more in interest. This additional interest and the $350,000 contin gency fund were never distributed. Interest has continued to accrue on thes e funds, and there is now nearly $1 million in the registry. Id. Nearly eight years after the initial distribution, the plaintiffs filed a motio n seek ing distribution of the remaining funds. Id. The plaintiffs originally asked th e court to use the money for scholarships benefiting class members a nd their families, but later changed their minds and sought to have the funds distributed directly to the class members. Id. at 493-94. (Their change of heart was apparently motivated by ta x consider ations. Id. at 493-94, 499.) Soon thereafter, GP filed a status repor t (apparently at the court's request) seeking to have the money distribu ted to the GeorgiaPacific Foundation, which would use it to establish a general scholarship fund for black high school students. Id. at 494.

The di strict court referred the case to a special master. Id. at 493; see als o Fed. R. Civ. P. 53(a). Following an evid entiary hearing, the master recommended that-4-

the court distribute the money to the class members pro rata

. Powell , 843 F. Supp. at 497-98. The master concluded that the cl ass members were entitled to the distribution both because they were not fully com pensated by the original distribution and because most of the money remaining in the registry was attributable to interest and therefore belonged to class members according to the terms of the consent decree. Id. at 498.

The district

court rejected the master's recommendation. Id. at 499. The court reasoned that each class member had been fully compensated according to the terms of the consent decree. Id. The court also noted that interest earned on the contingency fund account ed for most of the money in the registry, that the parties set this mone y aside to benefit unidentified class members, and that no new claima nts had materialized in ten years. Id. at 493, 499. The court made it clear, however, that its primar y concern was the fact that locating the individual class members for an additiona l distribution would be very difficult and costly. Id. at 498-99.

The court classified the money remaining in the registry as "unclaimed funds." Id. at 495. After considering several equitable doctrines governing the disbursement of unclaimed funds (including claimant fund-sharing, reversion to the defendant, and escheat to the government), the court opted for a cy pres distribution. Id. at 495-99. Because the court found th at, at the time that they entered into the consent decree, the parties all wanted to use for scholarships any funds that remained after distribution (but
we re unable to agree on particulars), it ordered the parties to confer and to submit an agree d-upon scholarship program to be administered by the Georgia-Pacifi c Foundation. Id. at 499-500.

In June, 1994, the court issued an order approving a scholarship progra m outlinedby the parties, and several months later the court issued an order disbursin g the funds. Under the court's plan, the Georgia-Pacific Foundation will provid e schola rships to 112 students over ten years, and any remaining money will go to th e United Negro College Fund. Only black high school students who live in three-5-

counties in Arkansas and three parishes in Louisiana are eligible for the scholarships. (These areas were sele cted because most of the class members lived in these counties while working at the Crossett facility.)

II. The plaintiffs first assert that the district court erroneously characterized th e money in the registry as "unclaimed funds." They contend instead that they are simply seekin g an additional distribution according to the terms of the consent decree. Th e pla intiffs reason that, because the remaining money is attributable entirely either t o intere stor to the contingency fund, they are entitled to all of it. They support thei r argument with two provisions in the consent decree: Fir st, the consent decree provides that interest is to be included in the settlement fund and dist ributed to the class; second, it names the plaintiffs' counsel as the trustee for the co ntingency fund and gives him the authority to distribute it. Id. at 492. We do not think that these provisions of the consent decree mean that the money at issue in this case is not "unclaime d." See 2 H. Newberg and A. Conte, Newberg on Class Ac tions § 10.13 at 10-35 (3d ed. 1992) (defining "unclaimed funds" as th e balance of a class recovery remaining after individual distribution). As we read th e consent decree, the parties did not intend for the provisions upon which the plaintiffs rel y to apply after the initial distribution of the settlement fund. In fact, a separat e provision was included to govern the current situation. Paragraph 9(h) of the decree provides that as to "any monies still in the registry of the Court ei ther as a surplus in the Settlement

Fund or a surplus in the Contingency Fund, disposition shall be approved by the Court. " Powell , 843 F. Supp. at 493. We therefore conclude that the cour t correctly found that the money in the registry was "unclaimed" and that neither party has a legal right to it.

III.-6-

Because neither party has a legal right to the unclaimed funds, the court correctly turned to tra ditional principles of equity to resolve the case. There are four ways i n which courts have distributed unclaimed funds of this sort: Pro ratadistribution to the class memb ers, reversion to the defendant, escheat to the government, and cy pre s distribution. See generall y 2 Newberg and Conte, Newberg on Class Actions § 10.15 at10-38, 10-39. Because neither party challenges the court's decision not to allow a
re version of the funds to GP or to escheat them, we need determine only whether the court correctly settled on a cy pres distribution or, alternatively, whether the mone y should have been distributed pro rata

.
We note at the outset that this is not an easy case. Because of the difficultie s inherent i n administering a settlement involving a class of over 2,000 member s (particularly in light of the number of years that have passed since the origina l distribution), the district court's determination is entitled to a great deal of deference. Ac cordingly, we will reverse only if the court's resolution was a clear abuse o f di scretion. See , e.g. , In re Folding Carton Antitrust Litigation , 744 F.2d 1252, 125 5 (7th Cir. 1984), cert. dismissed , 471 U.S. 1113, 1120 (1985), and In re Equity Funding Corp. of America Securities Litigation , 603 F.2d 1353, 1362-63 (9th Cir. 1979).
Cy pr es (sometimes called fluid-class) distribution has traditionally been use d in cases in which class members are difficult to identify or where they chang e cons tantly, as when a utility is found liable for overcharging its customers. See , e.g. , 2 Newberg and Conte, Newberg on Class Actions § 10.17 at 10-44, 10-45, and Market Street Railwayv. Railroad Commission , 171 P.2d 875, 881 (Cal. 1946), cert. denied , 329 U.S. 793 (1946) (ordering streetcar company to use unclaimed funds to improve transpo rtation facilities.). In these cases, the court, guided by the parties' origina l purpo se, directs that the unclaimed funds be distributed "for the indirect prospectiv e benefit of the class." See 2 Newberg and Conte, Newberg on Class Actions § 10.17 at 10-41. Cy pres distributions of unclaimed funds have been controversial in th e courts of appeals. See , e.g. , Six Mexican Workers v. Arizona Citrus Growers ,-7-

904 F.2d 1301, 1307-09 (9th Cir. 1990) (disapproving cy pres distribution t o In ter-American Foundation "for distribution in Mexico," id. at 1307); Wilson v

. Southwest Airlines, Inc. , 880 F.2d 807, 809 (5th Cir. 1989) (rejecting cy pre s distribution to general charit able organization); and Folding Carton , 744 F.2d at 1254 (holding that the district court abused its discretion in using cy pres distribution o f unclaimed funds to establish an antitrust foundation). In this case, however, we agree wi th the district court that a cy pres distribution is potential ly appropriate. The court found that it would be extremely difficult t o distrib ute the funds pro rata , and we cannot say that this factual finding is clearl y erro neous. Over a decade has elapsed since the initial distribution, and many clas s members have probably relocated. (In fact, when t he initial distribution occurred, over 125 checks were retur

ned as undeliverable. Powell , 843 F. Supp. at 498.) A pro rata dis tributionwould be further complicated by the fact that GP (the party entirel y responsible for conducting the first distribution) is no longer responsible for locatin g class members and distributing the funds. Id. at 498-99. After c arefully reviewing the record, we also conclude that the cy pres remedy fashione d by the court was not an abuse of discretion. We emphasize that, partl y b e cause the plaintiffs waited many years to seek distribution of the funds, the district
cour t was faced with a choice among "second bests." In this difficult situation, th e court c arefully weighed all of the considerations and tailored its remedy to reflect the parties' original intention regarding unclaimed funds. Although the plaintiffs may object to some of its particulars, the scholarship program balances the equitable interest s involved in the case with the need to conserve judicial resources. It is clear that at the time of the consent decree, both sides of this dispute wanted to use for scholarships any money remaining after distribution, and the district court took care to preserve tha t initial intention. Furthermor e, because the scholarships will be made available only to black students in the vicinity of Crossett, Arkansas, the program will likely also-8-

promote t he plaintiffs' desire to have the scholarships benefit the class members ' younger relatives.

IV. The p laintiffs also challenge the district court's denial of their motion fo r att orneys' fees. In denying the motion, the court relied on a provision in the consen t decree that provides class counsel with fees for ninety days following the initia l distribution. The plaintiffs assert, however, that this provision does not apply here and th at they are equitably entitled to additional fees because they have expended a great deal of time and mone y to ensure that this final distribution reflects the purpose of the consent decree. We agree.

Inour view, the work performed in this proceeding is analogous t o "postjudgment monitoring of a consent decree," which is "a compensable activity for which counsel is entitled to a reasonable fee." Pennsylvania v. Delaware Valle y C itizens' Council , 478 U.S. 546, 559 (1986). Although the amount of fees requested may be subject to reduction for factors such as those discussed in St. Louis Fir e Fighters Ass ociation v. City of St. Louis , 96 F.3d 323, 332 (8th Cir. 1996), an d Association fo r Retarded Citizens v. Schafer , 83 F.3d 1008, 1011-12 (8th Cir. 1996), cert. denied , 117 S. Ct. 482 (1996), the complete denial of a fee award is no t appropriate.

V. For the foregoing reasons we affirm the judgment of the district court, bu t remand the case with direction to award appropriate fees to the plaintiffs' counsel.-9-

A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.