United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 96-3531

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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.

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Submitted: April 17, 1997

Filed: July 11, 1997

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

___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.

The plaintiffs appeal from an order disposing of a large sum of money in the

district court's registry. The facts important to an understanding of the case are set

forth in detail in Powell v. Georgia-Pacific Corp., 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

Corporation (GP) had violated Title VII by systematically discriminating against the

class members at its Crossett, Arkansas, facilities. Id. at 492. The parties later settled

the remedy aspects of the lawsuit and entered into a consent decree that directed GP

to deposit $2,666,667 into the court's registry " 'in full and final settlement of the

money claims of the plaintiffs and members of the class.' " Id. The consent decree

further indicated that the class members were entitled to interest earned on this

settlement fund. Id. The parties set aside $350,000 as a "contingency fund for

'inadvertently excluded class members, underpayments, [and] computational errors.' "

Id. The plaintiffs' counsel was named as the trustee for the contingency fund and was

given the power to distribute funds from it, although court approval was required for
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any distribution over $500. Id. Finally, the parties agreed that the court should

determine how to dispose of any money remaining in the registry after distribution. Id.

at 493.

In the consent decree, the parties agreed that distribution should proceed

according to a "point system" designed to determine the amount of back pay due to

each class member. Id. at 492. They further agreed that GP would use its payroll

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

parties agreed to distribute $2,461,400 according to the point system, an amount that

represented the total fund less the $350,000 contingency fund and "special

circumstances" damages to named plaintiffs. Id. By the time that distribution actually

occurred several months later, however, the settlement fund had accrued several

hundred thousand dollars more in interest. This additional interest and the $350,000

contingency fund were never distributed. Interest has continued to accrue on these

funds, and there is now nearly $1 million in the registry. Id.

Nearly eight years after the initial distribution, the plaintiffs filed a motion

seeking distribution of the remaining funds. Id. The plaintiffs originally asked the

court to use the money for scholarships benefiting class members and 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 tax

considerations. Id. at 493-94, 499.) Soon thereafter, GP filed a status report

(apparently at the court's request) seeking to have the money distributed to the GeorgiaPacific Foundation, which would use it to establish a general scholarship fund for black

high school students. Id. at 494.

The district court referred the case to a special master. Id. at 493; see also

Fed. R. Civ. P. 53(a). Following an evidentiary hearing, the master recommended that
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the court distribute the money to the class members pro rata. Powell, 843 F. Supp. at

497-98. The master concluded that the class members were entitled to the distribution

both because they were not fully compensated 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 accounted for most of the money in the registry, that the parties set this money

aside to benefit unidentified class members, and that no new claimants had materialized

in ten years. Id. at 493, 499. The court made it clear, however, that its primary

concern was the fact that locating the individual class members for an additional

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 that, 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

were unable to agree on particulars), it ordered the parties to confer and to submit an

agreed-upon scholarship program to be administered by the Georgia-Pacific

Foundation. Id. at 499-500.

In June, 1994, the court issued an order approving a scholarship program

outlined by the parties, and several months later the court issued an order disbursing

the funds. Under the court's plan, the Georgia-Pacific Foundation will provide

scholarships to 112 students over ten years, and any remaining money will go to the

United Negro College Fund. Only black high school students who live in three 
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counties in Arkansas and three parishes in Louisiana are eligible for the scholarships.

(These areas were selected 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 the

money in the registry as "unclaimed funds." They contend instead that they are simply

seeking an additional distribution according to the terms of the consent decree. The

plaintiffs reason that, because the remaining money is attributable entirely either to

interest or to the contingency fund, they are entitled to all of it. They support their

argument with two provisions in the consent decree: First, the consent decree provides

that interest is to be included in the settlement fund and distributed to the class; second,

it names the plaintiffs' counsel as the trustee for the contingency 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 "unclaimed." See 2 H. Newberg and A. Conte, Newberg on

Class Actions § 10.13 at 10-35 (3d ed. 1992) (defining "unclaimed funds" as the

balance of a class recovery remaining after individual distribution). As we read the

consent decree, the parties did not intend for the provisions upon which the plaintiffs

rely to apply after the initial distribution of the settlement fund. In fact, a separate

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 either 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 court

correctly found that the money in the registry was "unclaimed" and that neither party

has a legal right to it.

III.
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Because neither party has a legal right to the unclaimed funds, the court correctly

turned to traditional principles of equity to resolve the case. There are four ways in

which courts have distributed unclaimed funds of this sort: Pro rata distribution to the

class members, reversion to the defendant, escheat to the government, and cy pres

distribution. See generally 2 Newberg and Conte, Newberg on Class Actions § 10.15

at 10-38, 10-39. Because neither party challenges the court's decision not to allow a

reversion 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 money

should have been distributed pro rata.

We note at the outset that this is not an easy case. Because of the difficulties

inherent in administering a settlement involving a class of over 2,000 members

(particularly in light of the number of years that have passed since the original

distribution), the district court's determination is entitled to a great deal of deference.

Accordingly, we will reverse only if the court's resolution was a clear abuse of

discretion. See, e.g., In re Folding Carton Antitrust Litigation, 744 F.2d 1252, 1255

(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 pres (sometimes called fluid-class) distribution has traditionally been used

in cases in which class members are difficult to identify or where they change

constantly, 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 Railway v. 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

transportation facilities.). In these cases, the court, guided by the parties' original

purpose, directs that the unclaimed funds be distributed "for the indirect prospective

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 the

courts of appeals. See, e.g., Six Mexican Workers v. Arizona Citrus Growers, 
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904 F.2d 1301, 1307-09 (9th Cir. 1990) (disapproving cy pres distribution to

Inter-American Foundation "for distribution in Mexico," id. at 1307); Wilson v.

Southwest Airlines, Inc., 880 F.2d 807, 809 (5th Cir. 1989) (rejecting cy pres

distribution to general charitable organization); and Folding Carton, 744 F.2d at 1254

(holding that the district court abused its discretion in using cy pres distribution of

unclaimed funds to establish an antitrust foundation).

In this case, however, we agree with the district court that a cy pres distribution

is potentially appropriate. The court found that it would be extremely difficult to

distribute the funds pro rata, and we cannot say that this factual finding is clearly

erroneous. Over a decade has elapsed since the initial distribution, and many class

members have probably relocated. (In fact, when the initial distribution occurred, over

125 checks were returned as undeliverable. Powell, 843 F. Supp. at 498.) A pro rata

distribution would be further complicated by the fact that GP (the party entirely

responsible for conducting the first distribution) is no longer responsible for locating

class members and distributing the funds. Id. at 498-99.

After carefully reviewing the record, we also conclude that the cy pres remedy

fashioned by the court was not an abuse of discretion. We emphasize that, partly

because the plaintiffs waited many years to seek distribution of the funds, the district

court was faced with a choice among "second bests." In this difficult situation, the

court carefully 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 interests

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 that

initial intention. Furthermore, because the scholarships will be made available only to

black students in the vicinity of Crossett, Arkansas, the program will likely also 
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promote the plaintiffs' desire to have the scholarships benefit the class members'

younger relatives.

IV.

The plaintiffs also challenge the district court's denial of their motion for

attorneys' fees. In denying the motion, the court relied on a provision in the consent

decree that provides class counsel with fees for ninety days following the initial

distribution. The plaintiffs assert, however, that this provision does not apply here and

that they are equitably entitled to additional fees because they have expended a great

deal of time and money to ensure that this final distribution reflects the purpose of the

consent decree. We agree. 

In our view, the work performed in this proceeding is analogous to

"postjudgment monitoring of a consent decree," which is "a compensable activity for

which counsel is entitled to a reasonable fee." Pennsylvania v. Delaware Valley

Citizens' 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 Fire

Fighters Association v. City of St. Louis, 96 F.3d 323, 332 (8th Cir. 1996), and

Association for 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 not

appropriate.

V.

For the foregoing reasons we affirm the judgment of the district court, but

remand the case with direction to award appropriate fees to the plaintiffs' counsel.
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A true copy.

Attest:

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