Opinion ID: 3155290
Heading Depth: 3
Heading Rank: 1

Heading: Western Union’s Interest in the Funds

Text: We first consider whether Western Union has a legally protected interest in the CSF or the separate indemnity fund that will be injured if an excessive attorney-fee award is paid from the CSF. Western Union has never disputed that the unclaimed transfer money it will deposit into the CSF belongs to the class members alone. As Western Union explains in its opening brief on appeal, class members who file claims “are merely getting their own, undisputed funds returned to them.” The CSF is thus composed entirely of customer funds to which Western Union has disclaimed any present interest. And, in any event, the district court’s approval of the settlement agreement “stripped [Western Union] of any present interest in the fund.” See Boeing, 444 U.S. at 481 n.7. Instead “[t]he members of the class, whether or not they assert their rights, are at least the equitable owners of their respective shares in the recovery.” Id. at 481–82. Thus, Western Union has no interest in the CSF itself that would be invaded by diminution of that fund. 9 What Western Union terms its “reversionary” interest in the CSF is, in fact, an interest in reimbursement or indemnification payments from a separate fund that is created and funded only after all claims and fees are paid from the CSF. The settlement agreement provides “if there are remaining monies in the Class Settlement Fund after payment of all valid claims, administration fees, Class Representative incentive awards, and attorneys’ fees and expenses, then the Parties agree that any remaining monies and accumulated interest will be put into a cy pres fund pursuant to the Court’s Order.” Per the district court’s order, the money in the cy pres fund will be first offered to the States and, if refused, will be placed in the separate “indemnity” fund from which Western Union can seek reimbursement for costs and judgments incurred in future litigation by the objecting States. Thus, by the terms of the settlement agreement, Western Union’s interest is in payments from this separate indemnity fund, not from the CSF, and not from the intervening cy pres fund. Importantly, this separate indemnity fund is created only after class claims, attorney fees, and other costs of the settlement have been paid from the CSF, a new cy pres fund has been created, and one or more States have refused payment or initiated litigation against Western Union. The settlement agreement and district court’s order therefore contemplate a fund contingent upon the outcome of these intermediate steps and limited to the excess available to create the indemnity fund; no provisions guarantee an indemnity fund of a particular size or proscribe the payment of fees beyond a certain point. Western Union’s interest in payments from that fund is thus likewise contingent and limited. Under these facts, we cannot agree the 10 settlement agreement or the district court’s order confers on Western Union a legally protectable interest in a larger indemnity fund. Western Union relies on Boeing Company v. Van Gemert, 444 U.S. 472 (1980), to argue it has standing by virtue of its interest in payments from the indemnity fund. Boeing involved a class action brought by holders of registered debentures to recover losses resulting from Boeing’s failure to provide proper notice that those debentures could be redeemed on favorable terms. 444 U.S. at 474. The district court entered a judgment assessing damages against Boeing with respect to the class as a whole and ordered Boeing to deposit that amount into escrow at a commercial bank. Id. at 476. Class members could then recover their individual share of the award through a special master appointed by the court. Id. Boeing claimed an interest in the return of any unclaimed funds. Id. at 477. The Supreme Court entertained Boeing’s challenge to the scope of an attorney-fee award paid from the settlement fund, observing that Boeing had “an interest, arising from its colorable claim for the return of excess money, in whether attorney’s fees could be assessed against the entire fund” as opposed to only that portion of the settlement fund actually claimed by class members. Id. at 481 n.7. Western Union claims it has “much more than the ‘colorable claim’ asserted by Boeing” because the district court’s order provides for indemnification of Western Union’s costs of defense. But the district court’s order here gives Western Union no right to the return of excess funds in the CSF, the cy pres fund, or the indemnity fund. Instead the settlement provides a much more limited right to reimbursement of 11 costs and judgments actually incurred, well after amounts have been expended to satisfy class claims, attorney fees, settlement expenses, class representative fees, and payments to settling States. And unlike in Boeing, the settlement fund here was comprised of amounts belonging to the class members, not to Western Union. We therefore do not agree that Western Union is in the same position as the defendant in Boeing, and Boeing does not alter our conclusion that Western Union’s interest in payments from the indemnity fund is insufficient to give it standing to challenge the award of fees from the CSF.