Opinion ID: 677610
Heading Depth: 2
Heading Rank: 1

Heading: In gross judgment.

Text: 110 It is possible that some of the individual investors in one or more of the plaintiff classes will not make claims against AY, and that therefore there may be excess damages funds after distribution. We have held that in such situations the district court is required to formulate a procedure for distributing unclaimed funds. Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1307 (9th Cir.1990). However, neither the district court's final judgment nor any subsequent order has formulated such a procedure. AY contends that the district court should amend its judgment to include a provision for excess funds to revert to AY. 111 We agree with AY that we must remand to the district court to formulate a procedure for the distribution of unclaimed damages, but we do not agree that the unclaimed amounts must necessarily revert to AY. We have held that a district court's alternatives for such a procedure include: (1) pro rata distribution of the funds to located class members; (2) cy pres or fluid distribution, (3) escheat to the government, and (4) reversion to the defendant. Id. In this particular case, we reject the first alternative because individual plaintiffs' recoveries on the Sec. 10(b), Sec. 11, and common law claims must be limited to their actual damages. See 15 U.S.C. Sec. 78bb(a) (1988) (recovery under Sec. 10(b) limited to actual damages on account of the act complained of.); 15 U.S.C. Sec. 77k(e) (1988) (recovery under Sec. 11 limited to difference between amount paid for security and value of security at time of suit or price at which security disposed of in market before suit, and in no case shall exceed offering price); Cal.Civ.Code Sec. 3343 (West Supp.1993) (recovery under common law fraud limited to difference between actual value of property parted with and actual value of property received, plus any additional damage arising from the particular transaction). Distributing the unclaimed funds pro rata would thus give the claiming class members a windfall; it might also encourage the bringing of class actions likely to result in large uncollected damage pools and create conflicts of interest between named plaintiffs and other class members. See Van Gemert v. Boeing Co., 553 F.2d 812, 815-16 (2d Cir.1977). 22 Thus, any excess unclaimed damages should not be distributed among the claiming plaintiffs. 112 However, the district court may select whichever of the other three alternatives it feels is most appropriate, consistent with the law of this Circuit. See Six Mexican Workers, 904 F.2d at 1307-08 (cy pres distribution appropriate for the limited purpose of distributing unclaimed funds; escheat to the government appropriate when such procedure serves the deterrence and enforcement goals of the substantive federal statute; reversion to the defendant appropriate when deterrence is not a goal of the statute or is not required by the circumstances). 113