In Re Airline Ticket v. v. ( 2002 )


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  •                     United States Court of Appeals
    FOR THE EIGHTH CIRCUIT
    ___________
    No. 02-1639
    ___________
    In re: Airline Ticket Commission         *
    Antitrust Litigation                     *
    ____________________                     *
    *
    *
    Travel Network, Ltd., a New Jersey       *
    corporation, individually and on behalf *
    of all others similarly situated,        *
    *
    Plaintiff/Appellee,        *
    *
    American Society of Travel Agents,       *   Appeal from the United States
    *   District Court for the
    Plaintiff/Appellant,       *   District of Minnesota.
    *
    National Association for Public Interest *
    Law,                                     *
    *
    Intervenor on Appeal,      *
    *
    v.                                *
    *
    United Air Lines, Inc.; American         *
    Airlines, Inc.; Continental Airlines,    *
    Inc.; Delta Air Lines, Inc.; Northwest *
    Airlines, Inc.; USAirways, Inc.,         *
    *
    Defendants.                *
    ___________
    Submitted: September 9, 2002
    Filed: October 4, 2002
    ___________
    Before LOKEN, FAGG, and RILEY, Circuit Judges.
    ___________
    RILEY, Circuit Judge.
    This class action lawsuit was filed against several major airlines by travel
    agencies, individual travel agents, and the American Society of Travel Agents
    (ASTA). The case settled in 1996. After the class members were paid under the
    settlement agreement, some settlement funds remained unclaimed and undistributed.
    The district court initially ordered a cy pres distribution of these funds to several
    organizations, including educational and charitable institutions in the vicinity of
    Minneapolis, Minnesota. We reversed that decision on appeal. In re Airline Ticket
    Comm'n Antitrust Litig., 
    268 F.3d 619
     (8th Cir. 2001). When the case was remanded,
    the district court ordered the funds distributed to the National Association for Public
    Interest Law (NAPIL). Today we reverse that decision as well. We remand the case
    for a distribution of the unclaimed funds to travel agencies in Puerto Rico and the
    U.S. Virgin Islands and, if necessary, further distribution consistent with our two
    opinions in this case.
    I.    BACKGROUND
    The named plaintiffs brought this class action lawsuit on behalf of travel
    agencies and agents, alleging violations of the Sherman Antitrust Act, 
    15 U.S.C. §§ 1
     & 2. They claimed seven major airlines colluded in order to place caps on
    commissions paid to travel agents. By 1996, all of the original parties had settled the
    lawsuit. Because the district court could not locate all of the class members,
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    approximately $500,000 of the settlement funds was left undistributed. (That figure
    has now grown to approximately $600,000.)
    ASTA proposed that the district court distribute the unclaimed funds to 578
    travel agencies in Puerto Rico and the U.S. Virgin Islands. ASTA first argued that
    the travel agencies were included in the class of plaintiffs, which the class
    certification order limited to "travel agencies in the United States." ASTA also
    argued that if the Puerto Rican and U.S. Virgin Islands travel agencies were not class
    members, the district court should nevertheless distribute the unclaimed funds to
    them, as the next best recipients, under the doctrine of cy pres. The district court
    rejected both arguments and ordered that the unclaimed funds be distributed to a list
    of organizations recommended by liaison counsel. This list included three Minnesota
    law schools and several Minnesota charities.
    ASTA appealed, and we affirmed, in part, and reversed, in part. In re Airline
    Ticket Comm'n Antitrust Litig., 
    268 F.3d at 626
    . We affirmed the district court's
    determination that the travel agencies in Puerto Rico and the U.S. Virgin Islands were
    not part of the class. 
    Id. at 622-25
    . However, we set aside the cy pres award. 
    Id. at 626
    . In reversing, we considered ASTA's proposal that the funds be distributed to
    agencies in Puerto Rico and the U.S. Virgin Islands, but wondered "whether travel
    agencies in other United States territories and possessions, such as Guam or American
    Samoa, which were affected by the caps also would be entitled to a cy pres
    distribution." 
    Id.
     Finding the district court had not "carefully weighed all of the
    considerations" necessary to tailor an award to the parties' original intentions, we
    remanded the case for "a distribution or distributions more closely related to the
    origin of this nation-wide class action case concerning caps on commissions paid to
    travel agencies." 
    Id.
    On remand, ASTA again sought to have the funds distributed to travel agencies
    in Puerto Rico and the U.S. Virgin Islands. Counsel for ASTA also informed the
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    district court of ASTA's "current understanding that travel agents in Guam and
    American Samoa were not in fact subject to the airline commission caps." ASTA
    suggested that counsel for the airlines could confirm its understanding. No contrary
    evidence was offered, and the district court did not otherwise receive any information
    contradicting this statement.
    NAPIL also sought to receive the funds.1 In its application, NAPIL explained
    its commitment to public interest law and described some of its programs. NAPIL
    also documented its success in obtaining cy pres distributions from other courts.
    NAPIL did not, however, draw any connection between its purposes and the subject
    matter of this class action lawsuit.
    The district court decided to distribute all of the unclaimed funds to NAPIL.
    The court did not address ASTA's statement that agents in Guam and American
    Samoa were not subject to the caps. Instead, it held ASTA's proposal would be "an
    inappropriate distribution for reasons previously discussed and approved by the Court
    of Appeals in its opinion." Determining that "there simply are no immediate,
    obvious, or automatic entities clearly entitled to the funds," the court awarded the
    funds to NAPIL. The district court ordered the money "be used to support attorneys
    providing legal services to low income clients by paying the interest on grant
    recipients' outstanding student loans."
    ASTA now appeals the district court's award to NAPIL, arguing that the district
    court abused its discretion and did not follow our mandate. NAPIL has intervened
    on appeal. First, NAPIL contends ASTA lacks standing to assert the interests of
    1
    Hamline University School of Law (Hamline) applied for the unclaimed funds
    as well. Hamline proposed to use the funds for yearly symposia on the continuing
    legal implications of the September 11, 2001, terrorist attacks and antitrust issues
    facing the airlines. The district court did not award any of the unclaimed funds to
    Hamline. Hamline has not appealed that decision.
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    travel agencies in Puerto Rico and the U.S. Virgin Islands. Second, NAPIL contends
    those travel agencies are not appropriate recipients of the funds. Finally, NAPIL
    concludes that its own nationwide work in the area of public interest law makes it a
    suitable cy pres recipient. Neither the defendant airlines nor any of the other
    plaintiffs have taken a position on who should receive the unclaimed funds.
    II.    DISCUSSION
    A.     Standing of ASTA
    As an initial matter, we reject NAPIL's assertion that ASTA lacks standing to
    contest the distribution. According to the complaint, ASTA has members in "about
    16,000 locations throughout the continental United States, Hawaii, Alaska, Puerto
    Rico, and the U.S. Virgin Islands." (The emphasis is our own.) ASTA has standing
    to bring this appeal on behalf of its members in Puerto Rico and the Virgin Islands,
    whose individual participation is not required to resolve the cy pres issue. See Hunt
    v. Wash. State Apple Adver. Comm'n, 
    432 U.S. 333
    , 343-44 (1977).
    B.   The Cy Pres Distribution
    We generally review a district court's cy pres distribution for an abuse of
    discretion. In re Airline Ticket Comm'n Antitrust Litig., 
    268 F.3d at 625
    . On
    remand, however, the district court's discretion is limited by the terms of our prior
    mandate, and we retain authority to determine whether the terms of the mandate were
    scrupulously carried out. See Duncan Energy Co. v. United States Forest Serv., 
    109 F.3d 497
    , 499 (8th Cir. 1997).
    The cy pres doctrine takes its name from the Norman French expression, cy
    pres comme possible, which means "as near as possible." In re Airline Ticket
    Comm'n Antitrust Litig., 
    268 F.3d at
    625 (citing Democratic Cent. Comm. v.
    Washington Metro. Area Transit Comm'n, 
    84 F.3d 451
    , 455 n.1 (D.C. Cir. 1996)).
    The doctrine originated to save testamentary charitable gifts that would otherwise fail.
    See Note, Damage Distribution in Class Actions: The Cy Pres Remedy, 39 U. Chi.
    -5-
    L. Rev. 448, 452 (1972). Under cy pres, if the testator had a general charitable intent,
    the court will look for an alternate recipient that will best serve the gift's original
    purpose. See 
    id.
     In the class action context, it may be appropriate for a court to use
    cy pres principles to distribute unclaimed funds. In such a case, 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. See In re Airline Ticket Comm'n Antitrust Litig., 
    268 F.3d at
    625-
    26.
    In Powell v. Georgia-Pacific Corporation, 
    119 F.3d 703
     (8th Cir. 1997), we
    approved a cy pres distribution that is instructive in this case. Powell involved a class
    of African American workers who alleged the Georgia-Pacific Corporation had
    violated their rights under Title VII. 
    Id. at 704
    . After the class members were
    compensated, nearly $1 million in settlement funds remained. 
    Id. at 704-05
    . Rather
    than distribute the remaining funds to class members, the district court ordered the
    parties to design a scholarship program to be administered by the Georgia-Pacific
    Foundation. 
    Id. at 705
    . Under the program, scholarships were to be awarded over
    ten years to 112 African American high school students in the three counties in
    Arkansas and three parishes in Louisiana where most of the class members lived, with
    the remaining proceeds going to the United Negro College Fund. 
    Id.
     Not only did
    the scholarship program carry out the plaintiffs' desire to have scholarships benefit
    their younger relatives, it addressed the subject matter of the lawsuit – the
    employment opportunities available to African Americans living near Georgia-
    Pacific's facilities in Crossett, Arkansas. See 
    id. at 706-07
    ; Powell v. Georgia-Pacific
    Corp., 
    843 F. Supp. 491
    , 494 (W.D. Ark. 1994).
    The last time this case was before us, we drew upon Powell to emphasize the
    importance of tailoring a cy pres distribution to the nature of the underlying lawsuit.
    In reversing the district court's initial distribution of funds to local charities, we
    suggested that the court failed to consider the full geographic scope of the case.
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    Thus, we quoted from the Seventh Circuit's decision in Houck v. Folding Carton
    Admin. Comm., 
    881 F.2d 494
    , 502 (7th Cir. 1989), which remanded for the district
    court to "consider to some degree a broader nationwide use of its cy pres discretion"
    because the case involved a nationwide harm. In re Airline Ticket Comm'n Antitrust
    Litig., 
    268 F.3d at 626
    . In addition, we said nothing to discourage a distribution to
    travel agencies in Puerto Rico and the U.S. Virgin Islands, which labored under the
    same allegedly unlawful caps as the class members in the United States.2 Rather, we
    pointed out that travel agencies in other U.S. territories and possessions, such as
    Guam and American Samoa, might also be entitled to a portion of the unclaimed
    funds. 
    Id.
     In light of this reasoning, we remanded the case for "a distribution or
    distributions more closely related to the origin of this nation-wide class action." 
    Id.
    The district court did not fully carry out our mandate. Considering the
    evidence and the options before the district court, travel agencies in Puerto Rico and
    the U.S. Virgin Islands were clearly the next best recipients of the funds. The lawsuit
    challenged the caps on ticket commissions for flights "within and between the
    continental U.S., Alaska, Hawaii, Puerto Rico, and the U.S. Virgin Islands." Travel
    agencies in Puerto Rico and the U.S. Virgin Islands, although not members of the
    class, were subject to the same allegedly unlawful caps. A cy pres distribution to
    these agencies would relate directly to the antitrust injury alleged in this lawsuit and
    settled by the parties. In contrast, as the district court appeared to recognize, NAPIL
    cannot claim any relation to the substantive issues in this case. Under these
    circumstances, following the equitable considerations underlying the cy pres doctrine
    and our prior mandate in this case, the district court should have ordered the
    unclaimed funds distributed, in the first instance, to the travel agencies proposed by
    ASTA.
    2
    Our ruling that those travel agencies were not specific members of the class
    does not foreclose such a distribution. This much should be clear from Powell, where
    we approved a distribution of scholarship funds for the benefit of the younger
    relatives of class members. See Powell, 
    119 F.3d at 707
    .
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    III.   CONCLUSION
    Accordingly, we reverse the district court's order and remand the case for a new
    cy pres distribution. The unclaimed funds should first be distributed on a
    proportional basis to the travel agencies in Puerto Rico and the U.S. Virgin Islands
    which were subject to the caps. We leave the details of this distribution to the district
    court's discretion. We also leave it to the district court to determine a recipient for
    any funds that may remain after distribution to these travel agencies. Such a recipient
    must relate, as nearly as possible, to the original purposes of the class action and its
    settlement. We recognize that the court's discretion in this regard must be guided, in
    part, by the amount of the remaining unclaimed funds and the costs of searching for
    another qualified recipient.
    A true copy.
    Attest:
    CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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