More Lessons from the Laboratories : Cy Pres Distributions in Parens Patriae Antitrust Actions Brought by State Attorneys General

"More Lessons from the Laboratories: Cy Pres Distributions in Parens Patriae Antitrust Actions Brought by State Attorneys General." The structure of the article is outlined in the Table of Contents. First, the article introduces a problem - the denial of an effective remedy for consumers overcharged by antitrust conspiracies, then it describes the legislative solution and identifies the unintended consequences that followed. Next, it proposes two alternative means to resolve the newly discovered issue and, finally, structures a proposed test for courts seeking to order the most efficient and effective remedy for consumers in these cases. The article explains that the Hart-Scott-Rodino Antitrust Improvements Act was adopted to fill a gap in antitrust remedies, which had made treble damages practically unavailable to consumers in antitrust cases. The legislative solution empowered state Attorneys General to act as parens patriae on behalf of their citizens in federal antitrust actions and to recover treble damages for them. The statutory reform that opened the courthouse doors to consumer antitrust actions carried with it the seeds of another problem: the difficulty of distributing monetary relief to the unidentified citizens for whose benefit the action was brought. To deal with that unintended consequence, the ancient equitable doctrine of cy pres was pressed into action. The cy pres theory, directing the undistributable remainder of a fund to a "next best" alternative recipient, has been expanded in some cases to distribute the entire corpus of the fund to court-approved charities. The goal in these cases is to provide indirect benefits for the represented consumers, through the services of charitable organizations, in lieu of direct restitution. I analyze two recent cases that exemplify this phenomenon, both alleging overcharges of a few dollars per pair on popular brands of tennis shoes purchased by millions of consumers. I propose a four-part test for determining when direct restitution is unworkable and the comprehensive cy pres theory should be employed as an alternative. Finally, I describe another route to return value directly to consumers that should be considered as a creative alternative to cy pres distributions. Thoughtful application of the test and consideration of various alternative distribution options is consistent with the goals of the statute and should be entertained by the parties in proposing distribution plans and courts in approving such proposals. The large size of these parens patriae antitrust cases, involving thousands of consumers and claims in the millions of dollars, together with their frequency, makes this issue important for scholars, practitioners and courts. My access to unpublished opinions and court documents, cited in the notes, allows a comprehensive treatment of this subject