When judges get generous

Washington Post: Judge Harold Baer Jr., a federal judge in New York, presided two years ago over a class-action lawsuit filed by a group of fashion models that claimed modeling agencies colluded to keep representation fees artificially high. The litigants came to terms, and the agencies established a settlement fund of $21.8 million. After determining individual payouts and attorneys’ fees, the judge had roughly $6 million left over, in large part because not all those entitled to cuts could be located. Instead of giving the money back to the agencies or giving the identified members of the class higher shares, Judge Baer decided to dole out most of the money to groups that were likely to help models, including hospitals with programs that focused on women’s health issues and others that specialized in eating disorders and substance abuse.

Judge Baer, who didn’t respond to our request for comment, is not alone in his charitable impulses with other people’s money. As Adam Liptak of The New York Times reported, other judges have recently given “leftover” money from class actions to law schools, legal aid societies and religious organizations. Mr. Liptak also reported that some organizations even hire lobbyists to persuade judges to send the found money their way.

Distasteful

Federal judges are permitted to find other uses for excess funds, but giving the money away to favorite charities with little or no relation to the underlying litigation is inappropriate and borders on distasteful. In all but the rarest of circumstances, those funds should be made available to individual plaintiffs and not to outside organizations — no matter how worthy.

That is the aim of a proposal being weighed by the American Law Institute (ALI), an influential legal research and reform organization with significant sway over judges. The proposal, crafted by New York University law professor Samuel Issacharoff, strongly urges judges to parcel out excess funds to individual class members. Only when that is not possible should judges consider outside beneficiaries that involve “the same subject matter as the lawsuit” and that “reasonably” approximate “the interests being pursued by the class.”