Klier v. Elf Atochem North America, Inc.

This appeal arose from the settlement of a class action where defendant paid substantial sums for res judicata protection from the claims of persons assertedly injured by the toxic emissions of an industrial plant. The monies were allocated among three subclasses, one of which was to receive medical monitoring. Upon the monitoring program's completion, substantial sums remained unused. The district court denied the settlement administrator's request to distribute the unused medical-monitoring funds to another subclass of persons suffering serious injuries. Instead, the district court repaired to the doctrine of cy pres and ordered that the money be given to three charities suggested by defendant and one selected by the district court. The court held that the district court abused its discretion by ordering a cy pres distribution in the teeth of the bargained-for-terms of the settlement agreement, which required residual funds to be distributed within the class. The court reversed the district court's order distributing the unused medical-monitoring funds to third-party charities and remanded with instructions that the district court order that the funds be distributed to the subclass comprising the most seriously injured class members.