To paraphrase the California Supreme Court, damage distribution poses special problems in indirect purchaser or consumer class actions. Often, proof of individual damages is not feasible, consumers are not likely to have retained records for long periods of time and, because the subject products have moved through a distribution chain and did not deal directly with the defendant, the end-buyer is difficult to identify and compensate. In response to these problems, the courts have turned to the equitable doctrine of cy pres. This doctrine originated in the law of charitable trusts. Where compliance with the literal terms of a charitable trust became impossible, the funds would be put to “the next best use,” in accord with the dominant charitable purposes of the donor.
In the class action context, the cy pres doctrine is generally denominated “fluid recovery.” Fluid recovery is used to fulfill the purposes of the antitrust and unfair competition laws or to promote justice for all. Fluid recovery enables the policies if disgorgement and deterrence. Without fluid recovery, defendants may be permitted to retain ill gotten gains simply because their conduct harmed large numbers of people in small amounts instead of small numbers of people in large amounts.
The Mogin Law Firm, P.C. has handled numerous cases that used fluid recovery resulting in millions of dollars being used to support charities and other non-profit institutions such as medical research, children’s hospitals, child advocacy, orphanages, community clinics, food banks, education, legal aid societies, consumer advocacy, environmental, MADD, the arts, museums, military, law enforcement and veterans groups. Some recent examples appear below: