Bankruptcy: Class-Action Settlement-Cy Pres Distribution-Disgorgement of Attorneys’ Fees

Petitioner filed a claim against debtor, which acted as class counsel in petitioner’s securities class action. Debtor’s chosen claims administrator fraudulently asserted claims of more than $5.8 million. After distributions to the class, debtor successfully obtained a cy pres distribution and supplemental fee award from the remaining settlement fund. Petitioner sought disgorgement of attorneys’ fees, alleging debtor’s negligence from supervision of the claims administrator.

Where the cy pres distribution was returned for distribution to the class and where debtor’s fees during its alleged negligent supervision of the claims administrator were earned outside the statute of limitations, the district court correctly affirmed the bankruptcy court’s denial of petitioner’s claim.

Judgment is affirmed in part and reversed in part.

In re: Green Jacobson, P.C. (MLW No. 72534/Case No. 18-1134 – 11 pages) (U.S. Court of Appeals, Eighth Circuit, Loken, J.) Appealed from U.S. District Court, Eastern District of Missouri