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Bill on class-action leftover funds raises questions about redirecting unidentified settlement money to state
Summary
A hearing on HB 6807 considered requiring leftover settlement funds from class actions be directed to the state general fund and capping attorneys’ fees; sponsors said the bill would prevent activist-driven settlements that divert funds to NGOs, while opponents warned it may not apply broadly and could push cases to federal court.
A bill to change how unclaimed or non‑distributed funds from class‑action settlements are handled drew testimony from its sponsor and legal observers in a brief Senate Judiciary hearing. The measure would require any settlement funds that cannot be distributed to identified class members to be deposited in the New Hampshire general fund rather than going to a third‑party organization, and it would put a cap on plaintiffs’ attorney fees tied to an established schedule.
The sponsor described “sue-and-settle” and related practices in which plaintiffs’ lawyers and aligned groups secure settlements that direct unclaimed funds to non‑governmental organizations, sometimes with tenuous ties to the harmed class. The sponsor said the bill aims to ensure leftover funds benefit the public instead of private groups and to limit excessive fee awards via a statutory fee schedule.
Several senators asked procedural and substantive questions about when residual funds would be declared unclaimable and who would determine the timeline for distribution. The sponsor said current court practice already allocates undistributed funds in certain cases and that this bill would redirect that portion to the state rather than to outside entities.
Opponents and some legal observers said most high‑value class actions are litigated in federal court, limiting the state legislature’s ability to alter outcomes for large, multi‑jurisdictional settlements. An attorney who has worked on class actions said diverting residual funds to the state could complicate negotiations and might dissuade parties from settling in state court, with the practical effect of moving more cases to federal venues.
The committee heard no final action on the bill during the session. Witnesses emphasized tradeoffs: proponents argued the bill would prevent activist-directed or commercially driven diversion of settlement proceeds; opponents said state-level reform may not reach the cases of most concern and could have unintended consequences for access to relief for victims.
