Democratic Cent. Committee of District of Columbia v. Washington Metropolitan Area Transit Com'n

Decision Date31 May 1996
Docket NumberNos. 21865,24415 and 24428,24398,s. 21865
PartiesDEMOCRATIC CENTRAL COMMITTEE OF the DISTRICT OF COLUMBIA, et al., Petitioners, v. The WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION, Respondent, D.C. Transit System, Inc., Intervenor.
CourtU.S. Court of Appeals — District of Columbia Circuit

Leonard N. Bebchick, Washington, DC, for Washington Metropolitan Area Riders' Fund.

Landon G. Dowdey, for Democratic Central Committee of the District of Columbia, et al.

Lutz Alexander Prager, Assistant Deputy Corporation Counsel, for the District of Columbia.

Bruce P. Heppen and Karen S. Karas, Assistant General Counsel, for intervenor Washington Metropolitan Area Transit Authority.

Before: BUCKLEY, RANDOLPH and TATEL, Circuit Judges.

PER CURIAM:

On November 30, 1995, this court issued an order directing NationsBank Trust Company, N.A., the Bank of New York's predecessor as trustee of the Riders' Fund, to solicit recommendations regarding the disposition of the Riders' Fund and the Bebchick Fund (collectively, the "restitutionary funds"). After reviewing the recommendations, the court has decided to consolidate the Riders' Fund and the Bebchick Fund pursuant to Article Two of the Riders' Fund Trust Agreement, see Democratic Cent. Comm. of the District of Columbia v. Washington Metro. Area Transit Comm'n, 41 F.3d 757, 758-59 (D.C.Cir.1994), and to transfer all the assets of the restitutionary funds, both liquidated and unliquidated, to the Washington Metropolitan Area Transit Authority ("WMATA"), subject to the following two conditions: first, the restitutionary funds must not be the basis for any reduction in the contributions due from the jurisdictions that fund WMATA; and second, with two exceptions noted below, the funds must be spent exclusively to purchase new buses in accordance with WMATA's January 19, 1996 letter to Leonard Bebchick, Esquire.

I. BACKGROUND
A. Regulatory Authority Over Bus Service

In 1960, Congress gave its consent to Virginia, Maryland and the District of Columbia (the "signatories") to enter into the Washington Metropolitan Area Transit Regulation Compact (the "Compact"). Pub.L.No. 86-794, tit. I, 74 Stat. 1031, 1031-35 (1960) (codified as amended at D.C. CODE ANN. § 1-2411 (1992)). The Compact established the Washington Metropolitan Area Transit Commission (the "Commission") and gave it regulatory authority over, inter alia, privately owned bus companies providing passenger transportation services in the metropolitan area. Id.

In 1966, Congress and the signatories added a third title to the Compact, establishing WMATA but expressly prohibiting it from performing, directly or through a contractor, transit service by bus. Washington Metropolitan Area Transit Authority Compact ("Title III"), Pub.L.No. 89-774, tit. III, art. XIII, 80 Stat. 1324, 1344 (1966) (codified as amended at D.C. CODE ANN. § 1-2431(1992)). Congress lifted this prohibition in 1972 when it amended Title III. National Capital Area Transit Act of 1972 (the "Act"), Pub.L.No. 92-517, 86 Stat. 999 (1972). The Act directed WMATA to initiate negotiations with, among others, D.C. Transit System, Inc. ("D.C. Transit") for the acquisition of its capital stock or its transit facilities used in connection with bus service in the Washington metropolitan area. Pub.L.No. 92-517, § 102(a), 90 Stat. 999, 1001. Since the acquisition of the bus companies, WMATA has been exclusively responsible for the provision of transportation services by bus in the metropolitan area.

B. The Restitutionary Funds
1. The Bebchick Fund

The history of the Bebchick Fund begins in 1968 when this court set aside three Commission orders increasing D.C. Transit's fares and ordered the company to make restitution to the bus riders in the Washington metropolitan area for excessive fares collected. See Williams v. Washington Metro. Area Transit Comm'n, 415 F.2d 922, 938-43 (D.C.Cir.1968), cert. denied, 393 U.S. 1081, 89 S.Ct. 860, 21 L.Ed.2d 773 (1969); see also Bebchick v. Washington Metro. Area Transit Comm'n, 485 F.2d 858, 860-61 (D.C.Cir.1973). In 1974, representatives of the bus riders sought to collect the restitution due them from condemnation proceeds belonging to D.C. Transit then under the control of the United States District Court for the District of Columbia. In an order dated December 19, 1974, the district court distributed to D.C. Transit all but $1,461,756 of the condemnation proceeds, retaining that amount in an account until all appeals of the restitution award were settled.

This court assumed custody of the account containing the withheld condemnation proceeds, known as the "Bebchick Fund," by order dated December 2, 1975. In 1979, all appeals of the restitution award became moot when D.C. Transit agreed that the bus riders were entitled to the Bebchick Fund as restitution for excessive fares it had charged them. By 1986, all issues regarding the restitution owed the bus riders in connection with the excessive fares in this case had been settled. See Bebchick v. Washington Metro. Area Transit Comm'n, 805 F.2d 396, 399-401 (D.C.Cir.1986). As of April 30, 1996, the Bebchick Fund contained $6,560,588.17. This court has never relinquished custody of the Bebchick Fund, nor has it ever appointed a trustee for the fund.

2. The Riders' Fund

The Riders' Fund was established pursuant to a compromise agreement, approved by this court's order of February 26, 1990, wherein D.C. Transit agreed to pay $9,200,000 in restitution into the Riders' Fund for the benefit of bus riders. See Democratic Cent. Comm. of the Dist. of Columbia v. Washington Metro. Area Transit Comm'n, 3 F.3d 1568, 1569 (D.C.Cir.1994). This court also adopted and executed a declaration of trust agreement, effective as of February 26, 1990, which, inter alia, appointed a trustee of the Riders' Fund to make "all reasonable efforts to collect all amounts to which the Trust is or becomes entitled and to realize the fair value of the Trust Assets." Democratic Cent. Comm. of the Dist. of Columbia, 41 F.3d at 759. On March 30, 1993, the Riders' Fund obtained a judgment against D.C. Transit in the amount of $4,976,124.79, the balance of unpaid restitution. The Bank of New York is currently trustee of the Riders' Fund. As of April 30, 1996, the Riders' Fund contained $4,850,459.80. The nonliquidated assets of the Riders' Fund consist of various interests in real estate and the judgment against D.C. Transit that the trustee is currently seeking to enforce.

On November 30, 1995, this court issued an order to the trustee of the Riders' Fund "to solicit, on behalf of the Riders' Fund and the Bebchick Fund, ... recommendations of the plaintiffs, the Washington Metropolitan Area Transit Commission [WMATA], the District of Columbia Government, and existing organizations representing users of mass transit services in the D.C. area as to the best disposition of these assets." In response to the trustee's solicitation, the court received sixteen recommendations.

II. DISCUSSION

Of the many recommendations submitted to the court regarding the disposition of the restitutionary funds, none suggested giving the farepayers an opportunity to prove and collect the amounts they were overcharged by D.C. Transit. Although a proof-of-claim procedure might usually be considered the most precise and direct method of compensation, the parties, special interest groups, and individual citizens that submitted recommendations correctly recognized that using such a procedure in this case would not be feasible. More than a quarter of a century has passed since D.C. Transit collected the excessive fares; identifying, locating, and notifying all those overcharged after so much time would be very difficult, if not impossible. The prohibitive cost of notification, together with the cost of distribution, would greatly reduce, or even exceed, the total amount of the funds. Even if such an opportunity were given, it is doubtful whether any of the overcharged farepayers would avail themselves of it; many would likely consider the potential of recovering a small award not worth the considerable effort of establishing a claim arising out of numerous minor transactions that occurred 25 years ago. See Market St. Ry. v. Railroad Comm'n, 28 Cal.2d 363, 171 P.2d 875 (1946) (claims by street-car riders for fare overcharges amounted to less than two percent of fund consisting of fare overcharges). Because of the great cost and likely failure of a proof-of-claim procedure, another method of distributing the restitutionary funds is needed to benefit the overcharged farepayers.

In class actions, some courts have applied the equitable doctrine of cy pres to undistributed damage or settlement funds. 1 See State v. Levi Strauss & Co., 41 Cal.3d 460, 224 Cal.Rptr. 605-611, 715 P.2d 564, 570 (1986). That doctrine permits such funds to be distributed to the "next best" class when the plaintiffs cannot be compensated individually. The object of applying the funds to the "next best" class is to parallel the intended use of the funds as nearly as possible by maximizing the number of plaintiffs compensated. See DeJarlais, supra note 1, at 740; Stewart R. Shepherd, Comment, Damage Distribution in Class Actions: The Cy Pres Remedy, 39 U. CHI L. REV. 448, 457 (1972). In the context of class actions, the cy pres doctrine is referred to as "fluid recovery." 2 The "next best" class in this case would be the current bus riders in the service region from which the excessive fares were collected. See Shepherd, supra, at 458 n. 44.

Fluid recovery offers four approaches to the distribution of unclaimed settlement or damage funds: (1) reduction of the defendant's prices, (2) escheat to a governmental body for either specified or general purposes, (3) establishment of a "consumer trust fund," and (4) "claimant fund sharing." See Levi Strauss, 224 Cal.Rptr. at 612, 715 P.2d at 571. Under the price...

To continue reading

Request your trial
42 cases
  • Keepseagle v. Perdue
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • May 16, 2017
    ... ... 16-5190 United States Court of Appeals, District of Columbia Circuit. Argued January 13, 2017 ded May 16, 2017 William A. Sherman, Washington, DC, argued the cause for appellant. With him on ... of this claim, Appellant Mandan cites Democratic Central Committee of the District of Columbia v. Washington Metropolitan Area Transit Commission , 84 F.3d 451 (D.C. Cir ... Cf. Democratic Cent. Comm. v. Wash. Metro. Area Transit Comm'n , 84 ... ...
  • Schwab v. Philip Morris USA, Inc.
    • United States
    • U.S. District Court — Eastern District of New York
    • September 25, 2006
    ... ... 04-CV-1945(JBW) ... United States District Court, E.D. New York ... September 25, 2006 ...    Cohen, Milstein, Hausfeld & Toll, Washington, DC by Benjamin D. Brown, Paul T. Gallagher, ... by the United States in the District of Columbia provide substantial support for plaintiffs' ... 401 advisory committee notes (1972) (citations omitted) ... v. Manhattan Cent. Capital Corp., 327 F.Supp.2d 159, 163-64 ... Metropolitan Life Ins. Co., 208 Ill.2d 414, 281 Ill.Dec. 554, ... , knowledge, or training related to general area, not to specific question before trier of fact) ... Auth., 802 F.2d 405 (11th Cir.1986); Democratic Cent. Comm. of D.C. v. Wash. Metro. Area Transit ... ...
  • Sulcov v. 2100 Linwood Owners, Inc.
    • United States
    • New Jersey Superior Court — Appellate Division
    • June 23, 1997
    ... ... of his 1994 testimony, the admissions committee that interviewed prospective buyers routinely ... York had a history of reported cases in this area. After review of the New York law, he concluded ... Democratic Cent. Comm. v. Washington Metropolitan Area ... ...
  • Sheikh v. Republic of the Sudan, Civil Action No. 14-2090 (JDB)
    • United States
    • U.S. District Court — District of Columbia
    • August 31, 2020
    ... ... 17-1630 (JDB) United States District Court, District of Columbia. Signed August 31, ... Daniel Sage Ward, Ward & Berry PLLC, Washington, DC, Brian Mathew Bush, Pro Hac Vice, Maria L ... ...
  • Request a trial to view additional results
2 books & journal articles
  • Antitrust Class Action Settlements
    • United States
    • ABA Antitrust Library Antitrust Class Actions Handbook
    • January 1, 2018
    ...Baby Prods. Antitrust Litig., 708 F.3d 163, 168 (3d Cir. 2013) (quoting Democratic Cent. Comm. v. Washington Metro. Area Transit Comm’n, 84 F.3d 451, 455 n.1 (D.C. Cir. 1996)); see also Marshall v. NFL, 787 F.3d 502, 521 (8th Cir. 2015) (Smith, J. concurring) (describing the development of ......
  • Table of Cases
    • United States
    • ABA Antitrust Library Antitrust Class Actions Handbook
    • January 1, 2018
    ...2005), 122 Delta Airlines v. Butler, 383 F.3d 1143 (10th Cir. 2004), 136 Democratic Cent. Comm. v. Washington Metro. Area Transit Comm’n, 84 F.3d 451 (D.C. Cir. 1996), 236 344 Class Actions Handbook Deposit Guar. Nat. Bank v. Roper, 445 U.S. 326 (1980), 261 Derzon v. Appleton Papers, Inc., ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT