Valencia Peralta v. Grana y Montero S.A.A. et al

Filing 137

ORDER denying 136 Motion for Disbursement of Funds. The Letter Motion for Disbursement of Funds is denied without prejudice. So Ordered by Magistrate Judge Steven Tiscione on 3/5/2025. (MJG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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In re GRAÑA Y MONTERO S.A.A.
SECURITIES LITIGATION
MEMORANDUM AND ORDER
17-CV-1105 (LDH) (ST)
This Document Relates to:
ALL ACTIONS.
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TISCIONE, United States Magistrate Judge:
This is a consolidated action seeking relief under the Securities Exchange Act of 1934 on
behalf of all purchasers of Graña y Montero S.A.A.’s American Depository Shares from July 24,
2013, through February 24, 2017. See Second Am. Compl., ECF No. 86. The parties filed a
Stipulation and Agreement of Settlement (“Settlement Agreement”) on July 2, 2020.1
Settlement Agreement, ECF No. 112-2.

See

On September 14, 2021, the Court approved the

Settlement Agreement and directed the Clerk of Court to enter judgment and close the case. See
Order Adopting R&R, ECF No. 126; Entry of J., ECF No. 127. On February 7, 2022, the Court
granted the parties’ joint motion to vacate the judgment, and held the case in abeyance. See Mot.
to Vacate J., ECF No. 128; Order Adopting R&R, dated February 7, 2022. On April 8, 2022, the
parties notified the Court that Defendants had made full settlement payment, and requested that
the Court reinstate the judgment. See Letter, ECF No. 131. On January 6, 2023, the Court granted
the request. See Order Adopting R&R, dated January 6, 2023.
Before this Court is a letter motion from Lead Counsel for Plaintiffs and the Settlement
Class for an order to disburse the remaining funds in the Net Settlement Fund to Legal Services

Over time, the parties stipulated and agreed to three amendments to the Settlement Agreement. See First Am. to
Settlement Agreement, ECF No. 124-1; Second. Am. to Settlement Agreement, ECF No. 129-1; Third Am. to
Settlement Agreement, ECF No. 131-1.
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NYC and the New York Bar Foundation (the “Motion”). See Mot., ECF No. 136. The Honorable
LaShann DeArcy Hall referred the Motion to this Court. See Docket Order, dated August 2, 2024.
For the reasons discussed below, the Motion is DENIED without prejudice.
BACKGROUND
This Court presumes familiarity with this case’s factual background. The Settlement
Agreement provides the process for distributing the funds in the Net Settlement Fund. See
Settlement Agreement ¶ 5.9. Paragraph 5.9 states in part:
If there is any balance remaining in the Net Settlement Fund after a reasonable
period of time after the date of the distribution of the Net Settlement Fund, Lead
Counsel shall, if feasible, reallocate such balance among Authorized Claimants who
negotiated the checks sent in the initial distribution and who would receive a
minimum of $10.00. Redistributions shall be repeated until the balance remaining
in the net settlement fund is de minimis. Any de minimis balance that still remains
in the Net Settlement Fund after such reallocation(s) and payments, which is not
feasible or economical to reallocate, shall be donated to any appropriate nonsectarian, non-profit charitable organization(s) serving the public interest selected
by Lead Counsel and approved by the Court.
Id.
Lead Counsel has distributed the final settlement payment to the class, and a balance of
approximately $14,100.00 remains in the Net Settlement Fund. See Mot. Lead Counsel claims
that it is not economically feasible to distribute the remaining funds to the class because the cost
of distribution would exceed the amount in the fund. Id. Lead Counsel now asks the court to
approve the donation of the remaining funds to Legal Services NYC and the New York Bar
Foundation per paragraph 5.9 of the Settlement Agreement. Id. Lead Counsel describes the
organizations as “non-profit organizations devoted to, among other things, supporting law-related
programs of legal services organizations throughout New York City and New York State, and
which are unaffiliated with Lead Counsel.” Id.

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LEGAL STANDARD
The donation of residual settlement funds is often referred to as a “cy pres” designation,
named after a doctrine originating in Roman and English trust law. Martin H. Redish et al., Cy
Pres Relief & the Pathologies of the Modern Class Action: A Normative & Empirical Analysis, 62
Fla. L. Rev. 617, 625 (2010); see Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 436
(2d Cir. 2007) (“Cy Pres means ‘as near as possible’ and ‘courts have utilized Cy Pes distributions
where . . . there are unclaimed funds.”) (citing 2 Herbert B. Newberg & Alba Conte, Newberg on
Class Actions § 10:17 (4th ed. 2002)).
In the class action litigation context, cy pres awards may be made when, for example,
distribution of the remaining funds to the class is infeasible, and the designees reasonably
approximate the class’s interests. See In re Citigroup Inc. Sec. Litig., 199 F. Supp. 3d 845, 852–
53 (S.D.N.Y. 2016). Indeed, “[t]he permissibility of distributions pursuant to cy pres principles is
well-established so long as class members benefit, even if indirectly, from the distribution.” Reyes
v. Summit Health Mgmt., LLC, 22-CV-9916 (VSB), 2024 WL 472841, *5 (S.D.N.Y. Feb. 6, 2024).
As such, courts require some showing that proposed cy pres recipients reasonably approximate the
class’s interests. See, e.g., Marin v. Apple-Metro, Inc., 12-CV-5274 (CLP), 2024 WL 4363629,
*11 (E.D.N.Y. Mar. 29, 2024) (seeking justification as to why a selected cy pres recipient
reasonably approximates the interests of the class); see Chen v. XpresSpa at Terminal 4 JFK LLC,
15-CV-1347 (CLP), 2018 WL 1633027, *4 (E.D.N.Y. Mar. 30, 2018) (“While The Manhattan
Children’s Center may be a well deserving charity, there has been no showing that the interests of
this organization ‘reasonably approximate’ the interests of the employee class members or
members of the putative collective action. Indeed, the organization is not particularly well-suited

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to members of the Class or Collective who reside outside of the New York City area and is not
even located in this Judicial District.”); see also Reyes, 2024 WL 472841, *5.
DISCUSSION
Here, the Settlement Agreement provides that any de minimis balance that is not feasible
to reallocate to the class be donated to non-profit charitable organization(s) serving the public
interest selected by Lead Counsel and approved by the Court. Settlement Agreement ¶ 5.9. The
Settlement Agreement specifically states that a de minimis balance “not feasible or economical to
reallocate, shall be donated to any appropriate non-sectarian, non-profit charitable organization(s)
serving the public interest selected by Lead Counsel and approved by the Court.” Id. It is unclear,
based on the Motion, whether Lead Counsel thinks that this language essentially contracts around
the doctrine of cy pres—and whether that is permissible—or merely paraphrases that standard.
Assuming the Settlement Agreement invokes the cy pres doctrine, it is unclear whether Legal
Services NYC and the New York Bar Foundation reasonably approximate the interests of the class.
From the letter Motion alone, this Court does not have sufficient information to assess these issues.
Therefore, the Motion is denied without prejudice, and Lead Counsel may refile.
Any new motion to disburse the residual funds to any non-profit charitable organization
should address whether the Court should interpret paragraph 5.9 of the Settlement Agreement to
contract around the cy pres doctrine or find that the clause comports with the cy pres doctrine. If
Lead Counsel intends to argue that the cy pres doctrine does not apply, they should explain their
legal basis for that assertion. If Lead Counsel seeks to invoke the cy pres doctrine, they should
explain, in detail, how the organizations that they propose reasonably approximate the class’s
interests. See Citigroup, 199 F. Supp. 3d at 852–53; see also Masters, 473 F.3d at 436.

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CONCLUSION
For the foregoing reasons, this Motion is DENIED without prejudice.
SO ORDERED.

/s
Steven Tiscione
United States Magistrate Judge
Eastern District of New York

Dated: Central Islip, New York
March 5, 2025

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