Ohio charities share millions of unclaimed funds

BY: Sarah Jacobson Irving I. Stone Editorial Intern
PUBLISHED BY: Cleveland Jewish News

Last week, the law firm of Dworkin & Bernstein distributed $14 million to 34 Ohio charities, a donation made possible by the firm’s use of an often-overlooked legal doctrine known as cy-pres (pronounced sigh-PRAY).

Dworkin & Bernstein presented the award checks to charities during a July 18 luncheon at the Cleveland Renaissance Hotel downtown. Over 350 guests, including state and federal judges, charity representatives, lawyers, politicians, and business, religious and civic leaders attended.

Cy-pres awards are funds leftover from class action lawsuits. If class members from a case cannot be located to receive settlement money, the unclaimed funds are distributed among charitable organizations.

In the last year, Dworken & Bernstein has directed more than $1 million of cy-pres monies to charities addressing hunger, homelessness, disease prevention, education, drug and alcohol treatment, and a host of other programs. Recently, the firm distributed nearly $180,000 to the Cystic Fibrosis Foundation and significant donations to the Adoption Network Cleveland, DARE, and St. Herman’s Hunger Center, says partner Alec Berezin. Several Jewish institutions are also on a list to receive funds in a class action case that has already been settled.

In 2007, Dworkin & Bernstein partner Patrick Perotti settled a case against Grange Mutual Insurance, a Columbus insurance company. Thirty million dollars was awarded to the class members, but only $16 million was allocated. The remainder went to charities, becoming the largest cy-pres of its kind.

Beneficiaries of this multi-million dollar award include The Leukemia & Lymphoma Society, the Muscular Dystrophy Association, the Children’s Hunger Alliance, and the Community Shelter Board. (For a complete list of charities receiving money from this settlement, go to www.cleveland

"Patrick made the utilization of cy-pres a cornerstone of his practice," says Berezin, who worked on the case with Perotti. “He has been unwilling to resolve cases and allow all of the unclaimed money to go back to the defendant. He insists that they give back to the community or to charities.”

Several factors are considered when deciding which charities will benefit from the legal doctrine, explains Berezin. Often, money is distributed to groups who have been victims of the same problems seen in that particular case. For instance, unclaimed funds were given to neighborhood housing groups after the firm settled a case against a bank that had problems in lending and mortgages.

Other times, the leading lawyer, with the help of his or her partners, has a great deal of influence. The defendant also frequently participates in selecting some of the nonprofits.

Cy-pres is used infrequently for a number of reasons, says Berezin. Many lawyers and judges are unaware of the doctrine, and others just want to distribute the money rather than dealing with an additional negotiation. Also, it has proven to be very difficult to get defendants to agree on using cy-pres awards when the unclaimed money can be returned to themselves rather than directed toward charity.

Berezin says the Grange case, "unusual for the sheer volume of funds that will be dispersed,” is a good opportunity to show what can be achieved through using cy-pres awards. “We fight hard, and the case shows that in the end, we can come together and achieve a broader good for the plaintiff, the defendant, and for public policy."

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Ohio charities share millions of unclaimed funds

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