Below are the most frequently asked questions about Cy Pres and Ohio Lawyers Give Back
Cy pres (pronounced “sigh-pray”) is a very old legal doctrine that allows the courts to carry out the terms of an agreement as closely as possible. In class actions, it refers to the distribution of unclaimed settlement funds to organizations that benefit society.
2. Why is there a need for cy pres?
Class actions usually pend for many years before they conclude. During that time some class members have passed away or can no longer be located. The settlement fund cannot then be fully distributed. A cy pres stipulation allows distribution of some or all of those unclaimed monies to organizations that serve the community as the next best option.
3. Why not just give the monies back to the defendant?
The typical settlement of a class action calls for a corporate defendant to make payment of a certain amount to the class members as damages for wrongdoing. Giving large amounts of that fund back to the defendant undermines the settlement as a method of making the corporation accountable for its wrongdoing. To prevent that unjust outcome, plaintiffs’ counsel and defense counsel agree on a reasonable portion of the unclaimed funds to be paid to charities as part of the settlement.
4. Some commentators criticize cy pres as leading to misconduct such as charities lobbying courts or lawyers.
Strictly enforced rules of ethics ensure that the doctrine is used honestly. Supervised by the court, the settlement process involves plaintiff, defendant and their attorneys to reach the settlement agreement. Each party asserts its own interests, ensuring that no single party has undue influence. The court carefully reviews and approves all terms of the settlement, including the cy pres stipulation.
5. Is it proper for a lawyer to include a charity as a proposed cy pres recipient if they serve on that board? What assurances are there that the money will be distributed in a manner that truly benefits the community?
We are less concerned about the possibility of self-serving stakeholders, and more concerned that the cy pres recipients are good substitutes for the missing class members. It is common and synergistic that large corporations regularly promote nonprofit organizations where their directors volunteer or serve as board members.To ensure that cy pres monies are spread broadly, cy pres negotiations should include but many organizations, covering a range of causes and programs. Visit our recipient charity list. Some organizations were selected by the plaintiff and others by the defense. This resulted in the broad distribution of cy pres monies to many diverse groups, yielding a positive outcome for the whole community.
6. How are the charities selected?
The parties propose a group of wide-ranging organizations covering many aspects of the community. Broad coverage is important to prevent undue influence by any one party. It is also important that we diligently and reasonably attempt to reach unresponsive class members. Those who cannot be found are likely spread across the community.
By selecting an array of causes in a broad geographic area, a cy pres distribution will likely touch the lives of the most of those missing class members, their friends, or their families. Each side reviews the proposals of the other and comments. The proposals are then given to the court. Together, the parties and the court develop a list of organizations respected in the community for their services.
7. Should cy pres be invoked in every class action?
No. Every case is unique. Cy pres stipulations are appropriate when it is apparent that a significant portion of the settlement funds will not reach class members for any number of reasons—people having died, moved, or are simply non-responsive.
8. What cy pres charities were selected in cases handled by Dworken & Bernstein?
The list of the past recipient charities include groups working with homelessness, hunger, disease prevention, alcoholism treatment, drug treatment, community development, education, and scholarships, mentoring for troubled or displaced children, crisis pregnancy assistance, legal aid services, and a host of others.
9. How can I help?
If you know of an organization in the community that is doing a great job and could use support, suggest the charity to us here. You can also mention the cy pres doctrine to lawyers, judges, and others you know. Encourage them to use it.
If you are an attorney whose practice includes class actions, contact us for to discuss how to negotiate a cy pres stipulation in the settlement of your next class action where significant unclaimed funds are expected. There is no charge for this service. It is one of the many ways Dworken & Bernstein gives back to the community.