1. What is cy pres?
Cy pres (pronounced “sigh-pray”) is a very old legal doctrine dating from the third century allowing the courts to carry out the terms of an agreement as closely as possible. In class actions, it refers to distribution of unclaimed settlement funds to purposes benefitting society.
2. Why is there a need for cy pres?
Class actions usually pend for many years before they are concluded. Because of this, some class members have moved, passed away, or are hard to locate. The settlement fund is then not fully distributed. Cy pres allows distribution of some or all of those unclaimed monies.
3. Why not just give the monies back to the defendant?
The typical settlement of a class action calls for defendant to make payment of a certain amount to the class members. Giving large amounts of that fund back to the defendant is not consistent with the settlement. As part of the settlement process, plaintiffs’ counsel and defense counsel agree on a reasonable portion of the unclaimed funds to be paid to charities.
4. Some commentators criticize cy pres as leading to misconduct such as charities lobbying courts or lawyers.
There are very serious ethical rules prohibiting that. They are strictly enforced. The cy pres process does not only involve the plaintiff or their attorneys to reach the agreement. The defendant and its attorneys must also agree. Then, the court must carefully review and approve all of the terms. This process is highly, carefully supervised.
5. Is it proper for a lawyer to include a charity as a proposed cy pres if they serve on that board?
The question isn’t really about the affiliation of a lawyer, judge or party but whether the money is going for an actual beneficial charitable purpose in the community. Also, it is about whether a range of causes and programs are being used. It is common and synergistic that large corporations regularly give major donations to charities for which the corporation’s directors volunteer or serve on the charity’s board.
To insure that cy pres monies are spread broadly, our cy pres distributions include not just one organization but many. Visit our recipient charity list for details. Some organizations were selected by the plaintiff and others by the defense. This resulted in very wide, diverse distribution of cy pres monies to countless groups, and a positive outcome for the whole community and not just one particular person or group.
6. How are the charities selected?
As explained above, the parties propose a group of diverse and wide-ranging organizations covering many aspects of the community. Broad coverage is important for another reason, The class members who cannot be found are spread through broad sections of the community. Those class members include men and women, young and old, workers, retirees, students, homemakers, professionals, and that list goes on. Selecting just one charity would only touch the lives of a small number of those class members. Selecting a wide range of causes in a broad area likely touches the lives of the most of those class members, their friends, or their families. This is very efficient. Each side reviews the proposals of the other and makes suggestions. The proposals are then given to the court. The key is broad distribution to organizations respected in the community for their services.
7. Should cy pres be required in every class action? Will you require cy pres in every one of your class actions?
Every case is unique. The parties propose cy pres most often when it is apparent that a significant portion of the settlement funds will not reach class members for a variety of reasons—people having moved, address changes, very small individual recoveries, etc.
8. What cy pres/charities were selected in cases handled by Dworken & Bernstein?
The number is incredibly large. The list of the recipient charities includes 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 are an individual, suggest a charity you know is doing a great job in the community and could use some help and support. Mention cy pres to lawyers, Judges, and others you know. Encourage them to use it.
If you are an attorney doing class actions, contact us for helpful suggestions on including cy pres in the settlement of your next class action where significant unclaimed funds are expected.