What is Cy Pres?
Translated from French, cy pres means “as near as possible.” It is an ancient legal doctrine historically used in trust cases where the final beneficiary was unavailable to receive a distribution. Unclaimed or leftover funds were distributed to deserving charities on the premise that the funds would thus serve the fund’s original purpose “as nearly as possible.” Only relatively recently has the doctrine been invoked in class action suits.
Typically, class actions are filed when a large company (or a large organization such as the government) is alleged to have committed a wrong of a small value against a large group of people.
Typical Class Action Examples
Here are some examples of where class actions are used.
A national bank deducts a $4.50 “check processing fee” from the accounts of all its customers (over 2 million people), even though the bank’s contract states that checks will be processed without a fee. No single customer will sue over $4.50, but the bank has cumulatively taken over $9 million from its customers.
A national car rental company adds a $15.00 “refueling” charge to the bill of all its customers (over 2 million people), even when the customer brings the car back full and the company does not refuel the car. No single customer can afford to sue over $15, but the car rental company has wrongfully taken over $30 million from its customers.
The U.S. Supreme Court permits the use of a class action in such cases.
One member of the group represents the class for the purpose of bringing the lawsuit, and after the proper procedures are implemented damages can be awarded to the entire class.
Most class actions settle with no need to go to trial. Yet, whether payout to the class members goes forward pursuant to settlement or judgment, significant funds may be leftover at the conclusion of the lawsuit.
Class actions often take years to resolve. By the time claims are set to be paid, many class members may have passed away or can’t be found.
What should be done when the monies set aside as damages to the class cannot be fully distributed?
There are a number of options. The unused funds can go back to the defendant, but returning the money to the defendant undermines the effort to hold it accountable for wrongdoing.
Another approach might be to increase the amount that each available class member receives. That does nothing to help the plaintiff class.
The Best Option
The best option is to distribute leftover funds to charitable programs that indirectly help the class by supporting the community.
Without a cy pres stipulation, the class action defendant usually keeps the unclaimed funds when the issue comes into play. That unfair result has prompted renewed interest in cy pres, whereby distributions are made “as nearly as possible” to the class.
Cy Pres Distributions are Game Changers.
A cy pres distribution allows the court—or the parties by agreement—to stipulate that if payment cannot be made as intended at the end of the matter, it will go to designated charities.
With the backing of Ohio Lawyers Give Back and Dworken & Bernstein, its sponsoring law firm, the strategy has recently provided many millions of dollars to charities.
In many cities, cy pres distributions saved key charities or their main programs from closing. The cy pres funds have brought new programs to life, expanding service areas to new markets and reaching more people.
A Heartwarming Example of the Success of a Cy Pres Distribution
A heartwarming example of the success of a cy pres distribution is the fight against cystic fibrosis.
Cystic fibrosis prevents the lungs from working properly and without constant, intensive treatment—at least three times each day—massive infection will result, followed by death.
Even with full treatment, CF patients in the 1980’s only lived into their teens or 20’s. But there is good news. Research funds have allowed scientists to battle this killing disease, and now kids born with CF are living into their 30’s and 40’s.
At a recent event where a cy pres check for over $180,000 was presented to the Cystic Fibrosis Foundation for more research and treatment, a 10-year-old CF patient put her arms around the presenter and said, “Thank you, Mister. You are going to save my life.”
Cy Pres Distributions Ought to be Broadly Embraced by the Legal Community
With the capacity to positively impact so many lives, cy pres distributions ought to be broadly embraced by the legal community. Yet its use has not been widespread.
Including a cy pres stipulation in a settlement agreement slows the litigation by adding an additional term to hammer out, requiring additional legal work and delaying payment of attorneys fees without additional billable hours. In addition, many judges across the country are unfamiliar with the application of the doctrine in class actions.
Committed to the Broad use of Cy Pres in Class Action Settlements
Ohio Lawyers Give Back is committed to promulgating the use of cy pres stipulations to benefit communal organizations, thereby making plaintiff classes whole, and at the same time, preventing class action defendants from walking away from their wrongdoing without full accountability.
Contact us today to learn more.