CY PRES AWARDS AND WHAT THE HECK ARE THEY ANYWAY?
Pro Bono Committee ����������������������������������������������������������
If you have not recently dusted off your Estates and Trusts textbook or do not practice class action litigation, you probably agree with the title. The cy pres doctrine evolved out of trust law to prevent a charitable gift from failing by allowing“ the next best use of the funds to satisfy the testator’ s intent as near as possible.” 1
Today, cy pres is most known and used in class action litigation. It is an equitable doctrine that grants the court discretion to direct excess class funds to their“ next best use.” 3 When directing payment to class members is impossible or impracticable for any number of reasons, cy pres often can, and should, come into play, because it offers a mechanism to provide an indirect benefit to class members who otherwise would receive nothing. 3
There are some basic rules that should be followed to ensure cy pres awards help those absent class members. First, when the funds can be distributed to the class, cy pres should not be necessary. Second, when the funds cannot be distributed to some or all the class, cy pres should be used to indirectly
benefit them, consistent with the goals of the underlying litigation. Third, if an indirect benefit for the class is not workable, then the funds should be distributed to a non-profit organization, such as legal services provider, which helps the public.
There are of course naysayers who argue cy pres is bad. Many states have laws governing how cy pres is administered and where those funds must go; however, Florida is not one of them. Often, these laws provide that at least a part of cy pres distributions must go towards legal services. Given the current climate of cutbacks in funding for legal advocacy for those with lower incomes, the role of cy pres funding for legal services can be critical. The distribution of cy pres to legal services organizations goes one step further in helping to prevent the same harm from being perpetrated on future victims. Cy pres to legal service organizations together with the provision of pro bono services helps meet the significant need for legal services to otherwise
Today, cy pres is most known and used in class actions. It is an equitable doctrine that grants the court discretion to direct excess class funds to their“ next best use.”
underserved and underrepresented communities. �
1
Democratic Central Comm. v. Washington Metro. Area Transit Comm’ n, 84 F. 3d 451, 455 n. 1( D. C. Cir. 1996).
2
Newberg on Class Actions, § 11.20 at 11-26( 3d ed. 1992).
3
Mirfasihi v. Fleet Mortgage Corp., 356 F. 3d 781, 784( 7th Cir. 2004)( noting the cy pres doctrine is used to prevent defendants“ from walking away from the litigation scot-free because of the infeasibility of distributing the proceeds of the settlement … to the class members.”)
4
Bob Glaves and Meredith McBurney, Cy Pres Awards, Legal Aid and Access to Justice, ABA Dialogue, May 19, 2017( noting 20 states as of 2017 have cy pres laws where funds go to legal services).
5
Florida is one of 3 states that provides no direct funding for legal services. ABA Access to Justice Initiatives 2018.
Author: Craig E. Rothburd – Craig E. Rothburd, P. A.
Learn more about pro bono and volunteering opportunities at hillsbar. com / page / ProBono.
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