Cy Pres: Advancing Justice

The term cy pres is derived from the term “cy pres commé possible,” meaning “as near as possible.” The concept, adapted from trust and estate law, allows for distribution of residual damage awards in class action lawsuits where it is not possible to determine each plaintiff’s actual damages or when plaintiffs fail to collect their portion of the award. Under the cy pres doctrine, courts may order residual funds to be put to the “next best compensation use, for the aggregate, indirect, prospective benefit of the class (aggregate cy pres distribution).” H.B. Newberg & A. Conte, Newberg on Class Actions, § 10.17 (3d ed. 1992).

Because the concept of cy pres indicates the “next best use” of funds, initially cy pres awards were related to the purpose of the case from which it was created. However, there is some permitted with the distribution. See Superior Beverage Co. v. Owens-Illinois, 827 F. Supp. 477, 479 (N.D. Ill. 1993) (finding  

[though the] use of funds for purposes closely related to their origin is still the best cy pres application, the doctrine of cy pres and courts’ broad equitable powers now permit use of funds for other public interest purposes by educational, charitable, and other public service organizations, both for current programs or, where appropriate, to constitute an endowment and source of future income for long-range programs to be used in conjunction with other funds raised contemporaneously.) 

Courts in the 7^th, 9^th and 11^th Circuits have awarded cy pres distributions to State Bar organizations and law schools. Also, courts across the country have found legal services programs to be appropriate recipients of cy pres awards because they often represent the next best use of funds to indirectly benefit the members of a class. The core mission of South Carolina’s legal services program is to protect the rights of those who ordinarily would go unrepresented. Class action beneficiaries may not be able to afford legal counsel, may be unaware of their rights or may not be able to vindicate their rights.

A cy pres award to a non-profit organization, such as the SC Bar Foundation, also is appropriate. Through its grant program, the Bar Foundation provides funding to organizations that afford basic access to civil legal aid to low-income citizens, promote law related education services to the public and advance the administration of justice.  

In many cases, cy pres awards are made pursuant to the stipulation or recommendation of counsel for both plaintiffs and defendants. Decisions about residual funds can be made by the court when the case is decided and the fund is established, or when the residual funds actually become available. Please consider a cy pres award to the Bar Foundation when you are looking for the next best use of class action residual funds. It could help advance the cause of justice.