June 02, 2015 Articles

Rule 23: Welcome to the Cy Pres Party

The doctrine's widespread use begs for guidance that only this Federal Rule can provide

by Timothy G. Blood and Paula M. Roach

The phrase cy pres is translated to mean “as near as.” Although the cy pres doctrine originated in courts’ saving an otherwise defaulting charitable gift by determining the next best use of the gift, it has become a common tool used to distribute class action settlement funds. In the context of a class settlement, the general idea is that if the settlement funds cannot be distributed directly to class members (the very best use of the funds), then the funds should go to the next best group—or the group “as near as” the class.

For decades, cy pres has been widely accepted as a means of distribution in class settlements. The rule governing class settlements—Rule 23(e)—requires that courts approve all aspects of a class settlement and provides specific criteria courts must follow in making that determination with respect to particular aspects of the settlement. Nonetheless, Rule 23 is silent on cy pres.

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