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Eblast Article 2 2011-12

Cy Pres Awards Help Support Bet Tzedek

As a regular component of Bet Tzedek’s annual revenues, Cy Pres awards, play a significant role in the underwriting of the vital programs and services we provide to our low-income clients. These awards have allowed us to expand the reach of our Employee Rights project, Housing project, Consumer Rights programs, Conservatorship Clinics, and numerous other direct services and educational offerings.  Bet Tzedek is very grateful to the attorneys and law firms who proffer the agency as a potential recipient of residual funds in the various class action lawsuits in which they are involved.

Want to learn more about Cy Pres?  Continue reading below . . .

Cy Pres Doctrine*

The term “cy pres” originates from old Norman French meaning “as near as possible”. The cy pres doctrine found its legal roots in charitable trusts: if a donor’s trust document contains an impossible, impracticable, or illegal objective, courts are given the power to amend the trust, keeping as close to the donor’s original intent as possible.

The cy pres doctrine has recently expanded its reach to apply to class action distributions or grants as well. If a nonprofit’s mission parallels the interest of the class action plaintiff class, it may be entitled to receive a portion of unclaimed settlement funds. This is referred to as cy pres awards, which the California Supreme Court endorsed in 1986.

Cy pres awards in the class action context are available in limited situations. Courts will usually distribute class action settlements to charitable organizations when recovery for class members is impossible or impracticable, if class members are difficult to identify, or if unclaimed funds remain after all class members have received their portion of the settlement.

Before a court approves a class action award, it undergoes a multitude of deliberations, one of which is whether or not a cy pres award will be included. Further, it considers which organizations might be eligible to receive the award. Those organizations that clearly present a mission statement and organization purpose in the public space, such as on a website, are more likely to be selected to receive the award due to ease of administrative process (if the organization’s goals meet the award criteria). Some organizations even explicitly state on their websites why they would be excellent candidates for a cy pres award. The more familiar courts and class action attorneys are with the organization, the more likely it will be nominated for a cy pres award.

*Gene Takagi  in CALIFORNIA LAW (October 26, 2008)

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Bet Tzedek is an affiliated agency of The Jewish Federation of Greater Los Angeles.