Modernizing Class Action Cy Pres Through Democratic Inputs: A Return to Cy Pres Comme Possible

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Forty-five years ago, the ancient doctrine of “cy pres” was lifted from the pages of trust law and applied, for the first time, to the class action context. Cy pres stood for the proposition that, when the explicit purpose of a charitable trust became impossible, the court should look to the testator’s intent and apply the trust to its next best use. In the class action context, cy pres was an equitable “patch” necessitated by the expanding scope of the class action mechanism at the state and federal levels. Generally, the concept has come to mean that when distributing damages to an individual class member is impossible or impractical, the court should use those damages for the benefit of the class at large.

However, the current class action litigation system does not consistently follow this standard. Cy pres awards lack the procedural and adversarial protections needed to ensure their fairness and accuracy. Courts, even when trying to apply cy pres for the benefit of the member class, are poorly suited to decide how best to benefit the class. And, unfortunately, cy pres awards are all too often diverted to general charity or directed to charitable projects of interest to the judge or lawyers involved in the case. These outcomes deprive class members of the benefits of their suit and cast a pallor of impropriety on the class action mechanism.

Fortunately, a remedy exists and can be deployed discretionarily without legislation or amendment to the Federal Rules. Because cy pres aims to approximate the benefit that individual damages would provide to class members, courts should ask the class how best to utilize cy pres awards. Through a crowdsourced, democratic voting process, courts could seek the input of identified class members at low marginal cost. This mechanism would add a democratic element to the cy pres process and largely obviate potential or perceived ethical violations. Moreover, it would improve judicial accuracy in awarding cy pres funds, enabling more of their compensatory value to flow to the injured class. This proposal modernizes class action cy pres while honoring its ancient origins by returning to cy pres’s core goal: adhering as closely as possible to the intended outcome.

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