Cy Pres & Residual Fund Awards

Cy pres awards are residual funds in class action cases that, for any number of reasons, are unclaimed or cannot be distributed to the class members or beneficiaries who were the intended recipients. Under the cy pres doctrine and Illinois law, courts can distribute these residual funds to appropriate charitable causes, and the CBF and the legal aid organizations and related initiatives the CBF supports are appropriate beneficiaries.

The CBF’s mission of improving access to justice for those less fortunate makes it an ideal match for class action cy pres awards, as one underlying premise for all class actions is to make access to justice a reality for people who otherwise would not be able to obtain the protections of the court system. Cy pres awards have made possible a number of innovative projects and initiatives in the state and federal courts and enable the CBF to provide ongoing support for these efforts. 

For more information about cy pres awards and other awards of residual funds and how you can make an impact by directing such an award to the CBF, contact Bob Glaves at bglaves@chicagobarfoundation.org or at 312.554.1205.

State Court Cases

Illinois law (735 ILCS 5/2-807) establishes a presumption that any residual funds in class action settlements or judgments will go to organizations like the CBF that improve access to justice for low-income Illinois residents. Courts have the discretion to award up to 50% of these funds to other organizations that serve the public good as part of a settlement if the court finds good cause to do so. In any event, at least 50% of any residual funds in class action cases must go to one or more organizations like the CBF that promote or provide access to justice for low-income Illinoisans.

This article provides a good primer on how the statute works. Sample language that can be used for settlements of Illinois class actions is available here.

Federal Court Cases

Federal courts in Illinois and elsewhere in the country have long recognized that under the cy pres doctrine, courts can distribute cy pres or residual funds to appropriate charitable causes, and the CBF and the legal aid organizations and related initiatives the CBF supports are appropriate beneficiaries. See, e.g., Doyle, Residual Funds in Class Action Settlements: Using “Cy Pres” Awards to Promote Access to Justice, Federal Lawyer, July 2010.

Among the federal court projects that cy pres awards have made possible and continue to support through the CBF are the District Court Advice Desk and the Court’s Settlement Assistance Program.

Sample language that can be used for settlements of class actions

Bankruptcy Court Cases

Courts in Illinois and elsewhere in the country have long recognized that under the cy pres doctrine, courts can distribute residual funds in bankruptcy and other federal cases to appropriate charitable causes, and the CBF and the legal aid organizations and related initiatives the CBF supports are appropriate beneficiaries. See, e.g., In re Xpedior Inc., 2006 WL 3017330 (Bkrtcy. N.D. Ill., Oct. 23, 2006); Superior Beverage Co. v Owens-Illinois, Inc., 827 F. Supp. 477 (N.D. Ill. 1993) (approving distribution of unclaimed funds to a variety of charitable organizations); In re Scouring Pads Antitrust Litigation, No. 93 C 6594, 1995 WL 290242, at *1 (N.D. Ill., May 11, 1995).

Among the bankruptcy court projects that cy pres awards have made possible and continue to support through the CBF is the Bankruptcy Court Help Desk, which provides a critical service to the court by providing advice, brief assistance, and referrals to hundreds of pro se litigants in the court each year. These awards also help make it possible for the CBF to provide steady support for the major pro bono and legal aid organizations that serve clients in bankruptcy court.

Sample language that can be used for bankruptcy cases is available by clicking here.