Cy-près Distributions: Uses And Controversies

Cy-près distributions disburse settlement funds or damages awards to charities or other public interest organizations in circumstances where it is impractical to distribute the funds to class members. While frequently useful and authorized by provincial class action statutes for damages awards, cy-près distributions can be controversial when some or all class members receive no part of the settlement or award.

Cy-près distributions frequently deal with settlement funds that go unclaimed by class members as compensation for individual claims. For example, the recent settlement in Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2018 BCSC 2091 allows class members to make claims on a settlement fund within 10 months of the settlement. Thereafter, a portion of the unclaimed amount (if any) will be distributed via vouchers to Canadian schools. In approving the settlement, the court held that the distribution to schools was "well thought and laudable" (para. 39).

Cy-près distributions for unclaimed settlement funds are generally consistent with class actions legislation, which typically allow for cy-près distributions of damages awards. For example, BC's statute allows a court to apply an unclaimed damages award "in any manner that may reasonably be expected to benefit class or subclass members, even though the order does not provide for monetary relief to individual class or subclass members" (s. 34). Other provincial statutes contain similar provisions.

Cy-près distributions can be controversial when class members receive no part of the settlement or damages award. For example, the U.S. Supreme Court is currently considering the validity of the cy-près only distribution in Frank v. Gaos, a class action brought against Google for violating privacy laws on behalf of over 100 million class members. The parties agreed to a...