Cy Pres and Restorative Justice: Part I in a Series


Conventional wisdom holds that the primary purpose of civil damages is to restore plaintiffs as best as courts can to their pre-injury position. While money cannot turn back time, it is often the best substitute we have for undoing or lessening the harm. And in most cases, finding and compensating the plaintiff or plaintiffs is a relatively simple endeavor even if the determination of damages is quite complex. In addition, as law and economics teaches us, civil damages also aim to deter bad behavior on the part of the defendants. We link damages to the harm caused with the hope that damages will teach both the specific defendant and potential future defendants that complying with the law is cheaper than violating it.

Sometimes, however, compensating all of the individual plaintiffs is not feasible or may even be impossible. This is a common problem in class action lawsuits. One of the existing remedies for this problem, cy pres, is a mechanism in which the U.S. Supreme Court has shown significant interest. In Part I, we will address the recent per curiam opinion in Frank v. Gaos (2019) to explore the potential and limitations of existing understandings of the cy pres remedy. We offer restorative justice as a way to answer some lingering questions about the remedy and to better tie cy pres to its intended purposes. We expand upon this idea in Part II with some observations about the television show Fleabag and how a restorative-justice-infused understanding of cy pres might speak to some of the larger questions in contemporary society about comebacks and earned redemption for wrongdoers.

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Cy pres is a flexible remedy that offers great potential for righting wrongs. At the same time, however, cases show that it can be greatly abused. The name comes from the from the French phrase “cy pres comme possible,” which means “as near as possible.” The remedy was borrowed from the law of charitable trusts. When a charitable trust is established, the creator designates a recipient, and can establish criteria that recipient must meet to get the money. For example, someone could fund a trust to give money to minority women who study fluid dynamics at a particular university. If the university eliminates its fluid dynamics lab, and if the founder of the trust cannot be consulted, cy pres permits the court to step in. Perhaps the trustor’s main desire was to support minority women in science fields. The court might then amend the terms of the trust so that the money could still go to the university to support minority women in science. In this way, the goals of the trust would be met, “as near as possible.”

Cy pres has a special role to play in class action lawsuits. Judges must approve all federal class action settlements that bind class members to ensure that such settlements are “fair, reasonable, and adequate.” This is, of course, appropriate; the ultimate goal of civil litigation is to restore the parties to their rightful positions. Settlements should fairly compensate the people who have been harmed.

In class actions, however, such compensation may not always be possible. Sometimes class members cannot be identified, or payment cannot be made. Perhaps the members of the class keep changing, or individual damages are too small to justify the expense of making payments to the members. Sometimes, class members will not or cannot claim their shares. They may have died, or otherwise be unable to reach for the money.

Cy pres settlements can be useful in these situations. When money cannot be distributed to class members, or when there is money remaining after the class members have all been paid, courts permit giving unclaimed money to charities related to the plaintiff’s injuries. One study found that most class actions that survive the pleading stage settle, and that most class-wide settlements include a cy pres remedy.

But just how tightly must a particular charity’s objectives relate to a class action’s injuries to qualify for cy pres money? Twice, the Supreme Court has stated that it wishes to consider this question.

The first occasion was in Marek v. Lane, 134 S. Ct. 8 (2013). This class action lawsuit involved Facebook’s short-lived “Beacon” programming, which automatically posted about the online activities of Facebook members absent an affirmative “opt out.” The disclosures revealed embarrassing movie choices, indulgent spending habits, and other information that arguably violated members’ privacy rights. Before any decision on class certification, the individual plaintiffs settled for $9.5 million and Facebook’s promise to discontinue the Beacon program.

Plaintiffs’ counsel took nearly one-quarter of the settlement and the named plaintiffs were awarded small “incentive payments.” The remaining unnamed class members received nothing.

Instead, the settling parties designated the remaining $6.5 million to a cy pres remedy that would fund the creation of a new foundation to give money to organizations that undertook to educate the public about online privacy.

This particular cy pres remedy raised some eyebrows. The foundation, being new, had no track record of success. Facebook executives would sit on its board of directors (and presumably exert some control over its actions). And, of course, the settlement barred subsequent claims from individuals injured both before and after Facebook changed Beacon’s default setting.

The district court approved the settlement over the objections of the lead plaintiff and other class members. The Ninth Circuit affirmed, and plaintiffs sought Supreme Court review.

The Supreme Court denied the petition for certiorari. But in the denial order, Chief Justice Roberts said the writ was denied because the petitioners’ objections focused on the peculiarity of the specific settlement, and the Court wanted an opportunity to address more fundamental concerns about cy pres remedies. He listed several questions he considered fundamental:

  • When should a cy pres remedy be considered?
  • How do you evaluate its fairness?
  • Can new organizations can be established as part of the remedy?
  • If not, how should you select existing organizations?
  • What roles should the judge and the parties play in determining the remedy?
  • How closely must an organization’s goals correspond to the interests of the class?

Those interested in cy pres believed answers to these questions would be forthcoming when the Supreme Court accepted review in Frank v. Gaos. That case involved a provision of the Federal Communications Act that requires entities that provide electronic communication services to maintain confidentiality about the contents of electronic communications. But Google transmitted information, called referrer headers, about user searches. Servers who hosted webpages were told that users had come to their pages by entering certain terms on Google’s website.

Google was able to challenge standing for a while, but the case trundled on, and merged with another action. Finally, a settlement was negotiated. Its terms required Google to include information about referrer headers (but not to stop using them).

In addition, Google had to pay $8.5 million, but none of the money would go to the absent class members. As each class member would have been entitled to receive only 4 cents, distributing the money was not practical. Instead, the district court approved a cy pres award that sent the funds to institutions studying internet privacy. The remaining money would be used for administrative costs and fees, given to the named plaintiffs, and awarded as attorney’s fees.

The district court approved the settlement over the objections of class members, who argued that it was not “fair, reasonable, and adequate.” The class members got some traction when the Supreme Court accepted the case to consider the parameters of fairness in a class action cy pres award. But once again, the Court declined to resolve the substantive questions presented in the case.

Justice Thomas dissented, arguing that the Court should have reached the merits on the cy pres settlement. He also would have found that the settlement unfairly extinguished the right of absent plaintiffs without giving them anything in return.

The cy pres remedy has a place in the reach for justice. Restoring members of a class to their rightful positions using money will not always be workable. But ignoring the need for corrective measures is also inappropriate, and returning unpaid money to culpable defendants undermines the function of class actions in enforcing the law and deterring wrongdoing. So, some form of substitutionary relief may be required. But how is this relief to be assessed for fairness? How do we get “as near as possible”?

We begin addressing this question by noting that civil damages rarely, if ever, actually restore plaintiffs to their pre-injury position. This is because not all losses are compensable under the law, some losses can’t be restored well via money damages (though money may help as a substitute), and plaintiffs often do not receive the full amount of damages awarded to them. Most cases, moreover, including most class actions, settle out-of-court. And settlements typically involve compromises on the amount of money that will be paid to plaintiffs.

But settlements may also provide opportunities for more creative resolutions to plaintiffs’ cases than might be possible through court verdicts and damage awards. For example, as part of a settlement, the hospital in a medical malpractice lawsuit might agree to invest in new procedures, research, or an organization that focuses on how to prevent medical errors.

What might restorative justice have to say about this? One tenet of restorative justice is that parties to a dispute commit to working together cooperatively to find appropriate ways to repair the harm done.

In thinking about how to repair harm, it is useful to consider the interests of plaintiffs in civil litigation. Social scientists have conducted studies that have explored the various motives that underlie the claims of civil plaintiffs and the goals that plaintiffs hope to achieve. It is clear that plaintiffs sue to obtain financial remedies. But many plaintiffs also seek to fulfill broader interests. Some hope that their lawsuit will help them obtain information from a defendant. Many see the lawsuit as a way to tell their own story. Some seek a court’s declaration of liability that confirms the relevant rule and affirms that it was violated. Many aspire to generate behavioral or institutional change that will prevent similar harms from happening in the future. And there may be a variety of other outcomes that plaintiffs think will contribute to an appropriate resolution of their case.

In considering the role of cy pres remedies in class action lawsuits, then, it might be useful to consider how the proposed cy pres remedy fulfills one or more of these goals. It is possible that a cy pres remedy could satisfy plaintiff needs and provide an approximate remedy for their harm, even in the absence of direct compensation. For example, if plaintiffs desire reform, then a cy pres recipient engaged in work that would contribute to prevention of harm or institutional change might serve to further plaintiffs’ need to turn a bad outcome into an opportunity for improvement.

At the same time, the law provides money damages as a remedy for important reasons, and courts should not discard that remedy too easily. Financial compensation is important to plaintiffs. Money creates security, choice, and other benefits that address the harms suffered by plaintiffs. Courts, therefore, must be careful about turning too quickly to cy pres remedies, particularly to the exclusion of individual compensation.

Importantly, restorative justice processes prioritize the participation of offenders and victims in the process and in determining appropriate remedies. Thus, in considering the role of cy pres remedies, restorative justice would suggest that courts should explore mechanisms that would allow plaintiffs to voice their interests and preferences about potential cy près recipients as a part of the negotiation process.

Finally, restorative justice contemplates the healing of individuals and communities through acknowledgment, restitution, and reintegration, processes that often must unfold over time. Cy pres remedies, therefore, that comprise ongoing efforts at amends-making or harm repair or that create enduring solutions to the underlying problems are more likely to be satisfying than one-time acts or events.

Assessing a cy pres remedy for its potential to recognize the harm, signal responsibility taking, repair tangible and intangible harms, and effectuate meaningful change over time is one way to ensure that the remedy is “near enough.”

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