Cy Pres is a legal doctrine originally developed to ensure the fair distribution of a trust fund. Its original meaning, from French “as near as possible,” refers to using a trust fund for its “next best use” should its original purpose fail. Today, cy pres refers primarily to residual funds left over from a class action lawsuit, but can also refer to funds from restitution, settlements, or penalties. The amended Haw.R.Civ.Pro. Rule 23 provides that the recipients of residual funds may include nonprofit tax exempt organizations eligible to receive assistance from the indigent legal assistance fund under HRS sec. 607-5.7 or the Hawaii Justice Foundation for distribution to one or more of such organizations.
Haw.R.Civ.Pro. Rule 23(f) states:
(f) Distribution. Prior to the entry of any judgment under subdivision (c)(3) or the approval of any compromise under subdivision (e), the court shall determine the total amount payable to each class member. The court shall set a date when the parties shall report to the court the total amount actually paid to class members. After the report is received, the court shall direct the defendant, by order entered on the record, to distribute the sum of any unpaid residue after the payment of approved class member claims, expenses, litigation costs, attorneys’ fees, and other court-approved disbursements. Unless otherwise required by governing law, it shall be within the discretion of the court to approve the timing and method of distribution of residual funds and to approve the recipient(s) of residual funds, as agreed to by the parties, including nonprofit tax exempt organizations eligible to receive assistance from the indigent legal assistance fund under HRS section 607-5.7 (or any successor provision) or the Hawaiʻi Justice Foundation, for distribution to one or more of such organizations.
WHY FUND CIVIL LEGAL SERVICES FOR THE POOR WITH CY PRES FUNDS
Legal services providers are grossly underfunded and therefore able to serve only a small fraction of eligible people in need. Meeting those needs is a clear public interest as it is a goal of equal justice for all.
“Nonprofit organizations providing access to justice have been presented with financial challenges, with severely reduced state, city, federal, and private contributions, while needs continue to grow for those they serve,” says Associate Judge Daniel R. Foley, Chair, Hawaii Access to Justice Commission. “Providing increased funding to support the efforts of these organizations will serve a compelling public purpose.”
William Hunt of Alston Hunt Floyd & Ing: “As a board member of the Hawaii Justice Foundation (HJF), I am acutely aware of the lack of funding available for legal services for disadvantaged and indigent people, and it is clear that the IOLTA funds that HJF receives and distributes to providers are not sufficient to meet the needs of that segment of the population.”
David Reber, a member of the Administration Committee of the Hawaii Access to Justice Commission and past president of the Legal Aid Society of Hawaii who was instrumental in drafting the cy pres amendment, believes “Distribution of residual funds to nonprofit organizations that are eligible to receive funding under the Indigent Legal Assistance Fund (H.R.S. § 607-5.7) is consistent with the underlying purpose of class actions and such recipients are appropriate beneficiaries of cy pres awards.”
For an extensive “toolkit” on the various aspects of cy pres, including sample court orders, see: Cy Pres Toolkit .