Wednesday, June 11, 2008

Cy Pres and Class-Action Funds in Washington

Someone recently asked me about the practice of directing some funds from class action settlements to legal aid organizations. I didn't know much at all, but I found and article in the Washington State Bar News that explains it: Andrea D. Axel and David A. Leen, Unclaimed Class-Action Funds Offer Hope for Equal Justice, Wash. St. B. News, July 2007:

In a groundbreaking move in 2006, the Washington State Supreme Court codified a common-law practice into Civil Rule 23, requiring that at least 25 percent of class-action residual funds in state cases be disbursed to programs that provide legal aid for those in need. Washington is one of the first states to adopt such a rule. While its ultimate impact remains to be seen, supporters of legal aid in Washington are hopeful that the new rule will generate significant funding to provide access to the civil justice system for all Washington’s residents.
The provision is in CR 23(f):
(f) Disposition of Residual Funds.

(1) "Residual Funds" are funds that remain after the payment of all approved class member claims, expenses, litigation costs, attorneys' fees, and other court-approved disbursements to implement the relief granted. Nothing in this rule is intended to limit the parties to a class action from suggesting, or the trial court from approving, a settlement that does not create residual funds.

(2) Any order entering a judgment or approving a proposed compromise of a class action certified under this rule that establishes a process for identifying and compensating members of the class shall provide for the disbursement of residual funds. In matters where the claims process has been exhausted and residual funds remain, not less than twenty-five percent (25%) of the residual funds shall be disbursed to the Legal Foundation of Washington to support activities and programs that promote access to the civil justice system for low income residents of Washington State. The court may disburse the balance of any residual funds beyond the minimum percentage to the Legal Foundation of Washington or to any other entity for purposes that have a direct or indirect relationship to the objectives of the underlying litigation or otherwise promote the substantive or procedural interests of members of the certified class.

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