Judicial Philanthropy

New Orleans     Based on our experience with several class action suits, ACORN has come to know a little something what is called cy pres money.

Cy pres comes from the French expression “cy pres comme possible” meaning “as near as possible.” The derivation comes from the law of charitable trusts and how assets are distributed when a public charity goes belly up. The legal requirement of tax law is that the assets have to go to another charity, and if arising from the specific requirements of a will or trust then they would have to go to another charity that is “as near as possible” to the original charity to maintain a continuity of purpose with the donor’s intent.

In the world of litigation cy pres money is the money that members of the class do not collect after the time period has been exhausted for them to qualify for the remedy. A judge is left with the responsibility of making the distribution. Usually, the lawyers for both sides have already made a recommendation in the case about how to handle this but not always.

Adam Liptak, a legal columnist for the Times fretted in a recent column that judges were becoming philanthropists in doling out cy pres money which seems a little farfetched, though I will have to admit that I was blown away by how small-timey we are compared to some of the big league charities that are now trolling for dollars in the outer benches of some of these courtrooms for their bosses. Examples: Liptak provided included $5M to the George Washington University Law School from a chemical anti-trust settlement that they had nothing to do with that I could tell or a Chicago hospital and the Illinois Institute of Technology cashing in on another $5M left over from a diabetes drug settlement or the Lubavitch Chabad of Illinois, a Hasidic Jewish group, that received $2M from another drug case. Wow! Book me a plane to Chicago and get me a taxi to the Federal Courthouse — we can all chase those ambulances!

There seem to be efforts to arbitrarily “attach” some of this money to fund legal services though that seems to be venue shopping in the same way the charity develop folks are doing. Other folks seem offended that judges are getting into the charity business.

The real issue seems to be equitable distributions that align “as near as possible” to the original intention of the case. There in fact a real difference can be made. Why not streamline the information and referrals appropriately rather than getting hot under the collar about the few things that seem out of whack?

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