Cy près settlements are used in situations where it would be impossible or impractical to locate all members of a class. Instead, the funds go to a third party, usually a charity that arguably has some connection to the purported class.

While that sounds like a win-win for everyone involved, the practice has come under academic scrutiny, at least in the common law world. There have been several examples where cy près payments to charities do not align with the nature of the litigation and instead, find their way to the class action lawyers’ favourite charity.

“I think the academics have put their finger on something, which is that there seems to be quite a different approach between the judges,” says Barbara Grossman, partner in Fraser Milner Casgrain LLP’s Litigation and Dispute Resolution Practice Group.

Class actions are supposed to provide restitution for plaintiffs and modify the behaviour of defendants. Judges accept cy près settlements because they fulfill that behavior modification mandate. However, the debate over the value of cy près settlements continues.

For more information, please read Drew Hasselback’s article “Cy près to be a big topic of discourse in Quebec” featured in the Financial Post (December 7, 2011).