Last Friday, the Republican controlled U.S. House held hearings on cy pres awards in class action litigation.  Cy pres awards are final surplus funds left over from class action cases.  The tort reform lobby seeks to repeal cy pres awards under the Class Action Fairness Act of 2005 (CAFA). 

During a hearing by the U.S. House Subcommittee on the Constitution, Northwestern Law Professor Martin Redish testified about the problems with such awards, saying class members are unaware of the lawsuit or can’t be found, or the award is so small that it doesn’t make sense for them to seek payment.

According to the U.S. Chamber of Commerce’s Institute for Legal Reform, cy pres awards in class actions help pump up attorney fees for plaintiffs’ lawyers.  Testifying last week from the Institute’s viewpoint was John Beisner of Skadden Arps.  Beisner said cy pres awards help inflate the size of the award and justify higher attorney fees.

"At NALFA, we oppose the repeal of cy pres awards under the Class Action Fairness Act.  Unclaimed funds in class actions are better served with charities and non-profits than returned to the defendants, the very individuals who just conceded wrongdoing.  This is like allowing a bank robber to keep some of the stolen money after he's been found guilty," said Terry Jesse, Executive Director of NALFA.