THE “ILLUSION OF COMPENSATION”: CY PRÈS DISTRIBUTIONS IN CANADIAN CLASS ACTIONS

Abstract

In both the US and Canada, the now common use of cy près in the design of class action settlement distribution plans represents a radical transformation of the original cy près doctrine. Despite the facilitative role of class actions in aggregating claims, in some cases there may be no practical way to calculate or pay hundreds of thousands of small claims. The cy près device has become the mechanism by which aggregation of loss is effected. It is therefore used not only to dispose of unclaimed settlement funds, but to avoid having class members claim a portion of the settlement at all. In this way, cy près creates the “illusion of compensation” because the bulk of the class receives no compensation at all. This paper critically and empirically examines the use of cy près in Canadian class actions, with references to developments in American cy près jurisprudence. It explores the various judicial approaches to the device, and provides a comprehensive collection of data regarding the nature and extent of cy près use in Canada. The author concludes with observations about the policy implications of resort to cy près in Canadian class action settlements.