Cy Pres as an Antitrust Remedy

Posted by D. Daniel Sokol

Bert Foer of the American Antitrust Institute discusses Cy Pres as an Antitrust Remedy in his latest working paper.

ABSTRACT: This paper discusses the cy pres doctrine and more specifically the courts‘ authority to use cy pres remedies in antitrust lawsuits. The doctrine allows undistributed or unclaimed residue of a settlement or class action damages to be used to provide indirect, prospective benefit of a class of consumers. This paper argues that in antitrust cases the cy pres doctrine may be used as a remedy to restore competition within a specific market or to maintain competition more generally. However, a cy pres distribution is legitimate only if it is linked, directly or indirectly, to the underlying purposes of the statue that was violated. While some fluid recoveries proposed to courts have adequately reflected this nexus between the scope of the lawsuit and the cy pres distribution, in other cases the nexus was completely absent. Such cases are particularly dangerous because they give the courts unfettered discretion to hand out money to any cause the judge or the lawyers personally favor. Fair and clear selection procedures should be established in order to fulfill the best interests of absent class members and to minimize disputes over the settlement. Consistent with this, the cy pres doctrine can be utilized to assist the goals of antitrust.