The Florida Supreme Court has rejected a rule proposed by the state bar association that would have encouraged courts to distribute unclaimed funds from class action settlements to nonprofit legal services organizations.

The court's decision on Thursday did not provide a reason why it rejected the policy, known as cy pres, though arguments presented to the court against the change cited the fact that the state bar would have been eligible for the funds, creating a conflict of interest in its recommendation. 

"The court … takes this opportunity to thank the [Florida Bar's] Access Commission for its efforts in identifying possible funding sources for nonprofit legal aid organizations and commends the commission for its continued work to address the civil legal needs of low-income and moderate-income Floridians," the decision said.

"However," it continued, "after thoroughly considering the [bar] committees' joint report, the Rules Committee's majority and minority positions on the proposed cy pres rule, and the comment filed, and having heard oral argument, the court declines to adopt the proposed rule."

The state bar formally proposed the rule to the high court in July 2018. The change would have allowed the courts to distribute unclaimed and residual funds from class action settlements to the Florida Bar and other legal nonprofits, with the goal being to increase access to justice and help with the functioning of the legal system.

A minority of the Rules Committee, however, maintained that the rule was not something the courts could implement on their own and would require the state Legislature to pass a law.

Retired lawyer Leza S. Tellam also formally objected to the proposed rule, suggesting that the Florida Bar was attempting to funnel money to itself.

She argued that many class actions provide little benefit to the class, with attorneys deriving most of the benefit through litigation fees, and accused the bar of looking to take its own cut of such awards.

She also argued that legal nonprofits were not the only suitable organizations that might be appropriate places to donate unclaimed funds. For example, she said, in a suit about opioids it might be appropriate to give any extra money to drug treatment and education programs.

These types of cy pres arrangements have become increasingly common for many courts, though some have challenged whether they are constitutional.

The U.S. Supreme Court recently took up a case involving cy pres but sent it back to the Ninth Circuit in March without ruling on whether the arrangements should be allowed, though some justices seemed skeptical of them.

The Florida Bar declined to comment Friday.

--Editing by Janice Carter Brown.

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