Nudge, Nudge, Wink, Wink: Behavioural Modification, Cy-Pres Distributions and Class Actions

Jurisdictions that have created class action regimes provide as one of their justifications the promotion of behavioural modification or deterrence of wrongdoers. Peculiar to some class action regimes is the phenomenon of cy-pres distributions, in which the class counsel and judge choose a form of distribution for class members. The justification for cy-pres distributions is to ensure that a defendant receives nothing back from the monetary award and is thereby required to internalize the true cost of wrongdoing, or to disgorge the profits of wrongdoing. The cy-pres remedy is seen as furthering the deterrence function of class actions. I argue that it is difficult to find empirical evidence to substantiate the claim of behavioural modification in class action litigation. However, if courts are serious about deterrence, then I suggest that reorienting the focus of cy-pres distributions to properly account for behavioural modification may provide a better chance of that outcome.