Residual Funds

Residual funds are settlement funds that remain after approved claims, expenses, attorney fees, and other court-approved distributions have been handled under the settlement plan. They may result from unclaimed payments, uncashed checks, claim reductions, or a fund containing more money than the first distribution used.

The settlement agreement and court orders determine what happens next. Some plans authorize a second distribution to eligible class members, often through a proportional calculation. Others direct remaining money to a cy pres recipient whose work relates to the interests of the class. A plan may also address reversion to the defendant or transfer of unclaimed payments under applicable state law.

The presence of residual money does not guarantee another payment. A second distribution may be impractical when administrative costs would consume much of the balance, and a court-approved plan can select another lawful destination for the funds.

Residual-fund rules can vary significantly by jurisdiction. Montana Rule of Civil Procedure 23 defines residual funds and requires at least 50 percent of qualifying residual funds to go to an Access to Justice Organization after the claims process is exhausted. The court may direct the remaining balance to that organization or another nonprofit connected to the litigation’s objectives or class members’ interests.

California follows a different statutory approach. California Code of Civil Procedure section 384 addresses unpaid residue and unclaimed or abandoned class-member funds. It generally directs qualifying amounts toward nonprofit or public-benefit purposes connected to the class, the underlying claims, or access to justice, subject to the statute and court-approved plan.

Residual funds are related to, but not identical to, an unpaid individual claim. A payment that remains owed to an identifiable claimant may be handled as an uncashed payment, reissue request, or unclaimed property before it becomes part of a residual distribution. Claim readers can use the settlement’s current entry and related payout guides to understand whether another distribution, a cy pres award, reversion, or unclaimed-property process may apply.