This case involved a settlement of consolidated antitrust class actions brought by consumers against retailers Toys “R” Us, Babies “R” Us and several baby product manufacturers. Class counsel asked for 40% of a $35.5 million common fund, and provided for cy pres payments although some class members went uncompensated.
CCAF objected that the $35.5 million figure was illusory because of a burdensome claims process, and appealed the approval of the settlement and fee request. On appeal, the settling parties admitted that the settlement would give less than $3 million to the class, $14 million to class counsel and $18.5 million to cy pres.
The Third Circuit held that the disproportionate ratio requires scrutiny from a district court, and that courts and class counsel should not be indifferent to whether recovery goes to class members or cy pres. On remand, the parties modified the settlement to provide approximately $15 million of additional direct recovery to class members, and the district court awarded CCAF fees for its role in improving the settlement.
Other class members appealed the approval of the settlement, which is pending in the Third Circuit.