In Re Baby Products Antitrust Litigation, 708 F.3d 163

Consolidated antitrust class actions settled regarding resale price maintenance of baby products against Toys 'R' Us, Babies 'R' Us, and manufacturers.
Settlement funded with $35.5 million; after fees and costs, remaining funds slated for distribution to class members first, then cy pres recipients.
Class members faced a three-tier payout scheme: up to 20% of actual price with proof, 20% of estimated price with proof, or a $5 payout without proof.
Awards for the first two tiers could be tripled up to three times the baseline; a priority structure dictated redistribution before cy pres.
Cy pres recipients would receive any remaining funds after distributions and administration, selected by the Court from proposed organizations.
Kevin Young, an unnamed class member, objected to the cy pres provision and allocation in the settlement.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether cy pres distributions undermine direct class recovery	Young contends cy pres reduces direct compensation to the class.	Defendants argue cy pres is permissible to use excess funds for related charitable purposes.	Cy pres permissible but direct benefits preferred; court must ensure sufficient direct class benefit.
Whether attorneys' fees should be discounted for cy pres portions	Fees should reflect only direct class benefits, potentially reducing fee if cy pres dominates.	Fees tied to overall settlement, not solely direct distributions.	Court may reduce fees based on level of direct benefit; no hard rule to always discount fully.
Whether class notice adequately advised about cy pres recipients	Notice did not identify cy pres recipients, impairing objectors' ability to challenge.	Notice sufficiently advised of cy pres possibility and later selection process.	Notice deemed adequate; potential recipients may be identified later with opportunity to object.
Whether the district court had sufficient factual basis to approve the settlement	Court lacked information on direct class benefit and actual allocations before approval.	Settlement terms were negotiated and approved; factual baselines existed at hearing.	Remand required to reassess fairness given actual and projected allocations to the class.

Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012) (cy pres approvals in some settlements)
In re Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24 (1st Cir. 2009) (cy pres framework and prudential considerations)
Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781 (7th Cir. 2004) (cy pres concerns and class counsel conflicts)
In re Lupron Mktg. & Sales Practices Litig., 677 F.3d 21 (1st Cir. 2012) (court discretion on cy pres recipient selection)
Boeing Co. v. Van Gemert, 444 U.S. 472 (U.S. 1980) (fee awards benchmark against entire fund where applicable)
Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423 (2d Cir. 2007) (fees based on total fund versus claims; need for discretion to adjust)
In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283 (3d Cir. 1998) (Prudential considerations for settlements)
Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975) (nine factors for evaluating settlement fairness)
In re Pet Food Prods. Liab. Litig., 629 F.3d 333 (3d Cir. 2010) (need for additional inquiries in thorough settlement analysis)