Beginning Next Week: InsideCounsel will become part of Corporate Counsel. Bringing these two industry-leading websites together will now give you comprehensive coverage of the full spectrum of issues affecting today's General Counsel at companies of all sizes. You will continue to receive expert analysis on key issues including corporate litigation, labor developments, tech initiatives and intellectual property, as well as Women, Influence & Power in Law (WIPL) professional development content. Plus we'll be serving all ALM legal publications from one interconnected platform, powered by Law.com, giving you easy access to additional relevant content from other InsideCounsel sister publications.

To prevent a disruption in service, you will be automatically redirected to the new site next week. Thank you for being a valued InsideCounsel reader!

X

Court tosses $35.5 million Toys “R” Us antitrust settlement

3rd Circuit questions distribution of funds and attorneys’ fees

An appeals court has thrown out a massive class action settlement that aimed to resolve antitrust claims involving Toys “R” Us Inc. and baby-product manufacturers.

In 2005 and 2006, consumers and online retailers sued Babies “R” Us, claiming the retailer conspired with baby-product manufacturers to set a price floor for certain items.

Toys “R” Us opted to settle. Under the terms of the $35.5 million settlement, only $3 million would have been distributed among class plaintiffs; $14 million would have gone to attorneys’ fees and expenses. The remaining $18.5 million was supposed to go to one or more charities that the parties designated.

A district court approved the settlement, but the 3rd Circuit reversed the decision yesterday, saying the distribution of funds may be unfair to consumers and that the attorneys’ fees were excessive.

“In this case, class counsel, and not their client, may be the foremost beneficiaries of the settlement,” the court said. “The current distribution of settlement funds arguably overcompensates class counsel at the expense of the class.”

The court also noted that cy pres awards—through which parties can designate settlement funds to charities—“should generally represent a small percentage of total settlement funds.”

The case now heads back to the district court where a judge will reevaluate the settlement’s fairness and the attorneys’ fees.

Read Bloomberg and Thomson Reuters for more about the decision.

For more recent antitrust-related news from InsideCounsel, read:

New study defends private antitrust lawsuits

Court revives antitrust case against grocers

Pay-for-delay deals rise

Google, FTC reach settlement

Ashley Post

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.