Key takeaways:

• District judges cannot approve class action settlements unless they know how much of a proposed settlement fund actually is making it directly into the hands of class members.
• Barring sufficient justification, only a small percentage of any common fund should be distributed to cy pres recipients rather than class members, and district judges may lower the plaintiffs’ attorneys’ fee to the extent monies are paid to cy pres recipients or reverted to the defendants.
• Going forward, plaintiffs’ counsel likely will have greater incentives to insist on settlements that yield greater payouts to class members, with less onerous proof-of-purchase requirements, and parties will have to provide more information about claims to district courts during the settlement approval process.