In Pearson v. NBTY, Inc., Nos. 14-1198, 14-1227, 14-1245, 14-1389 (7th Cir. Nov. 19, 2014), the parties reached a settlement that included nearly $1.5 million in notice and administration cost, a $1.1 million payment to a charitable organization, and permitted fees up to $4.5 million, while class members could submit a claim entitling them to be paid a cash benefit of approximately $3.  In addition, defendant agreed to a 2 year injunction against the challenged practices.  Class members ultimately claimed $865,000 in benefits.  The district court approved the settlement and awarded $1.93 million in fees, reasoning that if every class member claimed the refund, the maximum class benefit was more than $20 million.  The Seventh Circuit reversed.  Reiterating its holding in Redman, the court stated the ratio that is relevant for valuing attorneys’ fees is the ratio between the fee and the total of the fee plus what class members received.  Using this ratio gives class counsel an incentive to design a claims process that will maximize the benefits actually received by the class.  The court recognized the Supreme Court held in Boeing Co. v. Van Gemert, 444 U.S. 472 (1980), that creating an option to file a claim creates a prospective value.  It distinguished Boeing, however, stating that in that case class counsel had created an actual judgment fund.  In this case, there was no fund, no litigated judgment, and there no reasonable expectation that a substantial number of class members would submit claims.  Thus, even as reduced, the fee was too high.  The court stated that where the percentage of class members who file claims is low, the presumption is that fees to class counsel should not exceed a third or at most a half of the total amount going to the class members and their counsel.  The court also addressed other problems with the deal: the notice, claim form, and modest average monetary award were bound to discourage claims; the cy pres relief was of no benefit to the class; and the temporary injunction was meaningless.  The court also disapproved the provision that any amounts not awarded as fees would revert to the defendant, rather than the class, concluding this was “a gimmick for defeating objectors” and there should be a “presumption of invalidity for such clauses.”