The Third Circuit recently approved the limited use of cy pres distributions in class action settlements. In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir. 2013) (No. 12-1165). Cy pres distributions can be proper where direct distributions are infeasible. In evaluating class settlements with cy pres awards, district courts should analyze the degree of direct benefit to the class. In this settlement, defendants paid over $35 million to a settlement fund. Over one-third went to class counsel. Of the remainder, only a small portion would go to class members. The rest was to be distributed to cy pres recipients. Because the district court was unaware of the amount of the fund that would be distributed to the cy pres recipients when it approved the settlement, the Third Circuit reversed the approval of the settlement and remanded the case to the district court to consider whether the settlement provided sufficient direct benefit to the class. The court also addressed whether a cy pres award can justify class counsel’s fee, or whether the benefit of that payment must be discounted. The court concluded it was unwise to require a discount of attorneys’ fees where a portion of the settlement is used to fund a cy pres distribution. The court noted that cy pres distributions present potential conflict between class counsel and their clients because the inclusion of a cy pres distribution may increase the fund, and thereby attorneys’ fees, without increasing benefit to the class. It directed the district court to consider whether counsel had met its responsibility to obtain a result that “adequately prioritizes direct benefit to the class.” That approach must be conducted on a case by case basis.