Legal Case Summary

Judge Greenaway and I are privileged to have with us sitting five days in the federal circuit Judge Kathleen O'Malley. It is a, uh, Judge O'Malley, I don't know if this is your first time sitting with us. First time here, yeah. Uh, may it be the first of many? It is, it is really truly a pleasure to have you with us. We have two cases this afternoon. The first is Idrae Baby Products and a Trust litigation. Number is 12 by actually 1165, 1166, and 1167. Mr. Frank, and then I guess Mr. Spector and Mr. Zawaman? Uh, may it please the court, Theodore Frank, for the appellance, and I'd like to reserve eight minutes for a rebuttal if it pleases the tour. We have here a $35 million settlement where the attorneys are getting $14 million in change. And there's another $21.5 million where to the state, there's nothing in the record indicating who and where it's going to. We don't know how much is going to the settlement administration, whether it's half a million or two and a half million or more even. We don't, sometimes on the settlement administration, although you don't really know until it's over. That's correct, Your Honor, but in this case, uh, the claims very ended August 1st and the judgment issued in December. Uh, there's going to be between $10 million and $15 million going to Cypher recipients. We don't know how much and we don't know to whom. And that's still not in the record

. And all we know about what's going to the class is that as of the date of the fairness hearing, there are 41,000 claims. And we don't know whether those are $5 claims or 180 claims or $15 claims or something in between. First of all, what was it exactly that you objected to in the district court and appealed to us? We as you were saying, essentially, there's, there's due process violations here as to what? There are a variety of problems with the final judgments approving the settlement and we're appealing the settlement approval and we're appealing the $14 million attorney for the underworld 23H. And on the settlement part, what is your, what is the violation of due process there that you claim? The World 23 E noticed it's not indicate who the Cypher recipients are giving the class no opportunity to object to that. There's no procedure below establishing that the class will ever be given notice of who the Cypher recipients is. I thought that on that one, the Cypher recipients will be noticed and when they're determined and that you have an opportunity to object at that time. Is that not correct? There's nothing in the settlement providing for that. That's the representation of the parties on appeal after we've appealed. Had we not appealed and then attempted to appeal later, they would have said you should have appealed before. So we're in a situation where if we don't appeal now and get a ruling one way or the other whether we should appeal now or appeal later, we would be prejudiced later. Let me take a step back. It would seem that if you have what is this a $34 million settlement? A $35 million. Okay. 35 and that it is estimated that at best, $8 million will go out to the three classifications or three categories of possible recipients. Is that correct? 18 or so, but they follow in three groups. That's correct. I thought it was $8 million to the three groups. Well, we don't know that it's $8 million. It's probably closer to $1 or $10 million

. But that's why I said $8 million at best. But there are three, there's sort of a matrix. There's six certified subclasses based on individual products. Some are $300 products. Some are much cheaper. And then there are three categories. Judging from the code, they said that she thought it would be $8 million at best. That's correct. Okay. So let's just give it the at best for the moment. And then you have going out to council, $11 million plus fees, or I'm sorry, plus expenses, which equal another two to three million. So roughly $14 million to council. And under that best scenario, you would have $12 million going out to yet unidentified side-pray recipients. Is that correct? That's correct, yeah. And I thought your argument would be that doesn't fit as to what normally is done in a class action. But it doesn't seem that's really the argument you're making. Well, that is one of the arguments we're making. And where is it in the brief? It's in the section where we're complaining about the proportionality of the attorney fee relative to the class recovery. Well, that sounds like what you're saying there is you should take $35 million, less the whatever goes to the side-pray recipients, which is yet to be identified, and not really calculate attorney's fees until you subtract the side-pray amount from the actual amount going to the class

. Well, you're on our understanding and under-predential. This circuit follows a percentage of the recovery standard. But it would be a recovery to a class as opposed to a payout to... I'm just telling what I would expect to see, but I didn't see it there. I really thought I'd put it there. And we cited heartland and we cited prudential and we cited a variety of cases relating to the issue of the proportionality of the attorney fee relating to the class recovery. And all we're asking for is that the district court, instead of doing a percentage of the fund basis, to what the actual circuit standard is, which is a percentage of recovery basis. That's an attorney's fee. I'm talking about the settlement itself. Well, that's reflected in the fact that the notice, the 23 E notice about how to make a claim, and the four-page claim form, which deterred class members from making legitimate claims by telling them, by failing to tell them the ways that they could make legitimate claims for substantial amounts of money, and instead tell them, if you fill out this four-page form, all you're going to get is $5. That reduced the number of claims, and that's one reason why we only have 41,000 claims and one reason why. Part of the reason for that, I mean, at least I can understand the principle is you don't want to give a whole lot there because a lot of people might just file a claim form and never have purchased anything. Well, and that's why you require these things to be done independently, perjury. That's why you can have audit procedures. And certainly, that's a reason to prioritize the people who have the better proofs to purchase the receipts and the credit card statements over the people who only have photographs or declarations. You suggest that we should say adopt the ALI principles for purposes of use of Cypriar awards. But I don't see anything in the ALI principles that says that the Cypriar has to be identified up front before the settlement can be approved

. But you seem to say that the initial notice has to contain those, the identity of the Cypriar recipients. Where do you read that in the ALI? I don't read that from the ALI. I read that from the fact that it is a material turn of the settlement that can scuttle a settlement as happened in Dennis versus Kellogg out of the night circuit on September 4th. And as happened in several other cases such as Notion versus AOL. You're asking that's beyond what you're asking as it relates to ALI principles. You want us to also adopt an additional requirement. Is that right? I want the court to do the same thing that the Dennis V Kellogg court did, which was say that you can't have a trustless approach to Cypriar. Now as it relates to the size of the Cypriar, are you arguing that class members should be over-confensated instead of having a large sums going to Cypriar or simply that there should be a mechanism to make sure that they're sufficiently compensated? I'm not quite sure which argument you're making. The court can go either way on that. The ALI says that you don't have to have a windfall go to class members. So we're not saying that you have to have a windfall go to class members. But the class members with $175 claims who are only getting $5 under the settlement because the Cyprias prioritized ahead of them. I think that set of class members is unfairly prejudiced. Is your objection to the notice in any way tied to this Cypri issue? It's hard to tell. Whether your objection to the notice is independent or whether you're saying that somehow the notice would have resulted in more class members in the other subclasses. Those are three separate issues. One is the notice of how a class member can make a claim. One is the notice to the class of who the Cypriar recipient is. And one is the prioritization problem where the court failed to follow clear

. And other precedent in putting the class members ahead of the Cypri. Right. And in what ways do you propose that the class members get put ahead of the Cypri? The Cyprias not distributed until all class members have been fully compensated as clear says 6.58 F3 4.60. Okay. And I'm just I'm still trying to find out which class members do you think have not fully compensated? Are you limiting yourself to the $5 recipient? Yes, Your Honor. We're not challenging the the whole thing that the class members who got 60% of their purchase price are are fairly compensated. Well, let me pick up on something that you mentioned a few months ago. The trust us notion. Isn't it really not trust us since there's court oversight? Well, there was court or oversight in Dennis versus Kellogg too. Yeah, but this is not where when we picked that the Cypriar recipient or recipients, we will let you know and you can come in and object that seems to be different from Dennis by a significant margin. Well, there's no procedure in the settlement saying you can come in and object and there's not even anything in the court order saying you can come in and object. That's something they now agree that they now agree that that they now agree to that. They now agree to that. And but if you affirm without saying you can come in and object, we don't get to object. And as I'm sorry, I want to just finish this one point. So you don't disagree or no double negative. You agree with that procedure

. I don't agree with that procedure because I think it's better for the court to do it in one fell swoop rather than piecemeal. That's what Dennis versus Kellogg held, but it's an acceptable we're not going to appeal that to the Supreme Court if that's what this if this court decides that work that the third circuit's happy with multiple appeals. But we need to have that precedent. I think we all like to not make decisions when we don't have to and if there's some agreement then you know it takes it off the table. I well like I said, I don't agree. I think that Dennis versus Kellogg rule is better that you don't you shouldn't have piecemeal appeals. You shouldn't force defendants to have two sets of notice going out to class numbers just to it all at once. But even okay in that case, what would you have appealed on then if you if the sign-pray recipient was recipients were listed at that time at the time of the settlement. And let's say you were satisfied with them. Would you would you still have objected? Yes because the fees are disproportionate to the class recovery and the notice to the class that they could recover. The settlement is structured to benefit the attorneys and the attorneys' favorite charities rather than the class members. How much additional do you think would go out the class members if there were modifications made to the settlement agreement? What would like to have would like to be? There's 1.3 million class members. You know even if just 10% of them made claims that would triple the number of claims made and instead of one or two or unrealistically 8 million being distributed to class, we could see the entire 18 19 million goes to the class. And again we don't know how much is actually left over after settlement administration and notice. That's just by correcting the notice issue. That's correct. Okay. I see I've run out of my initial time

. I've asked for a battle time and I'll get you back. Thank you. Thank you. Mr. Spector. Mr. Jembrune may please the court, Eugene Spector, on behalf of the appellees class plaintiffs. Maybe at the outset. There's something about this type of settlement that doesn't seem as out of the norm where you have a or seems to be out of the norm where you have at best going to class recipients 8 million probably significantly less than that under the current way it's set up. You have 14 million going to council and 13 million going to Cyprize recipients. Normally you don't see the class members getting less than council. Normally you don't see class members getting less and I mean significantly less in both cases than the Cyprize recipients. And I mean I've talked with other judges on this and nobody seems to remember anything like that. I'm not aware of a similar situation either, Your Honor, but I think I'd like to take this back and put the whole thing into a context. We entered into a settlement agreement. The purpose of the settlement agreement was obviously to compensate the class members. We divided the class up based upon the products that were involved. We allocated damages based upon the analysis done by our expert in terms of what those damages would be. We presented that to the court for preliminary approval and sending notice to the class

. And in that notice and in the claim form, we explained to the class these various categories and what would be involved. And in fact the claim form itself spells out the language that is at issue here and the claim form says that to recover the maximum amount you can from the settlement fund for your purchases attach documentation showing your purchases of the products listed above. Well did you anticipate that a lot more claims were going to be made? Absolutely. So you didn't anticipate such a huge Cyprize? Of course not. And why is it then that you didn't build in a mechanism into the settlement agreement to guard against that huge Cyprize such as a second notice to the class attempting to get more claimants or a potential for re-negotiations of the $5 cap? I mean wouldn't it have been better to guard against this result? Well, Your Honor, I will be honest with you. I guess with hindsight a lot of things would have been better. But if you look at it at the time and let's do that. At the time, we knew that we had $35.5 million in a settlement fund. We knew that we had and that represented approximately 24% of the damages that the class members could claim. We knew that we had 1.3 million notices to send out. We had that information. We assumed for purposes of determining and you can assume anything that you like, but for purposes of determining whether Cyprize actually would come into effect, we thought about 10% claimants and 5% claimants. And when you apply that and assume that half of them would be $5.5 and half of them would be full value claims for one of a better expression. All of the money is used up. We don't get to Cyprize. But maybe this is my economics background, but that's one assumption

. Of course. Shouldn't you have also made the alternative assumptions that would have guarded against exactly what occurred here? I mean, the putting aside whether the court adopts the ALI principles, and there are plenty of courts that have said that Cyprize is supposed to be the exception. It's not supposed to be the tail wagging the dog, which is what it ends up being here. Especially when you have the attorney's fees award applied against the entirety of that figure. So shouldn't you have made the alternative assumption that perhaps there would be money left over that would be too large for a reasonable Cypriot award? There's always that that possibility certainly does always exist. The question then becomes whether what you can do to resolve that problem is more costly and will result in more benefit. But then the alternative. But I'll notice in a redistribution to the class is not going to cost 10 or 11 million dollars. No, it won't. It will probably cost one and a half or two million dollars. And it would probably it might result in more claimants, but it might also result in the same number of claimants. Well, if it were resulted in the same number of claimants, then wouldn't you just change your assumptions with regard to how you came to the five dollars? Wouldn't you just say well, we now know, let's say you get you you you you you you get the same number of people. Now we know the entirety of the class. You know, we think that the percentage of distribution to Cyprize, to council. And to the classes is skewed. We want to change the percentage. You can do that. Again, again, with proper notice to the class with proper opportunity for people to come in and object do almost anything, Judge Brewer. There's no question about that

. The question here is, though, I'm a district court judge. My job is to review the settlement and determine whether it's fair, reasonable and adequate at the time I review it. So the first time I review it is, of course, at the time of preliminary approval, when notice has to go out that describes the settlement to the class. Then the next time I have to review that is before the close of the claim spirit, but at some time later, so there's a bit more information, not necessarily enough information to tell you that there's going to be a small number of claims. The assumption that Judge Brody made here that there would be at best an eight million dollar set of claims might very well have been right and also might have been wrong. As it turns out, it probably was an overestimation. I think it probably was. I mean, the problem you have here from a court point of view is an optics issue. If you have a, for example, a presidential opinion that comes down that says, okay, we're going to adopt the ALI principles and under those ALI principles, we're going to approve or allow a settlement to go forward in which you have much, much less going to the class than you do to counsel and much, much less going to the class than you do the yet unidentified Cypriot recipients. It sends a message that, okay, I can file a suit here, settle, and among other things, get attorney fees based on the the full amount of the settlement when in fact, I really didn't benefit the class that much. And don't get me wrong, I realize here that you're taking a big hit on the dollar. So I'm not, but it's what we've, the facts that you have in this case before us are not a great set of facts in which to go out and set precedent. I guess part of the problem comes back to how how many times does a district court judge have to review and how often should a district court judge have to review a settlement agreement and settlement terms to determine whether it's very reasonable and adequate and then come back and revisit that issue. But if we set a standard and for, in this particular case, I think it's very difficult for anyone to argue that Judge Brody did not follow the law. If you look at her opinion, if you read her opinion, but she followed, but in this case, everything of this court has to look at the purpose of a class action is primarily to compensate those in a class. And when those in a class who are under category one or two, I guess, are getting trouble the claim that they have. And yet the aggregate amount is so little compared to the amount of the settlement. You know, look at do good. I understand that, Your Honor, but how, part of the problem is how do we make people file claims? We send out, we send out notice. I'll tell you what your friend's response from the other table will be and that is that you send out a notice that gives them some hope that they might be able to actually file one successfully. I mean, the argument was that you noticed it was so strict with respect to what the requirements were. I mean, I don't keep proof of purchase on major purchase as much as baby furniture. And, and Your Honor, nor do I. And one of the reasons that we provided for people to be able to make claims without proof of purchase was for that very reason. Well, there's a bait as to whether or not your, your, your, well, you're talking about the five dollar claimants. Yes. Okay. And, you know, judge Brody made a decision. The question about whether the five dollar was a fair payment to a group of people who had no objective proof that they purchased the product that they purchased it at babies arousen that they purchased it during the class period. She viewed as not an unreasonable burden and not an unreasonable thing to do because otherwise you're going to encourage fraud. And that was a balance that she tried to make. I agree that fraud is not a good thing and that you need to, to try to guard against it, but just hypothetically, are you going to submit a false statement under oath to a federal court for 750? You can submit a false statement under oath for a federal court to a federal court for $10. Well, Your Honor, first of all, it's $5 a product and it's eight products, so it could be $40. That's first. Secondly, people do it. Even there, it's not worth the jail time. Well, I don't think, I don't think any of it's worth the jail time, Judge Ambrill. And I personally wouldn't do it

. I'll tell you what your friend's response from the other table will be and that is that you send out a notice that gives them some hope that they might be able to actually file one successfully. I mean, the argument was that you noticed it was so strict with respect to what the requirements were. I mean, I don't keep proof of purchase on major purchase as much as baby furniture. And, and Your Honor, nor do I. And one of the reasons that we provided for people to be able to make claims without proof of purchase was for that very reason. Well, there's a bait as to whether or not your, your, your, well, you're talking about the five dollar claimants. Yes. Okay. And, you know, judge Brody made a decision. The question about whether the five dollar was a fair payment to a group of people who had no objective proof that they purchased the product that they purchased it at babies arousen that they purchased it during the class period. She viewed as not an unreasonable burden and not an unreasonable thing to do because otherwise you're going to encourage fraud. And that was a balance that she tried to make. I agree that fraud is not a good thing and that you need to, to try to guard against it, but just hypothetically, are you going to submit a false statement under oath to a federal court for 750? You can submit a false statement under oath for a federal court to a federal court for $10. Well, Your Honor, first of all, it's $5 a product and it's eight products, so it could be $40. That's first. Secondly, people do it. Even there, it's not worth the jail time. Well, I don't think, I don't think any of it's worth the jail time, Judge Ambrill. And I personally wouldn't do it. But I think that we're fairly aware that it gets done. That false claims are submitted in these cases. We check, we look, as we said in the record below, we consulted with our administration expert about what numbers should be used. How do we balance between encouraging claims and discouraging fraud? How do we deal with these issues? And that was a number that they suggested and thought would be fair. But then that brings you full circle back to the issue with respect to the notice to the other classes, which is, which is, did you really need to require the proof of purchase in that whole discussion that you had with the trial court during the settlement hearing where he said, well, maybe somebody could send in a photograph, but there was nothing in the notice that would allow that. Oh, I disagree, Your Honor. I think that the note, you're reading the notice far more narrowly than I think a class member would read it. It says that you need some form of documentation. It gave examples of the kind of form documentation that would be acceptable, but there didn't say that's the only kind. And in fact, it said quite openly that anything would be fine. The fact of the matter is that documentation means anything that would prove it. And a photo in and of itself won't prove that you're a class member. It'll prove that you have a picture of the product. You're going to need some more evidence. And I think, as I said in the record, you're going to have to show with whatever it is you produce that you've bought it at Babies R Us at the very least. And that doesn't happen with just a photo. So really, the problem that we have, it's clear as the number distribution. But your point is, listen, sure, things could have been done differently, but there's nothing that Judge Brody did that was improper. If we want to come up with a new test, we can come up with a new test or specific directions

. But I think that we're fairly aware that it gets done. That false claims are submitted in these cases. We check, we look, as we said in the record below, we consulted with our administration expert about what numbers should be used. How do we balance between encouraging claims and discouraging fraud? How do we deal with these issues? And that was a number that they suggested and thought would be fair. But then that brings you full circle back to the issue with respect to the notice to the other classes, which is, which is, did you really need to require the proof of purchase in that whole discussion that you had with the trial court during the settlement hearing where he said, well, maybe somebody could send in a photograph, but there was nothing in the notice that would allow that. Oh, I disagree, Your Honor. I think that the note, you're reading the notice far more narrowly than I think a class member would read it. It says that you need some form of documentation. It gave examples of the kind of form documentation that would be acceptable, but there didn't say that's the only kind. And in fact, it said quite openly that anything would be fine. The fact of the matter is that documentation means anything that would prove it. And a photo in and of itself won't prove that you're a class member. It'll prove that you have a picture of the product. You're going to need some more evidence. And I think, as I said in the record, you're going to have to show with whatever it is you produce that you've bought it at Babies R Us at the very least. And that doesn't happen with just a photo. So really, the problem that we have, it's clear as the number distribution. But your point is, listen, sure, things could have been done differently, but there's nothing that Judge Brody did that was improper. If we want to come up with a new test, we can come up with a new test or specific directions. If something unusual like this happens, I think part of the problem is none of us have ever seen a distribution like this before. If this case were, let's say, 20 million to the class and 14 for council fees, you might say, okay, fine. Because that's the usual case. Side Korea is usually an apt thought. It's the residue after you're fully compensated to class. And that was the intent here. That's what we tried to do. We set up a procedure. I know Mr. Frank says there's no procedure, but the settlement agreement provides that the plaintiffs and the defendants would recommend site potential site prayer recipients to the court. The court would evaluate that and make a decision. So there is a procedure involved. And anytime the court's going to enter an order, that order is applicable. I'm not sure what it is that Mr. Frank is complaining about in terms of applicability. Well, let me ask you this. I'm not going to focus on a peel of belly. I'm just going to focus on sort of a practical view of this. Is it a practical resolution that district courts in the future when any time the site pray distribution exceeds the class distribution that that's a red flag of sorts? Here it is a little extraordinary, but is that something that's workable or I guess part of the problem is when do you know? I mean, Mr

. If something unusual like this happens, I think part of the problem is none of us have ever seen a distribution like this before. If this case were, let's say, 20 million to the class and 14 for council fees, you might say, okay, fine. Because that's the usual case. Side Korea is usually an apt thought. It's the residue after you're fully compensated to class. And that was the intent here. That's what we tried to do. We set up a procedure. I know Mr. Frank says there's no procedure, but the settlement agreement provides that the plaintiffs and the defendants would recommend site potential site prayer recipients to the court. The court would evaluate that and make a decision. So there is a procedure involved. And anytime the court's going to enter an order, that order is applicable. I'm not sure what it is that Mr. Frank is complaining about in terms of applicability. Well, let me ask you this. I'm not going to focus on a peel of belly. I'm just going to focus on sort of a practical view of this. Is it a practical resolution that district courts in the future when any time the site pray distribution exceeds the class distribution that that's a red flag of sorts? Here it is a little extraordinary, but is that something that's workable or I guess part of the problem is when do you know? I mean, Mr. Frank talks about the Dennis case in California, then it's versus Kellogg. In that case, if you look at the settlement agreement, the first thing it provides is for a five and a half million dollar site pray fund. And then for a million or two million dollar cash fund for the class. And obviously, when you have that kind of a set up, you know that there's going to be a site pray award. You can talk about who the recipients are and when. I'm Judge Brody Souterman. I mean, she made the assumption that the site prayer award would be larger than the award to the class. I mean, that's not that different here. Well, I think it's not a situation in which everybody thought it was going to be a small residue left over. Everybody knew at the time of the approval that it was going to be larger than the payments of the class. At the final approval, not at the time of the settlement agreement. Well, at the time that the settlement agreement was negotiated inside, not at the time that the notice was sent to the file approval is when the judge has to make that decision. You know, that initial approval is supposed to be a very cursory look. There's no, I mean, the law is very clear on that. But that doesn't mean that you're stuck with it. That's why you have another hearing. Of course. And if there were a judge Brody thought that there were a problem, she would have obviously not approved the settlement because that would have been what her option was. It wouldn't have been to rewrite the settlement

. Frank talks about the Dennis case in California, then it's versus Kellogg. In that case, if you look at the settlement agreement, the first thing it provides is for a five and a half million dollar site pray fund. And then for a million or two million dollar cash fund for the class. And obviously, when you have that kind of a set up, you know that there's going to be a site pray award. You can talk about who the recipients are and when. I'm Judge Brody Souterman. I mean, she made the assumption that the site prayer award would be larger than the award to the class. I mean, that's not that different here. Well, I think it's not a situation in which everybody thought it was going to be a small residue left over. Everybody knew at the time of the approval that it was going to be larger than the payments of the class. At the final approval, not at the time of the settlement agreement. Well, at the time that the settlement agreement was negotiated inside, not at the time that the notice was sent to the file approval is when the judge has to make that decision. You know, that initial approval is supposed to be a very cursory look. There's no, I mean, the law is very clear on that. But that doesn't mean that you're stuck with it. That's why you have another hearing. Of course. And if there were a judge Brody thought that there were a problem, she would have obviously not approved the settlement because that would have been what her option was. It wouldn't have been to rewrite the settlement. It wouldn't have been to do anything other than at that point, disapprove it. What about the possibility of going back and doing a recaculation as you had alluded to earlier when you have a more final, the amounts that are paid out and that you anticipate coming in? That obviously can be done. It's done in the cases of under CAF I believe where you have a coupons settlement. But we don't have a coupons settlement here. We have an all cash settlement. So we know what the fund is. The only question is how was it ultimately going to be distributed? I think that no one at any point thought prior to seeing the claims as they came in by the settlement era, anybody thought at any time that the Cypriot fund would be larger than the claims fund. Although it seems as if at the time that Judge Brody made the high estimate of 8 million, that looks like, if so fact, though, you've got a huge amount of a Cypriot distribution to come and you haven't even notified anybody who that will be because perhaps at the time you didn't even know who it will be. Well, I don't think at the time, Your Honor, we didn't think it made sense to try to identify potential Cypriot recipients and get the court to approve that as part of the settlement because we didn't know whether they were going to be any and we didn't know what the amount would be. So that would have some in. That would have some in. Brody estimate that at best there would be 8 million dollars to distribute. That was at the final settlement approval here in Your Honor, not at the time we entered in the settlement agreement. That was after part of the claims process that played itself out. So at the final settlement approval, I mean, you've got sort of a couple of uh-oh moments then because as you said, you haven't seen this. I've talked with others. They haven't seen it. That's correct. We're in a different area than anything any of us have dealt with before or seen

. It wouldn't have been to do anything other than at that point, disapprove it. What about the possibility of going back and doing a recaculation as you had alluded to earlier when you have a more final, the amounts that are paid out and that you anticipate coming in? That obviously can be done. It's done in the cases of under CAF I believe where you have a coupons settlement. But we don't have a coupons settlement here. We have an all cash settlement. So we know what the fund is. The only question is how was it ultimately going to be distributed? I think that no one at any point thought prior to seeing the claims as they came in by the settlement era, anybody thought at any time that the Cypriot fund would be larger than the claims fund. Although it seems as if at the time that Judge Brody made the high estimate of 8 million, that looks like, if so fact, though, you've got a huge amount of a Cypriot distribution to come and you haven't even notified anybody who that will be because perhaps at the time you didn't even know who it will be. Well, I don't think at the time, Your Honor, we didn't think it made sense to try to identify potential Cypriot recipients and get the court to approve that as part of the settlement because we didn't know whether they were going to be any and we didn't know what the amount would be. So that would have some in. That would have some in. Brody estimate that at best there would be 8 million dollars to distribute. That was at the final settlement approval here in Your Honor, not at the time we entered in the settlement agreement. That was after part of the claims process that played itself out. So at the final settlement approval, I mean, you've got sort of a couple of uh-oh moments then because as you said, you haven't seen this. I've talked with others. They haven't seen it. That's correct. We're in a different area than anything any of us have dealt with before or seen. To a certain extent, Your Honor, I would say that the, while it's not quite that of that magnitude, the Lupron case deals with that kind of idea where unfortunately the number of claims that were made were less than anybody anticipated and there was an 11 million dollar settlement Cypriot fund to be awarded. So in Lupron it was certainly not to the same degree that it is here, but that idea did, did present itself to the court and the court I think dealt with it appropriately. But I guess in Lupron, the um- the court made a determination that the um-scope of the claimants had been essentially exhausted. They knew this is the full extent of the claimants. And obviously your adversary says that not so here. Well the question here I guess on that issue, Judge Greenaway, is whether paying five dollars to those who submitted a claim form without any substantiation that they actually purchased the product satisfies their claim. Right. If it does, yeah that's one thing. If it does, then I don't think there's an issue with regard to the Cypriot recipients. And I think, and I think that Mr. Frank kind of conceded that if there weren't Cypriot here, setting up a class or a subclass based on those without proof of purchase at some set number, a small number in order to balance for fraud would be acceptable. It's the problem here from his standpoint is that there's a Cypriot recipient who's going to get money that these class members might otherwise get. I think that's what his problem is. Not the fact that there's a five dollar cap for people who have no proof. Well, I think if he read the microphone he'd say it's both but that's needed. I'm sure he will. We can be certain of that right. I can almost guarantee that Judge Greenaway. Why don't we hear from Mr

. To a certain extent, Your Honor, I would say that the, while it's not quite that of that magnitude, the Lupron case deals with that kind of idea where unfortunately the number of claims that were made were less than anybody anticipated and there was an 11 million dollar settlement Cypriot fund to be awarded. So in Lupron it was certainly not to the same degree that it is here, but that idea did, did present itself to the court and the court I think dealt with it appropriately. But I guess in Lupron, the um- the court made a determination that the um-scope of the claimants had been essentially exhausted. They knew this is the full extent of the claimants. And obviously your adversary says that not so here. Well the question here I guess on that issue, Judge Greenaway, is whether paying five dollars to those who submitted a claim form without any substantiation that they actually purchased the product satisfies their claim. Right. If it does, yeah that's one thing. If it does, then I don't think there's an issue with regard to the Cypriot recipients. And I think, and I think that Mr. Frank kind of conceded that if there weren't Cypriot here, setting up a class or a subclass based on those without proof of purchase at some set number, a small number in order to balance for fraud would be acceptable. It's the problem here from his standpoint is that there's a Cypriot recipient who's going to get money that these class members might otherwise get. I think that's what his problem is. Not the fact that there's a five dollar cap for people who have no proof. Well, I think if he read the microphone he'd say it's both but that's needed. I'm sure he will. We can be certain of that right. I can almost guarantee that Judge Greenaway. Why don't we hear from Mr. Wainman? Thank you. I'd have to admit please the court Mark Wainman from Reed Smith. I represent the two-userous and babies-erest defendants but I'm speaking today on behalf of all the defendants with the exception of McLaren. McLaren is in bankruptcy and there's been relieved from the automatic state the appeal to proceed but they haven't appeared today. Your honor suggests that this case is a little bit out of the norm and I think we all agree with that. The issue however is that none of us knew or anticipated that it was going to be out of the norm at the time that we signed the settlement agreement and I think at least providing a defense perspective. I can tell you that we yielded relatively easily on the provision of the agreement concerning excess funds going to side-pray because we didn't have any great anticipation that there was going to be any meaningful amount that necessarily- The problem I have with this argument is that you're making the same point I guess that your council for the claimants did and that is that somehow it's more important what happens at the time of the initial approval than there is at the time of the final approval because as of the final approval everybody knew that there was going to be a huge side-pray award and there's still an opportunity at that point for an effort to say you know what you need to come over the mechanism and the court could have simply ordered you all to say sit down and either renegotiate that $5 cap or possibly consider you know re-noticing to the class to make it clear that the standards were not quite as strict as it might have appeared in the notice or to find more class members courts do that all the time. I understand you're on it I think there's a couple of things in in your question slash statement first at the time of the final hearing the claim spirit hadn't ended yet but it was far along and I think it could have been reasonably anticipated that we weren't going to get the kind of yield that we had at all anticipated. The notice point I think is is really a separate issue and the suggestion by Mr. Frank is that the notice was faulty because it didn't specifically say that a photograph would have been acceptable and I think that that's really you know an argument without any merit if you look even to the federal rules of civil procedure when they talk about what's you know within a document request in rule 34 it provides a litany of different types of things included among those things are photographs and other graphic images of the suggestion that you know other records wouldn't include a photograph I think is it's just a faulty one so indeed I think that the fact that many claims I think came in for the five dollars suggests that people weren't prevented in any way or discouraged from putting in claims. What was the aggregate amount of claims for the five dollars category? I'm not certain I think it's in the range of somewhere north of 30,000 is my understanding? So that only equals roughly 150 to 160,000 dollars total. Correct, Narada. So I don't think those folks were discouraged and I think that the reality in terms of assessing that five dollar point when we negotiated was you know there was some sentiment towards not providing anything in the settlement for those who couldn't document their claim which is not an unreasonable position I think one that likely would have been approved by the court in which because we wouldn't be here. Another point of view is and this is a defense point of view is perhaps if we had set up an agreement that said we'll pay you know treble damages for anybody who can document the claim and we'll get five dollars for anybody who will swear that they actually purchased the product and we'll pay whatever attorneys use the court awards right I don't think we'd be here today right because it's just this Cypriot issue which suggests to me that you know perhaps plaintiffs counsel and it pains me a bit to say so that a really good job in getting us to pay as much as we did because candidly none of us expected the circumstance that presently exists to be the case. We just would never have anticipated that. Well from your perspective it's not a situation in which the question is whether you have to pay more money it's really a question of the allocation of what's been paid correct? That's correct, Narada but it's also a question of what we would agree to and what we did agree to and why we don't want to encourage fraudulent clients. I mean the people who are getting money are my clients customers right these are the folks in order to be eligible for a claim you had to purchase one of these particular products at a Toys or Us or Babies or a Store or Online. So we feel good about the fact that as part of the settlement money is going to our customers and it's not going to strangers so that's a positive. The bottle line is you're not going to retainers

. Wainman? Thank you. I'd have to admit please the court Mark Wainman from Reed Smith. I represent the two-userous and babies-erest defendants but I'm speaking today on behalf of all the defendants with the exception of McLaren. McLaren is in bankruptcy and there's been relieved from the automatic state the appeal to proceed but they haven't appeared today. Your honor suggests that this case is a little bit out of the norm and I think we all agree with that. The issue however is that none of us knew or anticipated that it was going to be out of the norm at the time that we signed the settlement agreement and I think at least providing a defense perspective. I can tell you that we yielded relatively easily on the provision of the agreement concerning excess funds going to side-pray because we didn't have any great anticipation that there was going to be any meaningful amount that necessarily- The problem I have with this argument is that you're making the same point I guess that your council for the claimants did and that is that somehow it's more important what happens at the time of the initial approval than there is at the time of the final approval because as of the final approval everybody knew that there was going to be a huge side-pray award and there's still an opportunity at that point for an effort to say you know what you need to come over the mechanism and the court could have simply ordered you all to say sit down and either renegotiate that $5 cap or possibly consider you know re-noticing to the class to make it clear that the standards were not quite as strict as it might have appeared in the notice or to find more class members courts do that all the time. I understand you're on it I think there's a couple of things in in your question slash statement first at the time of the final hearing the claim spirit hadn't ended yet but it was far along and I think it could have been reasonably anticipated that we weren't going to get the kind of yield that we had at all anticipated. The notice point I think is is really a separate issue and the suggestion by Mr. Frank is that the notice was faulty because it didn't specifically say that a photograph would have been acceptable and I think that that's really you know an argument without any merit if you look even to the federal rules of civil procedure when they talk about what's you know within a document request in rule 34 it provides a litany of different types of things included among those things are photographs and other graphic images of the suggestion that you know other records wouldn't include a photograph I think is it's just a faulty one so indeed I think that the fact that many claims I think came in for the five dollars suggests that people weren't prevented in any way or discouraged from putting in claims. What was the aggregate amount of claims for the five dollars category? I'm not certain I think it's in the range of somewhere north of 30,000 is my understanding? So that only equals roughly 150 to 160,000 dollars total. Correct, Narada. So I don't think those folks were discouraged and I think that the reality in terms of assessing that five dollar point when we negotiated was you know there was some sentiment towards not providing anything in the settlement for those who couldn't document their claim which is not an unreasonable position I think one that likely would have been approved by the court in which because we wouldn't be here. Another point of view is and this is a defense point of view is perhaps if we had set up an agreement that said we'll pay you know treble damages for anybody who can document the claim and we'll get five dollars for anybody who will swear that they actually purchased the product and we'll pay whatever attorneys use the court awards right I don't think we'd be here today right because it's just this Cypriot issue which suggests to me that you know perhaps plaintiffs counsel and it pains me a bit to say so that a really good job in getting us to pay as much as we did because candidly none of us expected the circumstance that presently exists to be the case. We just would never have anticipated that. Well from your perspective it's not a situation in which the question is whether you have to pay more money it's really a question of the allocation of what's been paid correct? That's correct, Narada but it's also a question of what we would agree to and what we did agree to and why we don't want to encourage fraudulent clients. I mean the people who are getting money are my clients customers right these are the folks in order to be eligible for a claim you had to purchase one of these particular products at a Toys or Us or Babies or a Store or Online. So we feel good about the fact that as part of the settlement money is going to our customers and it's not going to strangers so that's a positive. The bottle line is you're not going to retainers. Correct. Yeah I mean the bottom line is your economic assumptions were off because you obviously thought you'd have a larger number of claimants the site pre would be not if not none exist and certainly nothing that we talk about you know that the classes would probably be you know north of 1516 million and this wouldn't be an issue. That's exactly correct. We went through and elaborate I mean if your owners have had the misfortune to read through the allocation order we spent a tremendous amount of time on that which involved essentially a determination that if there wasn't enough money in one of the settlement classes how money might be allocated from another settlement class to make sure that everybody ended up with something close to the same percentage recovery. But that's but that I think is getting to what Judge O'Malley has been asking about that is if certain assumptions are made you get to that point in time when everybody now sees where the numbers are shouldn't that have been the moment of reflection when folks said well wait a minute if if the site pre is an unordinately large number action should we be taking this step back and I understand the question I think the I think the answer is no one will tell you why yeah because I think an assessment was made in connection with the negotiations that a fair resolution for the class would involve a maximum travel damages to those who could document their claim and a maximum of a five dollar distribution for each settlement class that somebody who couldn't document their claim would get and end of the day right the fact that there are these additional funds doesn't mean that anybody out any of those who put in claim should get a windfall so then the question is and you see this in a lot of the case look how do you benefit the absent class members because we know that there are a lot of people out there there were you know I don't think 1.3 million is the right number for class members I think it's actually substantially an excess that we were able to identify that number of people with addresses that we could write to but there were many more people from prior years that we didn't have that information for so we know that there's you know probably a couple million people out there and how do we benefit them too because they were members of the class and that's what the side pray remedy is designed to achieve and the question is as a matter of preference right do you put the money in a side pray to give the money to side pray recipient or series of recipients that could benefit all those people or do you give those who we're just going to get $5 per settlement class more money for for some other reason just because there's extra money available and and I don't think that there's any error of law that judge Brody made even understanding as of the time of the settlement final settlement here and that it was very likely that we were going to have this disproportion if you will I don't think it's a wrong decision under the law to say this is a fair reasonable and adequate settlement by providing that those with documented claims get x those without get y and the remainder is going to go to charity for absent class members is not an inappropriate resolution well why didn't you help us with line drawing for a minute right if you think that this this this proportion is acceptable would a proportion where the class members got four million for instance and the side pray distribution was 16 would would that be reasonable there's got to be some point at which the proportion among the the the the three piles of funds has got to be off and I think that's what what what we're getting at at some point the side pray seems to be skewed and there has to be a recalculation I'm not I'm not sure that that's so your honor and I'll tell you why I think there's settlements and and you know they've been you know approved at the appellate level that really essentially provide that there's a remedy and there's funds and the funds don't go to the class per se the funds go entirely to side pray recipients and that's considered okay under certain circumstances where you can't identify the class members or it's too expensive to to you know send the send the funds to them so I think there you know there is the possibility that you could have a settlement with the the financial compensation is purely side pray which tells me that the proportionality that that you're on a describes isn't necessarily a requirement I haven't seen any cases that set forth the requirement that the amount that actually gets distributed as opposed to the amount that goes to side pray must be in a certain ratio I mean you know I get and I think we all do hear that this is out of the norm because we have none of us all of whom are experienced haven't seen a case quite as extreme as this in that respect but you know my view was and this was a matter that we negotiated at the time I mean you know not that it you know matters in any meaningful way but the issues to whether to give these folks five dollars was something that we negotiated hard and long about and and candidly I think on the defense side most of us was against it entirely we felt by all means give those who document their claims everything that they're entitled to but those who can't document their claims shouldn't get anything but I think giving them something shouldn't then open the door to say that you know it's you know it's an unfair settlement because a lot of money is going to to charity let me ask you this as of today what is the anticipated amount that you think is a range for payout to the class members my understanding your honor and I just saw some figures this morning I haven't had a chance to study them but I believe it's slightly under three million dollars is my understanding slightly under three million dollars and now I don't think that's not just so your honor understands I don't think that's a final number because this is a procedure that our settlement provides for in which the class administrator or the claims administrator is to report that back works with the plaintiffs council that then goes to the district judge and judge Brody would ultimately have to prove so let's just say this picking number let's go judge me always now let's say it's four million and the council fees and expenses come to 14 and that leaves 17 million or side-price and maybe the 35 million is the right number to settle let's assume it is the question then becomes and I think it's the point that judge or malice been probing for what could have been done at the time of the final approval of the settlement that could have made the numbers less glaring in terms of their contrast such as giving more to the five instead of five dollars giving ten or fifteen or twenty it's not going to be that much difference in terms of the the fraud that may come out probably none what about a renoticing to the class what about making the procedures otherwise easier to prove under category one or two you know and any other thing you can think of why wasn't that done or proposed I can't answer why something wasn't done other than you know it wasn't it wasn't on our plate it really wasn't suggested to us I think that the you know the objections that we received weren't quite as pointed as as the place that we are now I don't think there was a suggestion that we needed to notice again and remember we're at that point where we still have I think about three weeks to go in in the notice period and lots of people in procrastinators and we didn't know how many were going to come in between those two points in time but obviously we weren't going to get to a level that was going to be very very high I mean we anticipated that but we we didn't talk about it wasn't suggested and we didn't really consider doing something along those lines you know a hindsight is if we were to send it back you would get that opportunity I think that's right you're out of the question is you know should that be the case should should that should it be that in a class action settlement context right where I mean nobody claims that the notice program was not properly set up or was ineffective well mr. Frank is saying that he does object to not letting him know at the time of the approval who the Cypriot recipient or recipients would be that I that I understand I think he has two two complaints one is that and one is with regard to the photograph issue but I don't think there's anything in the record that suggests that either those emissions if you will had any bearing right on the number of claims that were filed I can't imagine that somebody wouldn't file a claim because they didn't know where side prey funds might go if if side prey funds were going to be in the picture at all I don't think that that's a reasonable rational decision in terms of the photograph issue sure I think that it's possible that you know if if the resolution were that you could just take a picture of your product and get more than the five dollars maybe other folks would have done it but that that wasn't what was said at the hearing that's not what any of our understandings are I mean is it possible that a photograph you know could have shown that you purchased from babies or us and when you purchased it's possible right some people take pictures of all kinds of events I mean if they took a picture coming out of the store with the shopping cart and it was a date on it you know I think the claims administrator probably would have said you know what close enough I mean it'd be nice to have a receipt but that's close enough but the average just you know being in the park and taking a picture of a stroller that doesn't get you any more than you're you're signed after David so I don't I don't think there was a serial number on it or what if you had a barcode on it I mean there's all kinds of things that could be identifying information that that's true but that you know there's no reason that wouldn't be another record that showed you know under the terms that are set forth both in the in the notice and in the claim form which says that other records would be acceptable that show you know that you purchased it from babies or us or toys or us and when you purchased it well it's I think you're missing so Jamfler's point here and that is that even if you objectively thought that that notice was okay the first time around by the time you got to the final settlement hearing you realized that not many people responded and so the question is maybe at that point you should have said we need to send out a notice that is a little more broad a little more inclusive encourages people to make claims and that's the whole point of these class action settlements is to encourage the class to participate. I understand that you're on I think we've got you know somewhere between 40 and 50,000 claims so obviously a lot of people understood the claim form were able to fill it out and send it in properly you know the plaintiffs engaged the claims administrator who was expert in class notification programs put in an affidavit in connection with the approval process and explained why we were to take all the steps that we did which included a mailing included publication included all kinds of you know what I'll call cutting edge internet advertisements that I had never been part of before that would design to essentially reach north of 80% of the class and was designed to get the greatest result possible so while I think that Mr. Frank objects to certain things that were not in the physical notice itself I don't think he objects and he didn't object that the hearing to the process the way it was set up and structured and designed to get the best yield possible. I don't think any of us know why people didn't you know respond in greater quantities than they actually did but you know 50,000 in most cases is not a terrible yield it just so happens that this case involves a class size that is appreciably larger and I think everybody was surprised at the result. What is the aggregate number of the fugitive class? I'm not sure your honor I know that people have bandied about 1.3 million it's my belief that it's you know considerably an excess of that but I don't I don't at this moment have a recollection of what the number is. Thank you thank you. Thank you. Thank you. Thank you. Your honor and I certainly promise that if they had come to the district court with a settlement that paid the class under $3 million while the attorney's got 14 million we would be here today also so the Cycray did not create. I will tell you on the attorney's fee point I mean in one sense it's kind of tough to object to the 37 cents of the dollar when you do you do the low star cross check you usually talking about a number that's you know a multiple of the amount that goes to that the council expended within the firm here it's not a multiple it's it's 37 percent. Well your honor as sentence indicated the cross check is not to create a floor it's a ceiling to cap a what it would otherwise be a gigantic one percentage of creases ceiling I mean not necessarily I don't remember that and I remember it also an opinion that came out are you talking about the sendent that I was on the panel or the sendent that Judge Guards was on the panel you don't remember I apologize on that one memory as you could have you could have something more than 100 percent in a particular case that's correct and so this case is you know in terms of the percentage it's it I mean the blink response is this is this is easily affirmable I'm not saying a firm but a firmable because it's so much less than what you typically see well if that's the case then you're abandoning the percentage of recovery method because no I mean what you're saying is you need to subtract the Cycray amount from you know what you had to take that out of the equation and in this case let's say the number is 4 million and probably you've got you know 20 some million that you might want to take out and say that it's it's x percent of whatever it is that goes to the class and x percent of 4 million is you know the number that the the number will go up in terms of percentage but that's what I thought you were saying that that is certainly what we're saying that there needs to be a correspondence and we're just asking for what you you cite a lot of cases about the percentage of the fund and that that should be a it should we should look to the percentage of the recovery but you don't cite any cases for the proposition that Cycray is to be removed from the recovery well we're not saying remove it from the recover we're saying counted at a discount like judge Rosenthal did in heartlands like you did in Lennardo in which wasn't a Cycray but it was a similar circumstance but it was not a Cycray case that was not a Cycray case what which you did there was you average the funds with the amount that the the class actually recovered what what's the principle basis for a discount and if so what what should be the discount the principle for the discount is to incentivize class counsel to not be indifferent between the Cycray and their own clients which is what effectively happened here we we have now now I don't know how's that a reasonable inference right I mean they negotiated a deal with a rational method of coming up with what they believe the size of the class would be and then what the yield would be based on those assumptions well are you saying that all of their assumptions were faulty and because they were faulty that's why they should be paid

. Correct. Yeah I mean the bottom line is your economic assumptions were off because you obviously thought you'd have a larger number of claimants the site pre would be not if not none exist and certainly nothing that we talk about you know that the classes would probably be you know north of 1516 million and this wouldn't be an issue. That's exactly correct. We went through and elaborate I mean if your owners have had the misfortune to read through the allocation order we spent a tremendous amount of time on that which involved essentially a determination that if there wasn't enough money in one of the settlement classes how money might be allocated from another settlement class to make sure that everybody ended up with something close to the same percentage recovery. But that's but that I think is getting to what Judge O'Malley has been asking about that is if certain assumptions are made you get to that point in time when everybody now sees where the numbers are shouldn't that have been the moment of reflection when folks said well wait a minute if if the site pre is an unordinately large number action should we be taking this step back and I understand the question I think the I think the answer is no one will tell you why yeah because I think an assessment was made in connection with the negotiations that a fair resolution for the class would involve a maximum travel damages to those who could document their claim and a maximum of a five dollar distribution for each settlement class that somebody who couldn't document their claim would get and end of the day right the fact that there are these additional funds doesn't mean that anybody out any of those who put in claim should get a windfall so then the question is and you see this in a lot of the case look how do you benefit the absent class members because we know that there are a lot of people out there there were you know I don't think 1.3 million is the right number for class members I think it's actually substantially an excess that we were able to identify that number of people with addresses that we could write to but there were many more people from prior years that we didn't have that information for so we know that there's you know probably a couple million people out there and how do we benefit them too because they were members of the class and that's what the side pray remedy is designed to achieve and the question is as a matter of preference right do you put the money in a side pray to give the money to side pray recipient or series of recipients that could benefit all those people or do you give those who we're just going to get $5 per settlement class more money for for some other reason just because there's extra money available and and I don't think that there's any error of law that judge Brody made even understanding as of the time of the settlement final settlement here and that it was very likely that we were going to have this disproportion if you will I don't think it's a wrong decision under the law to say this is a fair reasonable and adequate settlement by providing that those with documented claims get x those without get y and the remainder is going to go to charity for absent class members is not an inappropriate resolution well why didn't you help us with line drawing for a minute right if you think that this this this proportion is acceptable would a proportion where the class members got four million for instance and the side pray distribution was 16 would would that be reasonable there's got to be some point at which the proportion among the the the the three piles of funds has got to be off and I think that's what what what we're getting at at some point the side pray seems to be skewed and there has to be a recalculation I'm not I'm not sure that that's so your honor and I'll tell you why I think there's settlements and and you know they've been you know approved at the appellate level that really essentially provide that there's a remedy and there's funds and the funds don't go to the class per se the funds go entirely to side pray recipients and that's considered okay under certain circumstances where you can't identify the class members or it's too expensive to to you know send the send the funds to them so I think there you know there is the possibility that you could have a settlement with the the financial compensation is purely side pray which tells me that the proportionality that that you're on a describes isn't necessarily a requirement I haven't seen any cases that set forth the requirement that the amount that actually gets distributed as opposed to the amount that goes to side pray must be in a certain ratio I mean you know I get and I think we all do hear that this is out of the norm because we have none of us all of whom are experienced haven't seen a case quite as extreme as this in that respect but you know my view was and this was a matter that we negotiated at the time I mean you know not that it you know matters in any meaningful way but the issues to whether to give these folks five dollars was something that we negotiated hard and long about and and candidly I think on the defense side most of us was against it entirely we felt by all means give those who document their claims everything that they're entitled to but those who can't document their claims shouldn't get anything but I think giving them something shouldn't then open the door to say that you know it's you know it's an unfair settlement because a lot of money is going to to charity let me ask you this as of today what is the anticipated amount that you think is a range for payout to the class members my understanding your honor and I just saw some figures this morning I haven't had a chance to study them but I believe it's slightly under three million dollars is my understanding slightly under three million dollars and now I don't think that's not just so your honor understands I don't think that's a final number because this is a procedure that our settlement provides for in which the class administrator or the claims administrator is to report that back works with the plaintiffs council that then goes to the district judge and judge Brody would ultimately have to prove so let's just say this picking number let's go judge me always now let's say it's four million and the council fees and expenses come to 14 and that leaves 17 million or side-price and maybe the 35 million is the right number to settle let's assume it is the question then becomes and I think it's the point that judge or malice been probing for what could have been done at the time of the final approval of the settlement that could have made the numbers less glaring in terms of their contrast such as giving more to the five instead of five dollars giving ten or fifteen or twenty it's not going to be that much difference in terms of the the fraud that may come out probably none what about a renoticing to the class what about making the procedures otherwise easier to prove under category one or two you know and any other thing you can think of why wasn't that done or proposed I can't answer why something wasn't done other than you know it wasn't it wasn't on our plate it really wasn't suggested to us I think that the you know the objections that we received weren't quite as pointed as as the place that we are now I don't think there was a suggestion that we needed to notice again and remember we're at that point where we still have I think about three weeks to go in in the notice period and lots of people in procrastinators and we didn't know how many were going to come in between those two points in time but obviously we weren't going to get to a level that was going to be very very high I mean we anticipated that but we we didn't talk about it wasn't suggested and we didn't really consider doing something along those lines you know a hindsight is if we were to send it back you would get that opportunity I think that's right you're out of the question is you know should that be the case should should that should it be that in a class action settlement context right where I mean nobody claims that the notice program was not properly set up or was ineffective well mr. Frank is saying that he does object to not letting him know at the time of the approval who the Cypriot recipient or recipients would be that I that I understand I think he has two two complaints one is that and one is with regard to the photograph issue but I don't think there's anything in the record that suggests that either those emissions if you will had any bearing right on the number of claims that were filed I can't imagine that somebody wouldn't file a claim because they didn't know where side prey funds might go if if side prey funds were going to be in the picture at all I don't think that that's a reasonable rational decision in terms of the photograph issue sure I think that it's possible that you know if if the resolution were that you could just take a picture of your product and get more than the five dollars maybe other folks would have done it but that that wasn't what was said at the hearing that's not what any of our understandings are I mean is it possible that a photograph you know could have shown that you purchased from babies or us and when you purchased it's possible right some people take pictures of all kinds of events I mean if they took a picture coming out of the store with the shopping cart and it was a date on it you know I think the claims administrator probably would have said you know what close enough I mean it'd be nice to have a receipt but that's close enough but the average just you know being in the park and taking a picture of a stroller that doesn't get you any more than you're you're signed after David so I don't I don't think there was a serial number on it or what if you had a barcode on it I mean there's all kinds of things that could be identifying information that that's true but that you know there's no reason that wouldn't be another record that showed you know under the terms that are set forth both in the in the notice and in the claim form which says that other records would be acceptable that show you know that you purchased it from babies or us or toys or us and when you purchased it well it's I think you're missing so Jamfler's point here and that is that even if you objectively thought that that notice was okay the first time around by the time you got to the final settlement hearing you realized that not many people responded and so the question is maybe at that point you should have said we need to send out a notice that is a little more broad a little more inclusive encourages people to make claims and that's the whole point of these class action settlements is to encourage the class to participate. I understand that you're on I think we've got you know somewhere between 40 and 50,000 claims so obviously a lot of people understood the claim form were able to fill it out and send it in properly you know the plaintiffs engaged the claims administrator who was expert in class notification programs put in an affidavit in connection with the approval process and explained why we were to take all the steps that we did which included a mailing included publication included all kinds of you know what I'll call cutting edge internet advertisements that I had never been part of before that would design to essentially reach north of 80% of the class and was designed to get the greatest result possible so while I think that Mr. Frank objects to certain things that were not in the physical notice itself I don't think he objects and he didn't object that the hearing to the process the way it was set up and structured and designed to get the best yield possible. I don't think any of us know why people didn't you know respond in greater quantities than they actually did but you know 50,000 in most cases is not a terrible yield it just so happens that this case involves a class size that is appreciably larger and I think everybody was surprised at the result. What is the aggregate number of the fugitive class? I'm not sure your honor I know that people have bandied about 1.3 million it's my belief that it's you know considerably an excess of that but I don't I don't at this moment have a recollection of what the number is. Thank you thank you. Thank you. Thank you. Thank you. Your honor and I certainly promise that if they had come to the district court with a settlement that paid the class under $3 million while the attorney's got 14 million we would be here today also so the Cycray did not create. I will tell you on the attorney's fee point I mean in one sense it's kind of tough to object to the 37 cents of the dollar when you do you do the low star cross check you usually talking about a number that's you know a multiple of the amount that goes to that the council expended within the firm here it's not a multiple it's it's 37 percent. Well your honor as sentence indicated the cross check is not to create a floor it's a ceiling to cap a what it would otherwise be a gigantic one percentage of creases ceiling I mean not necessarily I don't remember that and I remember it also an opinion that came out are you talking about the sendent that I was on the panel or the sendent that Judge Guards was on the panel you don't remember I apologize on that one memory as you could have you could have something more than 100 percent in a particular case that's correct and so this case is you know in terms of the percentage it's it I mean the blink response is this is this is easily affirmable I'm not saying a firm but a firmable because it's so much less than what you typically see well if that's the case then you're abandoning the percentage of recovery method because no I mean what you're saying is you need to subtract the Cycray amount from you know what you had to take that out of the equation and in this case let's say the number is 4 million and probably you've got you know 20 some million that you might want to take out and say that it's it's x percent of whatever it is that goes to the class and x percent of 4 million is you know the number that the the number will go up in terms of percentage but that's what I thought you were saying that that is certainly what we're saying that there needs to be a correspondence and we're just asking for what you you cite a lot of cases about the percentage of the fund and that that should be a it should we should look to the percentage of the recovery but you don't cite any cases for the proposition that Cycray is to be removed from the recovery well we're not saying remove it from the recover we're saying counted at a discount like judge Rosenthal did in heartlands like you did in Lennardo in which wasn't a Cycray but it was a similar circumstance but it was not a Cycray case that was not a Cycray case what which you did there was you average the funds with the amount that the the class actually recovered what what's the principle basis for a discount and if so what what should be the discount the principle for the discount is to incentivize class counsel to not be indifferent between the Cycray and their own clients which is what effectively happened here we we have now now I don't know how's that a reasonable inference right I mean they negotiated a deal with a rational method of coming up with what they believe the size of the class would be and then what the yield would be based on those assumptions well are you saying that all of their assumptions were faulty and because they were faulty that's why they should be paid. We know their assumptions were faulty we see that there's less than three million dollars in claims and you can expect that when you force class members to fill out a four-page form that gives misleading instructions and and I ask you to read part two on page 276 of the appendix you know other records that show you purchase the baby product and when the purchase was made there's no way you get a photograph from that and and we they're they're going back and forth on whether a photograph does count and if they're saying that a photograph doesn't count then we have reversible error because the judge said the settlement was fair because the class members retroactively submit a photograph. Let's say you go back I'm sorry. Let's say you go back. You re-notes and you get x percentage more claims but it all adds up to another million dollars. Now is it your point that at that point the excess that shouldn't go to Cypheray there should be a recalculation among those class members who've made claims or at that point we'd just say okay we've had our peace we think that it's worked and that amount is to go to Cypheray our only question is we want notice of who it is at what I'm saying is that we want class counsel to be incentivized to argue for the cleanest easiest notice and claims process possible and when Cypheray is counted dollar for dollar the same as a dollar going to a class counsel's clients. Class council has no incentive to say okay four page claim form with confusing instruction. You have to answer my question. But certainly on on remand if you give the instruction class counsel's payment will be based on the percentage of the recovery with the discount for Cypheray I think we'll see class counsel suddenly arguing for simpler claim forms more notice because now they will be incentivized to make sure that the money is going to their clients rather than to their favorite charity. But ironically if we reduce class counsel's award and we can't find any more class members then the Cypheray award goes on right. I don't have a problem with that. So long as it's a 3.07 Cypheray that that that meets the ALI standards. That was a 35 million that was ultimately settled here you don't have a problem with that. We're not saying it should be 70 million or 350 million where we're we're not sitting here contesting how to value the anti-underline anti-trust case. Okay. Thank you very much. Very quickly you asked me where we raised the stuff in our briefing pages 12 to 13 and 39 to 47 in our opening grief in pages 19 to 24 in our reply brief. And if I can make just one other point in this country we send people to prison based on the testimony under oath of people who say that they were victims of crime. And to say that a statement under perjury in the course of filling out a four page claim form is insufficient to make a hundred dollar claim in a class action

. Just I think that's that's very surprising. Thank you very much. Thank you. Thank you to all counsel for well presented argument. Take the matter unde