The Second Circuit affirmed Rule 23(e)(2) approval of a cy-pres class-action settlement that paid no money to the class of student-loan borrowers, but millions of dollars to form a new organization operated by individuals affiliated with class counsel and the teachers' union secretly funding the litigation. Class members will receive no pecuniary benefit from the $2.4 million settlement fund, no incremental benefit from the formation of the new organization, and many will not even realize any benefit from the settlement's prospective injunctive relief because they no longer do business with the defendant.

Whether, or in what circumstances, a court may approve a settlement as "fair, reasonable, and adequate" under Rule 23(e) or certify a class under Rule 23(b) when it pays a cy pres award to third parties from the settlement fund.

Whether, or in what circumstances, a court may approve a settlement as 'fair, reasonable, and adequate' under Rule 23(e) or certify a class under Rule 23(b) when it pays a cy pres award to third parties from the settlement fund