Instead, the judge has awarded money from the settlement to two institutions not directly involved in the lawsuit, the Detroit Free Press reported Monday.
The lawsuit, filed in 2011, accused two McDonalds' restaurants in Dearborn of selling chicken sandwiches and chicken nuggets as halal when they were not.
Animals slaughtered according to Islamic practices are considered halal, similar to Jewish kosher.
Dearborn has one of the largest populations of Muslims in the United States.
The settlement, reached Jan. 7, distributes $275,000 of the $700,000 settlement to the Huda Clinic, a Muslim health clinic in Detroit, $150,000 to the Arab-American National Museum in Detroit and $25,000 to the lead plaintiff, a Dearborn Heights man. The rest will go to attorney fees.
Dearborn attorney Majed Moughni filed a complaint about the settlement Jan. 25, asking the court to set aside the settlement or allow more time for injured parties to challenge it.
He charged the settlement enriched two organizations at the expense of people who accidentally ate non-halal meat.
Mike Jaafar, one of the attorneys who settled with McDonald's, said it would have been difficult for individuals to document they bought non-halal products unknowingly.
Moughni's complaint is scheduled to be heard Friday.