A federal appeals court on Tuesday signed off on a controversial $8.5 million deal that Google Inc. reached to settle a class action claiming the company shared information about users' search queries without their consent.
The deal, approved by the U.S. Court of Appeals for the Ninth Circuit, provides no money to the 129 million class members, but the lawyers who brought the case are due to receive nearly $2.1 million. About $5 million in funds will be split among six nonprofit groups.
Settlements that only offer so-called cy pres funds have come under close scrutiny in recent years. Chief Justice John Roberts openly questioned "when, if ever, such relief should be considered" when the court declined to take up a large cy pres settlement involving Facebook Inc. in 2013.
In the Google case at the Ninth Circuit, objectors led by Theodore Frank, of the Competitive Enterprise Institute's Center for Class Action Fairness, complained some of the cy pres recipients had previously received funding from Google. Frank, who also represented objectors to the Facebook settlement, pointed out that half of the chosen groups—Harvard's Berkman Klein Center for Internet & Society, the Stanford Center for Internet and Society and the Center for Information, Society and Policy at the Illinois Institute of Technology's Chicago-Kent College of Law—are housed at alma maters of plaintiffs attorneys in the case.
But in an opinion written by Circuit Judge M. Margaret McKeown, joined by Judge Jay Bybee and joined in part by Judge J. Clifford Wallace, the court upheld a decision by U.S. District Judge Edward Davila blessing the settlement.
"To be sure, cy pres-only settlements are considered the exception, not the rule," McKeown wrote. But she continued to say the court "never imposed a categorical ban on a settlement that does not include direct payments to class members."
McKeown said the objectors offered only "barebones allegations" about the nature of the connection between the lawyers and the organizations receiving funds at their alma maters. At the district court below, McKeown wrote Davila had "explicitly or implicitly" addressed "the nature of the relationship, the timing and recency of the relationship, the significance of dealings between the recipient and the party or counsel, the circumstances of the selection process, and the merits of the recipient."
Kassra Nassiri of Nassiri & Jung, the lead plaintiff lawyer on the Ninth Circuit case, said in a phone interview the majority acknowledged that recipients of the settlement funds had developed detailed proposals of what they would do to promote privacy on the internet.
"I was pretty happy to read that the majority recognized the kind of lengths we went to ensure that there was transparency and accountability and real connections in terms of [the way that] the cy pres dollars" are spent and the injury alleged in the complaint, said Nassiri, who is an alumnus of Harvard Law School and Stanford University.
In a partial dissent, Wallace wrote that he would have sent the case back to Davila for an evidentiary hearing on whether the ties between the plaintiffs lawyer and their alma maters had any affect on the funding choices.
"To me, the fact alone that 47% of the settlement fund is being donated to the alma maters of class counsel raises an issue which, in fairness, the district court should have pursued further in a case such as this," Wallace wrote.
A spokeswoman for Google, which was represented by counsel from Mayer Brown and O'Melveny & Myers, said the company was "pleased with the decision."
Reach by email Tuesday, Frank said the decision was based on "false premises" and that he'll seek en banc review. "If it stands, we absolutely plan to take the resulting circuit split to the Supreme Court," wrote Frank, noting that he's handling an appeal of a similar $5.5 million cy pres-only settlement involving Google at the Third Circuit. In that case, a federal judge in Delaware signed off on a deal releasing millions of consumers' claims related to Google's placement of tracking cookies.
Ross Todd is bureau chief of The Recorder in San Francisco. He writes about litigation in the Bay Area and around California. Contact Ross at firstname.lastname@example.org. On Twitter: @Ross_Todd.