Google Settles With|Class for $8.5 Million

SAN JOSE (CN) - Google will pay $8.5 million, most of it to nonprofit organizations, to settle a class action that claimed that it illegally divulged users' search information to third parties, a federal judge ruled.

U.S. District Judge Edward Davila granted final approval to the settlement on March 31, finding that distributing the money to nonprofits instead of class members was appropriate.

Davila also found that the settlement was reasonable even though Google will not have to stop disclosing search queries.

The consolidated class action accused Google of routinely passing on private information through "referrer headers," which provided the website the user was visiting with the URL of the referring page. The URL included the search terms typed in by the user.

Personal information passed on through these referrer headers could include users' names, IP addresses, their confidential medical information, their race, or information about their religious beliefs and sexual orientation, according to the complaint.

Such transmissions to third parties could involve millions of search queries a day.

It was anticipated that the class would be consist of about 129 million people.

Under the settlement, Google will pay $8.5 million for distributions to cy pres recipients, attorney fees and costs, incentive awards to the named plaintiffs, and administration costs.

The nonprofit cy pres recipients are Carnegie Mellon University, the World Privacy Forum, Chicago-Kent College of Law Center for Information, Society and Policy, the Stanford Center for Internet Society, the Berkman Center for Internet and Society at Harvard University, and the AARP Foundation.

Objectors to the settlement argued that the class should be decertified because class members will not receive any form of direct monetary compensation. The objectors claimed that if it is too costly to distribute settlement funds to class members, then a class action is not the best method of resolution.

However, "the alternatives to a class action are not preferable since they involve either thousands of individual cases or a complete abandonment of millions of claims," Davila ruled. "Moreover, a class-wide resolution is not rendered inferior simply because the settlement agreement calls for an indirect rather than a direct benefit to the class."

Davila found that a cy pres remedy is the "next best" result in this case.

"First, the settlement fund, while sizeable, is 'non-distributable.' Since the amount of potential class members exceeds one hundred million individuals, requiring proofs of claim from this many people would undeniably impose a significant burden to distribute, review and then verify. Similarly, the cost of sending out very small payments to millions of class members would exceed the total monetary benefit obtained by the class," Davila wrote.

The cy pres distribution also accounts for the nature of the lawsuits, meets the objectives of the class action and furthers the interests of class members, the judge said.

The organizations receiving the money have a record of promoting privacy protection on the Internet and are capable of using the money to educate the class about online privacy risks.

Google also will have to post disclosures on its website concerning user search queries, including information about whether users' search queries are transmitted to third parties. The disclosures must appear on Google's FAQs page, Key Terms page, and Privacy FAQ for Google Web History page.

But Google will not be required to make changes to its homepage, google.com, or to practices of functionality of Google Search, Google AdWords, Google Analytics or Google Web History.

Davila noted that this relief is not the best result, since the class sought to stop Google from disclosing search queries altogether.

"At the same time, a class action settlement does not need to embody the best possible result to be approved. The court's role is not to advocate for any particular relief, but instead to determine whether the settlement terms fall within a reasonable range of possible settlements," Davila wrote.

He found the compromise reasonable because the plaintiffs might not have obtained the result they wanted if the case were to proceed, and Google did agree to provide the privacy disclosures, Davila said.

He awarded class counsel to $2.125 million in fees, 25 percent of the settlement fund.

Counsel took the case on a contingent basis and spent considerable time and money with no guarantee of payment. The settlement was not reached easily and counsel had to defend the claims against three motions to dismiss.

Furthermore, the requested award is not disproportionate to the class benefit and is comparable to awards approved in similar Internet privacy class actions, Davila said.

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