WASHINGTON (CN) — The Supreme Court agreed Monday to decide whether Google can settle privacy claims by paying millions to six nonprofits instead of class members.
Back in 2015, Google agreed to establish a fund of $8.5 million to settle claims that third-party websites could access users’ search terms without permission.
Search terms are included in referrer headers, which identify the page containing the link that the user clicked on to request the webpage, and lead plaintiff Paloma Gaos said such information can identify users.
Google’s proposed settlement meanwhile included $15,000 in incentive awards for Gaos and two other named plaintiffs, and about $3 million in attorneys’ fees, but the bulk of the fund was set to go to six cy pres recipients that would fund internet-privacy initiatives.
The scheme inspired an objection from class members Theodore Frank and Melissa Ann Holyoak. Represented by the Center for Class Action Fairness at the Competitive Enterprise Institute, Frank and Holyoak emphasized that Google and class counsel had ties to four of the six cy pres recipients: the Chicago-Kent College of Law Center for Information, Society, and Policy; the Stanford Law School Center for Internet and Society; the Berkman Center for Internet & Society at Harvard and the AARP Foundation.
Class attorney Michael Aschenbrener attended Chicago-Kent, and class attorney Kassra Nassiri attended Stanford and Harvard. Google donates to the Berkman Center, the Stanford Center, AARP and Chicago-Kent.
The other two cy pres recipients were Carnegie-Mellon University and the World Privacy Forum.
But the Ninth Circuit rejected the center’s objections last year, noting that class counsel swore they had no affiliation with the research centers, and that the objectors never disputed it.
“The claim that counsel’s receipt of a degree from one of these schools taints the settlement can’t be entertained with a straight face,” U.S. Circuit Judge M. Margaret McKeow wrote for a mostly unanimous three-judge panel.
The panel came to a similar conclusion regarding Google, finding that its role in vetting the recipients, its donations to them, and the fact that some received Google settlement funds in the past “does not cast doubt on the settlement.”
“Given that, over time, major players such as Google may be involved in more than one cy pres settlement, it is not an abuse of discretion for a court to bless a strong nexus between the cy pres recipient and the interests of the class over a desire to diversify the pick via novel beneficiaries that are less relevant or less qualified,” McKeown wrote.
U.S. Circuit Judge J. Clifford Wallace complained in a partial dissent, however, that class counsel and the trial court could have done more to prove that the settlement was appropriate.
Wallace said he was “especially dubious” of the decision to include the Center for Information, Society and Policy at Chicago-Kent among the recipients because it was inaugurated only a year before the parties agreed to the settlement.
Wallace said he would vacate approval of the settlement and remand with instructions to hold an evidentiary hearing, examine class counsel under oath, and determine whether their prior affiliation with the recipients played a role in their selection.
“The combination of a cy pres-only award, a pre-certification settlement, and the fact that almost half the cy pres fund is going to class counsel’s alma maters, is sufficient to shift the burden to the proponents of the settlement to show, on a sworn record, that nothing in the acknowledged relationship was a factor in the ultimate choice,” Wallace wrote.
“Here, the only sworn-to items in the record on this issue are boilerplate, one-line declarations from class counsel stating ‘I have no affiliation’ with the subject institutions,” he continued. “While the majority asserts that the district court conducted a ‘careful review,’ these terse declarations are the only shred of sworn-to evidence in the record. There was essentially nothing for the district court to review — carefully or not. Although there was some discussion between counsel and the district court during the hearings on the settlement, this was nothing more than unsworn lawyer talk during an oral argument.”
Objecting class member Frank, who is an attorney with the Competitive Enterprise Institute, said at the time that the majority opinion split with precedent from the Third, Seventh, Eighth and possibly Fifth Circuits.
In their Supreme Court fight, Frank and Holyoak are represented by Andrew Grossman with Baker & Hostetler.
“The court’s decision to hear Ted Frank’s challenge to cy pres awards is great news for consumers, reflecting that the use of cy pres to divert class settlement funds away from class members has gotten out of hand,” Grossman said in an email. “When a class action settles, it should be the class members who benefit, not the attorneys and their law schools.”
Google is represented by Donald Falk with Mayer Brown in Palo Alto, while class attorney Nassiri was with the firm Nassiri & Jung in San Francisco.
Per its custom, the Supreme Court did not issue any statement Monday in taking up the case.
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