SAN FRANCISCO (CN) — After ordering Google to pay privacy rights groups $9 million from a $13 million settlement over data collected by its Street View cars, a Ninth Circuit judge said her colleagues should rethink the practice of distributing the fruits of hard-fought class actions to charitable organizations and nonprofits in place of direct payments to class members.
U.S. Circuit Judge Bridget Bade, a Donald Trump appointee, wrote there is an “increasing skepticism” over whether injured class members actually benefit from seeing their settlement money go to third parties, especially when they may not have even heard of the organization.
This type of settlement is known as cy pres, a French legal term meaning “as near as possible,” and is typically adopted when it is impractical to distribute money to a class.
Such was the case here, with a class numbering some 60 million people described by U.S. District Judge Charles Breyer as “vast but nonetheless difficult-to-identify” who “suffered intangible injury, and minimal damages.”
Determining class membership would require sifting through 300 million frames of payload data acquired by Google and matching it to numbers on hardware that may no longer exist. In approving the settlement in March 2020, Breyer reasoned that even if they could be identified, each person would receive roughly 22 cents from the fund, a payment that only 1% of the class was expected to claim.
In a ruling affirming Breyer’s order, Bade and her fellow panelists agreed it would be unrealistic to try to distribute the fund directly to the class.
“Because self-identification would be pure speculation, and any meaningful forensic verification of claims would be prohibitively costly and time-consuming, we affirm the district court’s finding that it was not feasible to verify class members’ claims as would be necessary to distribute funds directly to class members,” Bade wrote.
But Bade was also was not convinced that cy pres awards to uninjured third-party groups indirectly benefit class members.
“[D]espite the acceptance of the theory of indirect benefit, there is, in my view, a compelling argument that class members receive no benefit at all from a settlement that extinguishes their claims without awarding them any damages, and instead directs money to groups whose interests are purportedly aligned with the class members, but whom they have likely never heard of or may even oppose,” Bade wrote separately.
She further questioned whether cy pres awards aren’t just a way of punishing defendants with millions of dollars in what amounts to civil fines and attorneys fees with no compensation for injured class members, who agree to give up their claims. “I respectfully submit that is time we reconsider the practice of cy pres awards," she wrote.
Google publicly apologized for harvesting wi-fi user data, and as part of the settlement, agreed to stop additional payload data through Street View without notice and consent. It also vowed to destroy what it had already collected and maintain websites to educate consumers about wireless security and data encryption.
Google did not respond to a request for comment Monday.
“Judge Bade did seem to appreciate the problems with using cy pres in lieu of payments to class members. We were glad to see that,” Adam Schulman with the Center for Class Action Fairness at the Hamilton Lincoln Law Institute said in an email. But he said the settlement “didn’t add anything material beyond the 2013 voluntary compliance agreement that Google had entered into,” echoing the concerns of 13 attorneys general in an amicus brief.
While Bade said the settlement asked “relatively little of Google,” some provisions such as the educational website extended its obligations a bit further than the 2013 agreement.
Schulman, who represented the objectors in the case, added the injunctive relief offered by the settlement “didn't provide any unique consideration to the class members being asked to relinquish their rights to sue in this settlement.”
Bade also raised this point in her concurrence, where she noted that non-class members and opt-outs receive the same general benefits as opt-ins.
“Indeed, cy pres settlements arguably benefit opt-outs more than class members because opt-outs reap any positive externalities of the settlement provisions while retaining the value of the claims that the settlement extinguished for class members,” she wrote.
The $9 million will be shared by the Electronic Privacy Information Center, the Center on Privacy & Technology at Georgetown Law, the Center for Digital Democracy, Massachusetts Institute of Technology’s Internet Policy Research Initiative, World Privacy Forum, Public Knowledge, the Rose Foundation for Communities and the Environment, the American Civil Liberties Union Foundation, and Consumer Reports.
“In a thorough and cogent analysis, the Ninth Circuit flatly rejected the objectors’ claim that cy pres settlements are inappropriate whenever some money can be distributed to some class members," class counsel Daniel Small of Cohen Milstein and Jeffrey Kodroff said in an email. "We are grateful that the court once again upheld a proper role for cy pres settlements.”
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