Phone Spying Settlement Gets Judge’s Final OK

     SAN FRANCISCO (CN) – Carrier IQ will pay $9 million to settle claims that it collected personal information from smartphone users without their permission before sending it to Sprint, AT&T and other companies.
     Carrier IQ and several telecoms were hit in 2011 with a raft of consumer privacy class actions alleging Carrier used a device called IQRD to access smartphones while hiding its presence and subverting standard operating system functions or other applications.
     Plaintiffs said the software allowed Carrier IQ to log users’ keystrokes, including their private text messages and web searches, in violation of federal and state wiretap laws.
     U.S. District Judge Edward Chen on Thursday granted final approval of the $9 million settlement and $2.25 million in attorneys’ fees after throwing it in limbo in July over questions about how many people knew they were eligible for an award.
     However, Chen denied approval of incentive awards to named plaintiffs who spent less than 26 hours on the case, lowering the award to $3,000 from the requested $5,000.
     Once attorneys’ fees, costs and incentive awards are subtracted from the settlement fund, an estimated $5.9 million will remain for distribution to about 42,000 class members, according to an order Chen issued Thursday. It’s estimated that each member will receive between $138.35 and $149.28.
     “The number of objections and opt-outs is small, which indicates that the class largely supports the settlement,” Chen said in his 12-page ruling. “While the number of claims is also small, this cannot be said to be the result of inadequate notice.”
     In deferring to grant final approval in July, Chen ordered class counsel to provide more information about the “reach” of the class notice, citing the low number of claims submitted by class members as a potential indicator that not enough people learned about the settlement and their eligibility for an award during the notice period.
     With a response rate of 0.14 percent, Chen said the reach may have been insufficient. He asked for more information about how people were reached through both paper publications and the Internet, as well as what additional notice could be done and how much it would cost.
     In response, plaintiffs’ counsel provided a declaration from settlement administrator Alan Vasquez explaining that the publication notice placed in USA Today and People magazine, as well as a banner advertisement notice, likely reached 81 percent of the class.
     “In our experience, the claims rate in this settlement is consistent with many other settlement administrations with similar class characteristics,” Vasquez said in his declaration.
     Based on Vasquez’s declaration, Chen found that “a substantial portion of the settlement class were likely exposed to the multi-faceted notice provided by the administrator.”
     The plaintiffs were represented by Daniel Warshaw with Pearson, Simon & Warshaw in Sherman Oaks, Calif.
     Carrier IQ was represented by Tyler Newby of Fenwick & West in San Francisco.
     Neither attorney could be reached for comment on Friday afternoon.

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