Small Class Could Derail Phone Spying Settlement

     SAN FRANCISCO (CN) — Carrier IQ’s $9 million settlement with smartphone users who accused it of collecting their personal information is in limbo after a federal judge questioned how many people were informed of the settlement.
     U.S. District Judge Edward Chen on Wednesday deferred ruling on a motion for final approval of the settlement, attorney’s fees and incentive awards. He 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 less than half of one percent, Chen said the reach of the class notice may not have been sufficient. 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.
     The nationwide settlement class consists of 30 million unique members. Less than 40,000 members responded.
     “The overall settlement in view of risks and everything else is within range and that hasn’t changed, but we need to make sure reasonable notice did get out and that these people had a fair chance to decide whether they want to participate or not,” Chen said.
     Carrier IQ was on track to settle claims that it used a device called IQRD to access smartphones while hiding its presence and subverting standard operating system functions or other applications, and then sent personal information to Sprint, AT&T and other companies.
     The 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.
     Class counsel told the court it placed half-page ads about the settlement in People magazine, USA Today and on the internet, including social media channels like Twitter, on the premise that the ads could be seen by anyone over the age of 18 who used an affected cellphone.
     But Chen said there was no evidence that everyone who had an affected phone read one of those publications and saw the ad, and that he wanted to know how class counsel’s notice expert determined that 81 percent of the class saw the ads in the demographics that each media outlet attracts.
     “This is all conclusory and I don’t have any sense of whether we reached 1 percent, 10 percent or 80 percent,” Chen said.
     Chen also questioned the award amount proposed for class representatives, asking if those who spent only a few hours on the suit should receive the same $5,000 award as those who invested a substantial amount of time, but class attorney Daniel Warshaw argued that the judge should also consider factors like agreeing to put their name on a legal filing and their inclination to challenge the industry.
     At the Wednesday hearing, an objector — identified by class counsel in an email read aloud in court as having a “history of sabotaging class actions” — challenged class counsel’s request for 25 percent of the settlement fund, arguing there is little in the record to justify fees that high.
     “It appears to me you’re asking for money in exchange for dropping your objection,” Chen said.
     Nonetheless, the judge said he would consider awarding less than the 25 percent benchmark given class members’ low response rate.
     “That is not something you should penalize class counsel for,” Warshaw said. “The record has established that we’ve done a good job for the class. We fought hard.”
     If the settlement is approved, class members will receive $148.85 each. Carrier IQ has also agreed to stop using the same port for SMS text messages that it uses to receive instructions, and to only collect the web URLs of U.S. customers when their device is transferring data on its own network or when a third-party carrier notifies users that URL data may be collected.
     Warshaw is with the firm Pearson, Simon & Warshaw in Sherman Oaks, California.

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