SAN JOSE, Calif. (CN) - A federal judge has granted preliminary approval of a settlement that would prohibit Yahoo from intercepting non-users' emails in transit to access information for "targeted" advertising.
Yahoo can still access emails once they reach their destination points.
Under the agreement, Yahoo would make technical changes to the way it handles incoming and outgoing email content.
"Yahoo has agreed to make these significant structural changes to its system architecture for the processing of all incoming and outgoing email, not just emails sent to and from the California class members," according to a 21-page motion for preliminary approval.
Under the language of the settlement, however, it does not appear that Yahoo has any intention of discontinuing its practice of analyzing people's emails and using information to send them advertisements, regardless of whether they are Yahoo users or not. The change is about when the information can be accessed. Under law it can only be accessed once it has reached its destination, not in transit.
"As a result of these changes, Yahoo will only access incoming email content for advertising purposes after it has been delivered to Yahoo Mail subscribers' inboxes, and will only access outgoing email for advertising purposes after it has been placed in Yahoo Mail subscribers' sent email folders."
Yahoo would also change language on its website to inform users that it "analyzes and stores all communications content, including email content from incoming and outgoing mail" and that "Yahoo may share keywords, package tracking and product identification numbers with third parties in order to enhance your user experience and provide targeted ads."
Four people who do not use Yahoo but sent emails to people who do brought a class action lawsuit against the Internet portal in October 2013, alleging violation of state and federal wiretap and privacy laws.
Yahoo moved to dismiss the claim in March 2014 and U.S. District Judge Lucy Koh whittled the plaintiffs' claims down to one violation of the federal Stored Communications Act and one claim under the California Invasion of Privacy Act.
She certified a nationwide class on the federal claim and a subclass consisting of California residents under the California law in May.
Yahoo filed a petition with the Ninth Circuit for permission to appeal the certification, but the court refused to intervene.
The two sides made a motion for settlement in January 2016. Judge Koh granted preliminary approval on Tuesday.
"The court grants preliminary approval of the settlement and all of the terms and conditions contained therein," she said in an 8-page order. "The settlement agreement appears to be the result of serious, informed, non-collusive negotiations conducted at arms length by the parties. The terms do not improperly grant preferential treatment to any individual or segment of the class, and fall within the range of possible approval."
The settlement agreement calls for $4 million in attorneys' fees.
Attorneys for the plaintiffs, Laurence King of Kaplan Fox & Kilscheimer in San Francisco and Daniel Girard of Girard Gibbs in San Francisco, did not immediately return phone calls for comment.
A final approval hearing is set for Aug. 15, 2016.
The court noted that the settlement agreement does not release any claims for monetary damages against Yahoo and the class members may still seek monetary damages against Yahoo even if the settlement is approved.
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