January 22, 2020 / 9:21 PM / a month ago

State AGs, class action watchdog protest cy pres-only settlement in Google Street View case

(Reuters) - Back in March 2018, Google was trying to persuade the U.S. Supreme Court not to take a look at so-called cy pres settlements in class actions, which deliver cash to charities instead of class members. The class action watchdog Ted Frank of the Center for Class Action Fairness, had petitioned the justices to use an $8.5 million Google privacy class action settlement - in which all the money was slated to go to nonprofits rather than offering pennies to millions of purported class members – to determine whether cy pres-only settlements comply with the federal rule that requires class action settlements to be fair, reasonable and adequate. One of Google’s primary arguments against Supreme Court review, as I told you at the time, was that the justices need not bother with the issue because cy pres-only settlements were already a dying breed. Google acknowledged that cy pres remained a feature of class settlements, but said that after years of appellate skepticism, lawyers had, in the main, learned to resort to cy pres payouts to nonprofits only after making all feasible payments to class members.

The Supreme Court, as you may remember, granted review of Frank v. Gaos despite Google’s opposition, but ended up delaying a reckoning for cy pres-only settlements because of concerns that plaintiffs in the underlying privacy class action didn’t have standing to sue.

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Google has since proved that its report of the imminent death of cy pres-only class actions was premature, agreeing to just such a deal in its $13 million settlement of class action allegations that Street View vehicles improperly intercepted class members’ wireless electronic communications. According to a motion for final approval of the settlement, filed in November by class counsel at Cohen Milstein Sellers & Toll, Spector Roseman & Kodroff and Lieff Cabraser Heimann & Bernstein, everything left over from the $13 million, after attorneys’ fees, incentive payments to named plaintiffs and administrative costs, will be divvied up among nine nonprofits that have demonstrated a commitment to protecting and promoting internet privacy.

But Ted Frank isn’t going away either. On Monday, his firm, the Hamilton Lincoln Law Institute, filed an objection to the settlement on behalf of class member David Lowery, a musician (he founded the bands Cracker and Camper Van Beethoven and has produced albums for the Counting Crows) who said he’s not happy that class money is slated to be directed to a group that he considers to be hostile to copyright holders.

Nine state attorneys general also filed a protest to the cy pres-only Street View settlement in an amicus brief that argues the deal is a “stark” illustration of the inequity of these deals for absent class members. “Put simply, in this settlement, class members, who are already at a disadvantage in the class action settlement process, release their claims in exchange for nothing,” the AGs’ brief said.

Class counsel in the Street View case said in their preliminary approval brief that it’s simply not feasible to identify all of the millions of people who are potentially members of the class. Ascertaining class membership, the brief said, would require combing through 300 million frames of data in order to associate the data to the electronic addresses of prospective class members’ routers or other internet devices – many of which have been discarded because the class period ends back in 2010. At best, the approval brief said, the arduous process of identifying millions of class members would result in minuscule payments that disproportionately reward people who happen to have saved outdated equipment. In those rare circumstances, class counsel argued, a cy pres-only settlement is the best way to benefit the class as a whole and advance the goals of the litigation.

“Rather than spending the bulk of the settlement fund to identify absent class members and administer claims that at best would benefit a tiny fraction of the class, the cy pres mechanism uses as much of the fund as possible to benefit the entire class by funding Internet privacy watchdogs and educators,” the brief said.

Class counsel Daniel Small of Cohen Milstein, Jeffrey Kodroff of Spector Roseman and Elizabeth Cabraser of Lieff Cabraser did not respond to my email requesting comment. Google counsel Brian Willen of Wilson Sonsini Goodrich & Rosati referred me to Google’s press office, which did not respond to my email about objections by Frank and the state AGs. U.S. District Judge Charles Breyer of San Francisco granted preliminary approval of the settlement in October but did not write an opinion analyzing the cy pres issue, merely signing an order drafted by class counsel. Until Monday’s filings by Frank and the state AGs, no class members had objected to the Street View settlement.

Frank’s client, Lowery, said he is a member of the class because he used an unencrypted wireless network during the class period, when he worked at a recording studio in Virginia that has been viewable on Google Maps and Street View since 2009.

Frank argued in his brief for Lowery that class counsel prematurely concluded that it’s not feasible to distribute recovery to class members. Prospective class members can identify themselves through sworn affidavits, Frank said. And given the low claims rates in most class actions, it might turn out that dividing the $13 million settlement (less fees and costs) to actual claimants results in payments of more than mere pennies.

“The relevant question then is whether it would be practicable to distribute the available $13 million settlement fund to self-identifying class members through a claims-made process,” the objector’s brief said. “The answer is indisputably yes.” (The brief said that if Frank and his client are wrong and it’s truly impossible to ascertain class membership then the class should not be certified and settled.)

The brief advanced several other arguments, protesting the proposed $4 million fee award to class counsel, scrutinizing purported connections between the proposed cy pres recipients, Google and plaintiffs lawyers’ and asserting that the cy pres distribution violates objector Lowery’s First Amendment right against compelled speech because it uses money that belongs to him, as a class member, to support groups he does not approve of.

Interestingly, Frank offered a handy compendium for his detractors in the class action bar in a 25-page declaration in which he preemptively discloses all of the criticism that’s been leveled against him in previous cases. (The declaration is so up-to-the-minute that it includes Frank’s rejoinder to U.S. District Judge Thomas Thrash of Atlanta, who lumped him in with “serial objectors” in an opinion last week in the Equifax privacy class action.) Frank urged Judge Breyer to disregard “these irrelevant ad hominem attacks.”

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