Google, class counsel to SCOTUS: Don’t waste your time on cy pres-only deals

The logo for Google at the Google Store in New York, November 17, 2021. REUTERS/Andrew Kelly

(Reuters) - There’s a lot of sound and fury in the class action bar about the propriety of so-called cy pres-only settlements, in which all of the settlement money goes to charity instead of to class members. But according to a pair of briefs filed on Monday at the U.S. Supreme Court by Google LLC and class counsel who negotiated a $13 million cy pres-only settlement to resolve allegations that Google Street View vehicles swept up private wireless data, there’s not much significance to the controversy.

Google and class counsel offered the Supreme Court the best possible reason not to grant review of their deal: Their briefs contend that cy pres settlements are so rare that it’s not worth the justices’ time to meddle with them.

And besides, Google and class counsel told the Supreme Court, the federal circuits have all adopted the same basic framework for analyzing whether cy pres settlements are permissible. So, according to Monday’s briefs, there’s simply no reason for the justices to take up the issue.

“The question presented is of minimal importance because cy pres-only monetary distributions are exceedingly rare today,” asserted Supreme Court counsel for the class, Daniel Small of Cohen Milstein Sellers & Toll.

The new briefs were filed in opposition to a June 3 Supreme Court petition from class member David Lowery, a rock musician (Cracker and Camper Van Beethoven) and client of Ted Frank at the Hamilton Lincoln Law Institute. In the underlying case, a class of as many as 60 million people claimed that Google vehicles collected snippets of private data transmitted over Wi-Fi while amassing photographs for the Street View app between 2007 and 2010. U.S. District Judge Charles Breyer of San Francisco approved the cy pres-only deal because he said it would be almost impossible to identify class members, who would have to have access to the wireless routers they used years ago and, even then, would have to rely on Google to figure out if Street View vehicles happened to capture data at the moment their street was being photographed.

Frank, a perennial critic of cy pres payouts, previously persuaded the Supreme Court to take up the issue in 2018’s Frank v. Gaos, only to see the case remanded to the 9th U.S. Court of Appeals on Article III standing grounds. Frank asserted in Lowery’s petition that the 9th Circuit has recently seen an “explosion in consumer class-action settlements featuring cy pres awards.”

Twenty state attorneys general similarly argued in an amicus brief backing Lowery that the 9th Circuit’s relatively permissive cy pres precedent has already incentivized plaintiffs lawyers to file class actions that could end in cy pres deals in California federal courts.

But according to Google’s lawyers at Wilson Sonsini Goodrich & Rosati and class counsel from Cohen Milstein, there are vanishingly few class action settlements in which the settlement fund goes entirely to charity, with no payouts to class members.

I want to emphasize an important distinction here between cy pres-only settlements and settlements that designate charities to receive residual funds left over after distributions to class members. Residual cy pres provisions are not uncommon, as studies cited by Lowery and the state AGs have documented. But Lowery's petition asked for guidance on cy pres-only deals — and those, as I'll explain, are extraordinarily rare.

Both of the new opposition filings cited a 2018 amicus brief from the Supreme Court’s Frank v. Gaos case, in which leading class action scholar William Rubenstein of Harvard Law School analyzed the frequency of cy pres-only settlements. According to Rubenstein, who authored the most recent edition of the treatise "Newberg on Class Actions," federal courts had, as of 2018, approved a grand total of 18 cy pres-only settlements – ever – and had blessed only six such settlements after a warning about their use from Chief Justice John Roberts in 2013.

Cy pres-only settlements, Rubenstein said in that 2018 amicus brief, are so unusual that the Supreme Court should not have bothered to take a case to rein them in. Rubenstein's amicus brief actually urged the justices to dismiss Frank v. Gaos as improvidently granted.

Since the Gaos case, Google and class counsel said in their new briefs, class action lawyers on both sides have become even more leery of cy pres-only settlements. Class counsel said they’re aware of only two decisions approving cy pres-only settlements after Rubenstein’s 2018 empirical study. Both rulings, the class brief said, involved claims under the Fair Debt Collection Practices Act, which restricts potential damages based on the defendant’s net worth. Sometimes those damages are so small, class counsel said, that it’s not feasible to distribute recovery to individual class members. (It’s no accident, the class brief said, that 11 of the 18 cy pres-only deals Rubenstein identified in his 2018 study were debt collection class actions.)

Class counsel cited one other pending cy pres-only settlement, a class action alleging privacy violations against Google for installing “cookies” in certain internet browsers. The 3rd Circuit struck down a $5.5 million cy pres-only settlement in that case in 2019, but the parties have asked for approval of a revised agreement that still directs all of the recovery to charities. Ted Frank has objected to the revised proposed settlement.

I asked Frank by email about the opposition briefs’ argument that cy pres-only settlements are too rare to merit the Supreme Court’s attention. He said Google and class counsel “badly miscounted” the cases that would be affected by the Lowery petition. Frank said in an email that his shop has objected in at least two pending cases. He also said he anticipates another cy pres-only settlement in the remanded Gaos case, which involves claims that Google violated the Stored Communications Act, but that the parties seem to be waiting to disclose that deal until after the Supreme Court decides whether to grant review in the Street View case.

Frank’s petition posed a second question about whether courts should certify classes — like the Street View class — when it’s essentially impossible to ascertain class membership. Monday’s opposition briefs said the circuits have reached a consensus on ascertainability. But that’s a whole other story.

Read more:

States’ top lawyers ask Supreme Court to review charity-only class settlements

U.S. appeals court voids Google 'cookie' privacy settlement that paid users nothing

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Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin.