High court split on Google class action
Privacy case settlement shows ideological divide
WASHINGTON – The Supreme Court appeared divided along ideological lines Wednesday over class-action settlements that reward lawyers and outside groups rather than millions of individual class members.
Faced with an $8.5 million internet privacy settlement between Google and up to 129 million customers who stood to receive as little as 4 cents each, several liberal justices said it made sense that lower courts divided the money among groups seeking to educate consumers and address solutions.
The more conservative justices, however, were hostile to plaintiffs and defendants devising their own settlements and leaving potential beneficiaries penniless.
“The attorneys get money, and a lot of it. The class members get no money whatsoever,” Associate Justice Samuel Alito said. “And money is given to organizations that they may or may not like and that may or may not ever do anything that is of even indirect benefit to them. How can such a system be regarded as a sensible system?”
Settlements such as the one involving Google are approved by judges when class members either don’t claim all the money or, as in this case, there are so many of them that administrative costs would be mammoth and individual proceeds minimal.
In the case heard Wednesday, a federal district judge in California approved and an appeals court upheld sprinkling nearly $6 million among six universities and nonprofit groups involved in internet privacy issues. The plaintiffs’ lawyers got more than $2 million.
Some recipients were previously funded by Google, which Chief Justice John Roberts called “fishy.” Several also were associated with universities that lawyers in the case attended, which Associate Justice Brett Kavanaugh said created an “appearance of favoritism and collusion.” But liberal justices were more sympathetic to lower court judges who recognize the difficulties in spreading money around huge classes and instead seek out nonprofits.
“Why is that an abuse?” Associate Justice Ruth Bader Ginsburg said. “Because practically, the class members would get nothing at all, and here, at least they get an indirect benefit.”
With the court divided, justices on both sides recognized a potential way out: Google’s original challengers, they said, may have failed to prove they were injured when their search terms were disclosed to third-party websites. The Supreme Court has said such an injury must be proven, rather than merely possible. If so, the court could send the case back to the U.S. Court of Appeals for the 9th Circuit or even dismiss it outright.
Federal rules require class-action settlements be “fair, reasonable and adequate” in the eyes of the court. When it isn’t reasonable to spread the proceeds across millions of users – or, as is more common, when some money goes unclaimed – settlements benefiting thirdparty groups are judged to be “as near as possible” to the desired goal.
Paloma Gaos originally went to court in 2010 after Google search terms she used were disclosed to third-party websites, a common practice. In the eventual settlement, she and other class representatives got $5,000 each, but the broader group of 129 million people who used Google’s search engine in the U.S. from 2006 to 2014 proved an impractical number for notification, processing, mailing and other costs.