March 20, 2019
Decided March 20, 2019
Frank v. Gaos, No. 17-961
The Supreme Court determined that questions concerning plaintiffs’ standing to challenge Google’s alleged violations of user privacy prevented the Court from deciding whether cy pres-only class action settlements are fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e).
Plaintiffs, on behalf of a putative class of 129 million users of Google’s search engine, alleged that Google violated users’ privacy under the Stored Communications Act, 18 U.S.C. § 2701 et seq., by disclosing the search terms they used to third-party websites. The parties agreed to an $8.5 million class action settlement consisting of $2 million in attorneys’ fees and costs and $6.5 million distributed as a cy pres award to various institutions studying internet privacy and information sharing. Under the proposed settlement, class members would receive no money. The district court approved the settlement, concluding that it would not be feasible to distribute the $6.5 million portion of the settlement to class members. The Ninth Circuit affirmed.
Whether a class action settlement is fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e) when class members receive no direct, monetary relief and instead all of the settlement funds are distributed to cy pres beneficiaries.
The lower courts should decide in the first instance whether any named plaintiff has Article III standing.
“Resolution of the standing question should take place in the District Court or the Ninth Circuit in the first instance. We therefore vacate and remand for further proceedings.”
What It Means:
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