9th Circuit judge says cy pres awards should have limits

A 9th U.S. Circuit Court of Appeals panel approved a $13 million cy pres settlement of a class action, but the judge who wrote the opinion argued in a concurring opinion that such deals should be reconsidered.

The ruling was a victory for class action plaintiffs and Alphabet Inc., whose Google subsidiary reached a deal giving the bulk of the money to nine nonprofit agencies instead of trying to give small amounts of money to each plaintiff.

Barring a successful appeal, the ruling resolves a class action that accused Google of violating plaintiffs' privacy rights by illegally gathering Wi-Fi network data using a fleet of cars known as Street View that helped map the country more than a decade ago.

Judge Bridget S. Bade affirmed Senior U.S. District Judge Charles R. Breyer of San Francisco's approval of the settlement, allowing 25% of it to be paid in attorney fees. In re Google Inc. Street View Electronic Communications Litigation, 2021 DJDAR 13051 (9th Cir., filed April 7, 2020).

She rejected arguments by attorneys for two individual objectors, led by David Lowery, as well as several state attorneys general, concluding that it would be "infeasible" to distribute small sums of money to 60 million potential class members.

"More fundamentally, even assuming that the subset of class members who claim payments would be small enough that the settlement fund could provide meaningful value to every claimant, Lowery does not identify a viable way for a claims administrator to verify any claimant's entitlement to settlement funds," she wrote.

But Bade's approval was reluctant, and she wrote a concurrence to add that the cy pres settlement was justified under 9th Circuit case law but perhaps an unwise policy. She cited U.S. Supreme Court Chief Justice John G. Roberts' 2013 opinion expressing misgivings about such settlements. "In a suitable case, this court may need to clarify the limits on the use of such remedies," he wrote. Marek v. Lane, 134 S. Ct. 8, 9 (2013).

Bade, an appointee of President Donald Trump, also wrote that while the affirmance follows 9th Circuit precedent, it is inconsistent with decisions by the 3rd and 7th circuits.

"And, despite the acceptance of the theory of indirect benefit, there is, in my view, a compelling argument that class members receive no benefit at all from a settlement that extinguishes their claims without awarding them any damages, and instead directs money to groups whose interests are purportedly aligned with the class members, but whom they have likely never heard of or may even oppose," she wrote.

"Therefore, I respectfully submit that it is time we reconsider the practice of cy pres awards," Bade added.

Theodore H. Frank, an attorney with the Hamilton Lincoln Law Center, Center for Class Action Fairness, who represents the objectors, expressed interest in seeking U.S. Supreme Court review.

"We're reviewing the decision and evaluating our options for further review given the circuit split," Frank wrote.

Daniel A. Small, a partner with Cohen Milstein Sellers & Toll PLLC who represents the class, focused on the affirmance in a statement.

"In a thorough and cogent analysis, the 9th Circuit flatly rejected the objectors' claim that cy pres settlements are inappropriate whenever some money can be distributed to some class members," Small wrote. "We are grateful that the court once again upheld a proper role for cy pres settlements.

No representative of Google could be reached for comment. Brian M. Willen, a partner with Wilson Sonsini Goodrich & Rosati PC, declined to comment.

The other 9th Circuit panel members are Marsha S. Berzon, an appointee of President Bill Clinton and Morgan Christen, an appointee of President Barack Obama.