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Agreeing to review an $8.5 million class-action settlement, the U.S. Supreme Court will consider whether a "cy pres" settlement was close enough.
The cy-pres doctrine allows courts to approve settlements for "as close as possible" to the donor's intent. In Frank v. Gaos, Google settled claims that the company wrongfully shared users' search queries with the settlement money going to the plaintiffs' attorneys and third parties instead of the class members.
An appeals court approved it because otherwise the class members would have received only about 4 cents each. The question is whether that was close enough or, in the words of Maxwell Smart, missed it by that much.
Finally, Cy Pres
Chief Justice John Roberts Jr. said in a 2013 case that cy pres relief raises "fundamental concerns." The National Law Journal said, it's about time the court revisited the issue.
In Frank, a trial judge approved the settlement over class members' objections. Among other concerns, they complained that more than $5 million was going to the attorneys' alma maters and Google-funded charities.
The U.S. Ninth Circuit Court of Appeals rejected their arguments and affirmed. Judge J. Clifford Wallace, concurring and dissenting, said the choice of recipients was "unseemly."
Lead plaintiff Paloma Gaas accused Google of violating users' privacy by sharing their search terms with third party websites without users' permission. In the settlement, $5.3 million went to fund internet privacy initiatives, $3.2 million to attorneys' fees and costs, and $15,000 to three named plaintiffs.
"Cy Pres Abuse"
Ted Frank, an objector and director of litigation for the Competitive Enterprise Institute, said he was encouraged by the Supreme Court's decision to take the case.
"We are hopeful that the Supreme Court's review will result in a standard forbidding attorneys from misusing class action settlements to selfishly put themselves and third parties ahead of their client," he said.
Melissa Holyoak, CEI's senior staff attorney, said the Google settlement was a classic example of cy pres abuse.
"Class counsel chose their favorite charities over their clients while Google is getting credit for donations they are already making," she said.
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