CEI Appeal May Be the Cy Pres Case Supreme Court is Looking for

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Amanda Bronstad of ALM writes (registration required) about the positive reception to the CEI Center for Class Action Fairness (CCAF) certiorari petition in Frank v. Gaos. The underlying case alleged that Google violated federal privacy laws in its search results, but the settlement required no significant changes and provides class members no recovery. Instead, the settlement pays $8.5 million to the attorneys and several organizations not involved in the litigation, including class counsel’s alma maters, and several organizations that Google already supports through donations.

Such cy pres recovery to unrelated parties has been a hot topic in class action law. In 2013, Chief Justice John Roberts wrote an unusual statement concurring with the Court’s denial of review in another privacy case. Justice Roberts opined that the Supreme Court should “address more fundamental concerns surrounding the use of [cy pres] remedies in class action litigation, including when, if ever, such relief should be considered.”

CEI’s petition in Frank v. Gaos may be what Justice Roberts was looking for. Bronstad quotes Eimer Stahl LLC partner Susan Razzano:

“The Supreme Court more or less asked for a case that will allow it to analyze how cy pres is used in class action cases,” she said. “And I do think that this Google case might be that opportunity that Chief Justice Roberts was looking for.”

Because the underlying settlement diverts moneys to groups that benefit the settling parties, it provides a stark example of cy pres abuse. For this reason, CCAF’s petition has received amicus support from 16 state attorneys general, the Cato Institute, the Center for Constitutional Jurisprudence, and the Center for Individual Rights.

The Supreme Court has not yet acted on CCAF’s petition, authored by Andrew Grossman, which appeals the Ninth Circuit’s affirmance of the underlying settlement.

For more on the Gaos case, see here.