The Competitive Enterprise Institute’s Center for Class Action Fairness (CCAF) petitioned the Supreme Court today asking it to consider taking on the class action settlement case Gaos v. Google. Previously, a Ninth Circuit panel affirmed a settlement where $2.1 million went to the attorneys, $0 to class members and $6.4 million went to cy pres recipients including the alma maters of the plaintiffs’ attorneys and charities favored by Google.
Ted Frank, director of litigation at CEI and founder of CCAF, said “There is a large likelihood that if this abuse of cy pres stands, it will only allow more class attorneys to benefit their own interests instead of their clients’ interests in future settlements.”
The idea of cy pres originated in the trust context, where courts would reinterpret the terms of a charitable trust when literal application of those terms resulted in the dissolution of the trust because of impossibility or illegality. In class action settlements, cy pres is typically used to distribute any left-over money to a third-party charity.
In this case plaintiffs sued Google for alleged federal privacy violations regarding their search engine. The settlement established an $8.5 million fund, none of which went to the class members affected by the privacy violations. Instead, the settlement fees were split between the plaintiffs’ lawyers – who received $1000/hour on this case - and cy pres recipients. These recipients were third-party charities that included class counsel’s alma maters and several charities that Google was already supporting through donations.
CCAF has been a pioneer of protecting consumers and shareholders from the abusive practice of cy pres, winning landmark appellate decisions on the question in 2011, 2013, 2014, and 2015.
See more about the case here.