The Competitive Enterprise Institute’s Center for Class Action Fairness (CCAF) requested rehearing or en banc review in the Gaos v. Google settlement case on September 5, 2017. The Ninth Circuit panel affirmed a settlement and attorneys’ fee award where all of the settlement funds were directed to cy pres recipients even though it was feasible to deliver funds to class members.
Ted Frank, senior attorney and founder of CCAF, said “These cy pre awards aren’t a new benefit to the class, but an illusory change in Google’s accounting entries. The fact that some cy pres settlements may hypothetically pass muster does not mean that anything goes.”
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.
CEI objected to the settlement, but the district court and the Ninth Circuit approved the settlement. The Ninth Circuit court’s decision on this case could affect future class-action settlements, especially potential abuse of cy pres awards.
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.
View CEI’s petition for rehearing here.