$4M Yahoo E-Mail Scanning Class Settlement Gets OK

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By Jimmy H. Koo

March 16 — Yahoo! Inc. March 15 obtained preliminary approval to pay up to $4 million in attorneys' fees and costs and change how it handles e-mail traffic to settle class allegations that it mined e-mails to target advertising.

Judge Lucy H. Koh of the U.S. District Court for the Northern District of California scheduled an Aug. 25 final approval hearing.

Although under increasing pressure from shareholders to demonstrate profitability as it contracts its overall operations, Yahoo still ranks as the third largest e-mail service in the U.S.

According to the October 2013 class action complaint, Yahoo intercepted e-mails without consent and profited from advertising, profiling and data collection unrelated to Yahoo Mail . In August 2014, Yahoo successfully shook off federal wiretap claims under the Electronic Communications Privacy Act as well as invasion of privacy claims under the California Constitution, but failed to dodge California Invasion of Privacy Act (CIPA) claims .

Yahoo agreed Jan. 7 to settle the class action by agreeing to adopt practices that comply with the CIPA and to make changes to its website to contain explanations of its information collection and use practices . The company also agreed to pay a $5,000 service award for each class representative.

Girard Gibbs LLP and Kaplan Fox & Kilsheimer LLP represent the plaintiffs. Morrison & Foerster LLP represents Yahoo.

To contact the reporter on this story: Jimmy H. Koo in Washington at jkoo@bna.com

To contact the editor responsible for this story: Donald G. Aplin at daplin@bna.com