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Second Circuit Allows Google to Appeal Class Certification in Google Books Cases

Wednesday, August 15, 2012

Google will be permitted to appeal a district court's Rule 23(a) grant of class certification to thousands of authors claiming harm from Google's Library Project, the U.S. Court of Appeals for the Second Circuit ruled Aug. 14 (Authors Guild v. Google Inc., 2nd Cir., No. 12-2402, appeal granted8/14/12).

The court's order will allow the search engine to challenge the U.S. District Court for the Southern District of New York's May 31 determination that two groups of plaintiffs were due certification as representatives of classes of copyright holders whose rights might have been infringed by Google's Library Project (107 PTD, 6/5/12).

Interestingly, Judge Denny Chin, the author of the May 31 opinion, was randomly assigned to the three judge panel tasked with issuing a ruling on Google's motion for interlocutory review. Chin recused himself from the appellate court's consideration of the issue, leaving Judges Richard C. Wesley and Peter W. Hall to rule that Google was entitled to a review of Chin's order below.

The petition for appeal was granted pursuant to Fed. R. Civ. P. 23(f), which allows a party to challenge a class-action determination within 14 days of its issuance. However, the rules states, “An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders.”

The Second Circuit's short order makes no mention of a stay, and as of press time there were no docket entries in the district court proceeding indicating that the court would stay proceedings pending resolution of the class issue. As a result, it is unclear how long, if at all, the appeal will delay the litigation, which has been ongoing for nearly seven years.

Initial Suits Filed in 2005.

In 2005, the Authors Guild, several authors, and publishers brought two class action lawsuits in the Southern District of New York challenging Google's arrangement with several large libraries to digitize the entire contents of their collections and to make the resulting database searchable over the internet (183 PTD, 9/22/05).

The complaint alleged that Google was infringing the plaintiffs' copyrights when it scanned copyrighted works without authorization and made plans to provide portions of those materials to the public through an online searchable database.

In 2008, the Authors Guild and Google reached a settlement allocating rights to the copyrighted materials at issue(209 PTD, 10/29/08). Under the terms of the deal, Google would pay $125 million to establish a centralized royalty collection organization and to compensate authors of scanned books. Each book would earn at least $60 in royalties.

Furthermore, the agreement proposed creating institutional subscriptions to Google's digitized library, which would earn ongoing royalties. A Books Rights Registry would be established under the control of authors and publishers to keep track of the use of registered works and for centralized collection of royalties. Authors would be given the opportunity to opt out of the deal either initially or after participating.

Under the deal, Google would be granted non-exclusive rights to keep scanning works, sell subscriptions to its digitized content, and earn revenue from advertising displayed with search results.

Second Deal Rejected.

Judge John E. Sprizzo gave preliminary approval to the deal. However, following a period of public controversy over the terms of the settlement, the parties proposed a revised settlement in 2009, removing any terms relating to the use of foreign works by Google, and sought final approval pursuant to Fed. R. Civ. P. 23 (219 PTD, 11/17/09).

The amended settlement also proposed to establish an independent fiduciary to police use of orphan works and extend the opt-out date to 2012. It also proposed that unclaimed money collected for use of orphan works would not be distributed to members of the settlement class, providing for use of some of that income for charitable contributions.

Also in November 2009, a group of pictorial copyright interest holders were refused the opportunity to intervene (213 PTD, 11/6/09). The court found that the intervention was untimely and would interfere with the settlement process.

In the meantime, Sprizzo died and the case was assigned to then district court Judge Denny Chin, who gave the amended settlement preliminary approval.

Hundreds of third parties, including copyright holders and public interest groups, as well as the Antitrust Division of the U.S. Department of Justice, commented on the proposed settlement.

Plaintiffs Gear Up to Continue Battle.

Nearly a year a half later, in March 2011, the court rejected a revised $125 million settlement of claims by the authors and publishers after finding that its terms were not “fair, adequate, and reasonable“ with respect to the rights of members of the relevant class (56 PTD, 3/23/11).

During the period that the court was considering the amended settlement, the visual artists associations filed their own class action against Google (67 PTD, 4/9/10).

In September, the court granted the Authors Guild leave to file a new amended complaint and move for class certification (179 PTD, 9/15/11). The Authors Guild filed a fourth amended complaint in October and in November, the visual artists amended their own complaint.

Google moved to dismiss for lack of standing the associational plaintiffs from the two actions, including the Authors Guild, the American Society of Media Photographers, the Graphic Artists Guild, the Picture Archive Council of America, the North American Nature Photography Association, and the Professional Photographers of America.

The Authors Guild, Betty Miles, Joseph Goulden, and Jim Bouton moved for certification as class representatives for the purposes of a class action.

Chin Grants Class Certification.

Chin, who was elevated to the Second Circuit in April 2010 but retained some of his district court workload, determined that the plaintiffs had demonstrated common questions of law and fact sufficient to satisfy the standards articulated by the U.S. Supreme Court in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011).

In so holding, the court rejected Google's argument that addressing its fair use defense would require individual members' participation to establish the fair use factors involving the nature of the works and the effects of Google's use on the market.

According to the court, association members could be grouped to account for any differences regarding classification of works and uses. The court said:  

While different classes of works may require different treatment for the purposes of “fair use,” the fair-use analysis does not require individual participation of association members. The differences that Google highlights may be accommodated by grouping association members and their respective works into subgroups. For example, in the Authors Guild action, the Court could create subgroups for fiction, non-fiction, poetry, and cookbooks. In the [visual artists'] action, it could separate photographs from illustration. The Court could effectively assess the merits of the fair-use defense with respect to each of these categories without conducting an evaluation of each individual work. In light of the commonalities among large groups of works, individualized analysis would be unnecessarily burdensome and duplicative.  

 

 

 

The Authors Guild is represented by Michael J. Boni of Boni & Zack, Bala Cynwyd, Pa., Google is represented by David J. Silbert of Keker & Van Nest, San Francisco.

By Tamlin H. Bason  


Order at http://pub.bna.com/ptcj/122402Aug1412.pdf

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