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By Jimmy H. Koo
Alphabet Inc.'s Google’s settlement of class allegations it disclosed user internet search terms to third-party websites is acceptable even though nearly none of the $8.5 million payout will go to users, a federal appeals court affirmed Aug. 22 ( In re Google Referrer Header Privacy Litig. , 2017 BL 293516, 9th Cir., No. 5:10-cv-04809-EJD, 8/22/17 ).
The U.S. Court of Appeals for the Ninth Circuit held that Google may distribute approximately $5.3 million of the settlement fund to consumer privacy education and research programs, from which class members benefit only indirectly.
The order highlights the use of such relief in class action litigation, known as cy pres, under which settlement funds are given to charities, non-profit organizations and other entities instead of being distributed to class members.
Google is the most popular internet search engine, accounting for 63.3 percent of searches in July 2017 and 63.1 percent of searches in June 2017, according to Bloomberg data. Online advertisers rely on the ability to target ads to consumers. Out of the $89.5 billion in Google’s gross revenue for fiscal 2016, advertising revenues accounted for $79.4 billion, or approximately 88.7 percent, according to Bloomberg data.
The settlement includes only $15,000 in incentive payment for the three named plaintiffs. In a majority opinion written by Judge M. Margaret McKeown and joined by Judge Jay S. Bybee, the court also approved approximately $3.2 million for attorneys’ fees and administrative costs.
Plaintiffs alleged that Google violated their privacy rights by disclosing search terms—including payment card numbers, medical information, and names—to third parties. Google agreed to a no-fault settlement to resolve the litigation, which was approved by the trial court.
Concurring and dissenting in part on appeal, Judge J. Clifford Wallace agreed with the majority that the consumer privacy and education payment was appropriate. Wallace disapproved of what he saw as a preexisting relationship between class counsel and some of the organizations named to receive the payments.
Wallace noted that 47 percent of the settlement fund is being earmarked for schools that class counsel attended,including 16 percent each for the Chicago-Kent College of Law and Stanford University and 15 percent for Harvard University. He said he would vacate the approval of the settlement agreement, and determine whether the class counsel’s prior affiliation with the recipients played any role in their selection .
Carnegie Mellon University will receive 21 percent of the settlement fund. The World Privacy Forum and the AARP Foundation will receive 17 percent and 15 percent, respectively.
A spokeswoman for Google told Bloomberg BNA Aug. 22 that the company is “pleased with the decision.”
Mayer Brown LLP and O’Melveny & Myers LLP represented Google. Nassiri & Jung LLP represented the plaintiffs.
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