Last week, in a decision that confirms the viability of cy pres settlements in privacy class action cases, the Ninth Circuit affirmed approval of a class action injunctive relief and cy pres-only settlement in In re Google Inc. Street View Electronic Communications Litigation, No. 20-15616, 2021 WL 6111383. The case featured Wiretap Act claims based on Google Street View vehicles’ collection of “payload data,” including emails, passwords, and documents that Internet users transmitted over unencrypted Wi-Fi networks.
After years of litigation, the district court approved a settlement for a class of approximately 60 million wireless network device users whose payload data Google obtained. The settlement required Google to extend by several years its compliance with the “Assurance of Voluntary Compliance” (AVC) that it entered to resolve related investigations by state attorneys general. The settlement also required Google to create a $13 million settlement fund to pay for attorneys’ fees, litigation and administrative costs, and service awards for class representatives, with any remaining amount to go to cy pres recipients rather than class members.
Two putative class members objected to the settlement on multiple grounds, including that the settlement fund should have been distributed to class members rather than cy pres recipients. The Ninth Circuit rejected the objectors’ arguments across the board. First, it refused to adopt a rule that cy pres-only settlements are inadequate as a matter of law. Second, it affirmed that a cy pres award was permissible in the circumstances of this case, which included a low per-class member monetary recovery and difficulty in determining class membership.
In assessing whether the settlement was “fair, reasonable, and adequate” under Rule 23(e)(2), the Ninth Circuit considered both the value of the injunctive relief and the cy pres award. And even though the injunctive relief added only incrementally to Google’s preexisting obligations under the AVC, the Ninth Circuit held that extending the period of compliance with the AVC by several years and requiring additional educational materials to be posted online provided benefit to the class.
Finally, the Ninth Circuit rejected the objectors’ challenge to the privacy organizations selected as cy pres recipients, including the ACLU and the Electronic Privacy Information Center (“EPIC”). The objectors urged the Ninth Circuit to adopt a new standard for approving cy pres recipients, which would require examination of whether “any party has any significant prior affiliation with the intended recipient that would raise substantial questions about whether the award was made on the merits.” The objectors argued that because the ACLU, EPIC, and other recipients had “pre-existing relationship[s]” with class counsel and defense counsel and had received cy pres awards from Google and other tech companies in other cases, they were not appropriate recipients here, but the Ninth Circuit refused to adopt such an “expansive proposed test.”