Last September, we criticized a 2-1 decision out of the Ninth Circuit, In re Google Referrer Header Privacy Litigation, 869 F.3d 737 (9th Cir. 2017), calling it a “poster child” for cy pres abuse in class actions. Read the entire post for all the gory details, but briefly, the class action settlement in Google Referrer:
- Let counsel have a whopping 38% of the settlement as fees.
- Declared the entire settlement “non-distributable” because, even without opposition, neither the class members nor their damages could be determined.
- Gave 100% of the settlement funds as cy pres to six uninjured charities, and 0% to the 129 million estimated supposedly injured class members.
- All three of the law school cy pres recipients had ties to counsel in the case.
- The cy pres recipients were to educate and publicize supposed internet privacy issues – in other words, to act as a breeding ground for further litigation of this sort.
We closed that post by recommending, “[w]e think this is a case that should go to the United States Supreme Court.” We don’t say that often (only about Desiano, Neurontin, Bartlett, Bristol Myers-Squibb, and Fosamax, that we can recall offhand) – six times in eleven years.
Well, we’re pleased to report that yesterday the United States Supreme Court accepted a certiorari petition in the case, rechristened as Frank v. Gaos, No. 17-961, 2018 WL 324121 (U.S. Apr. 30, 2018). The SCOTUSBlog story is here. The order granting certiorari is here. The question presented is:
Whether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and comports with the requirement that a settlement binding class members must be “fair, reasonable, and adequate.”
See Certiorari petition. We are cautiously optimistic that the result in Frank will be the disavowal or severe limitation of cy pres distributions in class actions.