On Wednesday, the U.S. Supreme Court (SCOTUS) remanded Frank v. Gaos, an $8.5 million Google privacy class action settlement back to the U.S. Court of Appeals for the Ninth Circuit to consider whether the plaintiffs in casehas “standing” to assert their claim in response to the justices’ 2016 decision in Spokeo v. Robins.
In Spokeo, the court held that “standing” requires a concrete injury even in the context of a statutory violation. By sending it back, the courts will have to decide whether users meet the requisite requirements established in Spokeo, which held that plaintiffs did not have standing to sue based on statutory violations.
Why Was Google In Trouble?
Back in 2010, Google was sued for allegedly violating federal privacy laws by sharing the search queries of its users with third-parties for commercial purposes. This included personally identifiable information (“PII).
Google ultimately settled the class-action suit for $8.5 million, with the proposal that the bulk of the money be distributed among the class lawyers, non-profit organizations, and any remaining administrative costs.
Understanding the Settlement
In August 2017, the Ninth Circuit affirmed the District Court’s approval of the settlement and the trial judge’s finding that the settlement fund was not eligible for distribution to a class size estimated to be around 129 million Google users.
Which is why the allegedly harmed “class” of petitioners were left out of the following distribution:
- Lawyers: $2.1 million was paid;
- Administrative costs: $1 million was paid; and
- Non-Profits: $5.3 million was set aside for six non-profit organizations that handle internet privacy issues: Carnegie-Mellon University; World Privacy Forum; Chicago Kent College of Law Center for Information, Society, and Policy; Stanford Law School Center for Internet and Society; Berkman Center for Internet & Society at Harvard University; and AARP Foundation.
But, the question is why the Ninth Circuit ruled this way. According to the court, distributing that settlement money would leave each class member with about 4 cents, “a de minimus amount if there ever was one.”
With great power, comes great responsibility. Most importantly, these internet giants like Google and Facebook. In Gaos, the alleged statutory violation involved the Stored Communications Act (SCA).
Frank v. Gaos, the first important class-action case of 2019, involves a “cy pres” settlement, a common device in class actions that award trivial sums of money to a large class of plaintiffs.
A “cy pres” settlement is where courts commonly approve a settlement that takes a portion of settlement proceeds and distributes them to some public-interest or charitable recipient that serves an interest parallel to the interests served by the judgment in the case.
But, what’s missing? While the individuals who initially sued, each received $5,000, what about the millions of Google users in the class that was being represented? Ideally, if all the 129 million people in the class had been paid, they each would have received 4 cents.
Back in October, the justice’s were presented with arguments involving the standing issue, where the court ordered all parties in the case to file briefs speaking to that issue.
In response to those arguments, the SCOTUS decided to hear the case only as it pertained to the question of “standing.”
On Wednesday, the SCOTUS in its unsigned per curiam opinion, vacated and remanded the case back down to the Ninth Circuit, asking it to revisit the issue of whether the plaintiffs had standing to bring their claim to begin with.
“We ‘are a court of review, not of first review,’” the Supreme Court said. “Nothing in our opinion should be interpreted as expressing a view on any particular resolution of the standing question.”
The Court added […] that “the supplemental briefs filed in response to our order raise a wide variety of legal and factual issues not addressed in the merits briefing before us or at oral argument.”