What AdWords Customers Need To Know About $20 Million Settlement

As many of you know, Google settled an AdWords class action suit for $20 million. Now, advertisers are receiving email notifications on what their rights are in this class action lawsuit. I read the settlement notice (PDF) and I’ll highlight what I feel most AdWords customers need to know.

Probably the most important section is VII, the rights of class members. That section reads:

If you are not a Reseller, you are a member of the Class if: you reside in the United States, have paid Google for advertising pursuant to Google’s AdWords program and either (a) became an AdWords advertiser between June 1, 2005 and February 28, 2009, inclusive, and were charged more than your per day Daily Budget on any day during that time period; or (b) paused your AdWords advertising campaign on any day during the period from January 1, 2002 to February 28, 2009, inclusive, and during the same billing period when your AdWords advertising campaign was paused, were charged more than the product of your per day Daily Budget times the number of days that your AdWords advertising campaign was not paused during that billing period. Class members have the following options:

(A) If you wish to remain a member of the Class, you may share in the proceeds of the Settlement. Class Members will be represented by Representative Plaintiffs and Representative Plaintiffs’ Counsel, unless you enter an appearance through counsel of your own choice at your own expense. You are not required to retain your own counsel, but if you choose to do so, such counsel must file an appearance on your behalf on or before July 14, 2009, and must serve copies of such appearance on the attorneys listed below.

(B) If you do not wish to remain a member of the Class, you may exclude yourself from the Class by following the instructions below. Persons who exclude themselves from the Class will NOT receive any share of the Settlement Proceeds and will NOT be bound by the Settlement.

(C) If you object to the Settlement, the Plan of Allocation, or to Representative Plaintiffs’ Counsel’s application for attorney’s fees and expenses and for an incentive compensation award for Representative Plaintiffs, and if you do not exclude yourself from the Class, you may present your objections by following the instructions below.

The lawyers seem to be collecting at least $5 million of the $20 million from this suit. Plus the two main plaintiffs in the case are getting only $20,000 each.

Google has denied any wrong doing and it states so in the settlement:

Google has denied all claim of wrongdoing or liability in the Action. The Settlement Agreement is not and shall not be construed or deemed to be evidence or an admission or a concession on the part of Google of any fault or liability or damages whatsoever, and Google does not concede any infirmity in the defenses which it has asserted in the Action.

Google paid the $20 million on March 31, 2009 and has been earning interest in an escrow account.

The $20 million will be paid out as follows:

• To pay the fees, expenses and costs of Representative Plaintiffs’ Counsel as and to the extent allowed by the Court;
• To pay an incentive compensation award to each Representative Plaintiff to the extent allowed by the Court; and
• To pay all costs and expenses reasonably incurred in connection with the preparation and filing of tax returns and the payment of taxes on the interest earned on the Settlement Proceeds, including all taxes and tax expenses.

Hat tip to Tim for sending this to us first and if you want to read the whole settlement document, you can download it as a PDF document.