Google involved in Supreme Court case that may change class-action damages awards

The underlying facts have nothing to do with the reason a case involving Google is now before the US Supreme Court. It has to do instead with an arcane legal doctrine (cy-près) that awards damages to charitable causes or entities when it’s difficult to compensate plaintiffs.

In 2010, Google was sued because the company allegedly violated its privacy policy by “leaking” personal information in referrer headers that were passed to third-party websites after users clicked on links in search results. Google settled the litigation in 2013 for about $8.5 million.

What’s at issue in the Supreme Court case is how the settlement was allocated. The money was slated for several law schools (Harvard, Stanford and Chicago-Kent) and organizations involved with privacy issues, including the World Privacy Forum and the MacArthur Foundation. At the time, US District Judge Edward Davila expressed concern that the plaintiffs’ attorneys were steering money to their own law schools.

Now, critics of the settlement, led by the conservative Competitive Enterprise Institute, argue it “violated procedural rules in US law requiring settlements to be fair, reasonable and adequate,” according to Reuters.

The US Ninth Circuit Court of Appeals approved the settlement because the roughly 129 million Google users implicated would have received less than 10 cents each under its terms. Accordingly, the cy-près doctrine was invoked to give the money to groups and institutions doing privacy-related work.

The Supreme Court will determine whether this particular settlement will survive. But in the process, it will also clarify when cy-près may be invoked and what federal settlement-related procedural rules require in terms of compensating plaintiffs in class actions.