Joffe v. Google, Inc., No. 20-15616 (9th Cir. 2021)
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Plaintiffs alleged, in this consolidated class action, that Google illegally collected their Wi-Fi data through its Street View program. After the parties reached a settlement agreement that provided for injunctive relief, cy pres payments to nine Internet privacy advocacy groups, fees for the attorneys, and service awards to class representatives—but no payments to absent class members, David Lowery, one of two objectors to the settlement proposal, appealed the district court's approval of the settlement and grant of attorneys' fees.
The Ninth Circuit affirmed, concluding that the district court did not abuse its discretion in approving the settlement, certifying the class, or in its award of attorneys' fees, and it did not commit legal error by rejecting Lowery's First Amendment argument. The panel rejected the suggestion that a district court may not approve a class-action settlement that provides monetary relief only in the form of cy pres payments to third parties; Lowery has not shown that the district court abused its discretion in approving the use of cy pres payments in the settlement; the infeasibility of distributing settlement funds directly to class members does not preclude class certification; and viewing the modest injunctive relief together with the indirect benefits the class members enjoy through the cy pres provision, the panel affirmed the district court’s finding that the settlement was fair, reasonable, and adequate.
The panel also concluded that the settlement agreement does not compel class members to subsidize third-party speech because any class member who does not wish to subsidize speech by a third party that he or she does not wish to support, can simply opt out of the class. The panel has never held that merely having previously received cy pres funds from a defendant, let alone other defendants in unrelated cases, disqualifies a proposed recipient for all future cases. Furthermore, the panel affirmed cy pres provisions involving much closer relationships between recipients and parties than anything Lowery alleges here. The court further concluded that the district court properly considered all relevant circumstances, including the value to the class members, and concluded that a 25% benchmark was appropriate. Finally, the panel concluded that class counsel and class representatives did not breach their fiduciary duties by entering the settlement.
Court Description: Class Actions. The panel affirmed the district court’s order certifying a class, approving a settlement agreement, and awarding attorneys’ fees, in a consolidated class action lawsuit in which plaintiffs alleged, on behalf of an estimated sixty million people, that Google illegally collected their Wi-Fi data through its Street View program. After a decade of litigation, including a complex, three- year forensic investigation to confirm the standing of the eighteen named plaintiffs, the parties reached a settlement agreement that provided for injunctive relief, cy pres payments to nine Internet privacy advocacy groups, fees for the attorneys, and service awards to class representatives— but no payments to absent class members. The district court IN RE GOOGLE INC. STREET VIEW LITIG. 3 approved the proposed settlement, finding that it was not feasible to distribute funds directly to class members given the class size and the technical challenges to verifying class members’ claims. David Lowery, one of two objectors to the settlement proposal, appealed the district court’s approval of the settlement and grant of attorneys’ fees. Federal courts have widely recognized the cy pres doctrine as a tool for distributing unclaimed or non- distributable portions of a class action settlement fund to the “next best” class of beneficiaries. The panel rejected the suggestion that a district court may not approve a class-action settlement that provides monetary relief only in the form of cy pres payments to third parties. Lowery argued that, even if permissible in some circumstances, cy pres relief was inappropriate here because it was feasible to distribute settlement funds directly to class members. Because self-identification would be pure speculation, and any meaningful forensic verification of claims would be prohibitively costly and time-consuming, the panel affirmed the district court’s finding that it was not feasible to verify class members’ claims as would be necessary to distribute funds directly to class members. Further, as proof of individual claims would be burdensome and distribution of damages costly, the panel held that the district court did not abuse its discretion by approving the use of cy pres payments in the settlement. The panel rejected Lowery’s argument that if it was impossible to distribute settlement funds to class members, then class certification was an error of law because the class device was not superior to other available methods for fairly 4 IN RE GOOGLE INC. STREET VIEW LITIG. and efficiently adjudicating the controversy, as Fed. R. Civ. P. 23(b)(3) requires. Noting that this court, in upholding the validity of cy pres arrangements, has repeatedly recognized that class members do benefit—albeit indirectly—from a defendant’s payment of funds to an appropriate third party, the panel held that the infeasibility of distributing settlement funds to class members does not preclude class certification. Considering the unique challenges plaintiffs would have faced in proving their claims, the panel held that the district court did not err by concluding that the injunctive relief— which required Google to destroy all acquired payload data, refrain from collecting or storing additional payload data through Street View without notice and consent, and comply with other provisions in an assurance of voluntary compliance entered into with the attorneys general of thirty- eight states and the District of Columbia—together with the indirect benefits conferred by the cy pres provisions, was “fair, reasonable, and adequate” compensation to the class members under Fed. R. Civ. P. 23(e)(2). Lowery argued that the settlement violates the First Amendment’s prohibition on compelled speech by distributing class settlement funds to organizations “that take lobby positions adverse to” his own interests and beliefs. The panel did not decide whether, or under what circumstances, a district court’s approval of a class action settlement agreement is “state action” for purposes of the First Amendment. Instead, the panel held that the settlement agreement does not compel class members to subsidize third-party speech because any class member who does not wish to subsidize speech by a third party that he or she does not wish to support, can simply opt out of the class. IN RE GOOGLE INC. STREET VIEW LITIG. 5 Lowery argued that the district court abused its discretion by approving cy pres recipients who had a “significant prior affiliation” with defense counsel and class counsel. The panel noted that this court has never held that merely having previously received cy pres funds from a defendant, let alone other defendants in unrelated cases, disqualifies a proposed recipient for all future cases; and that this court has affirmed cy pres provisions involving much closer relationships between recipients and parties than anything Lowery alleges here. The panel concluded that the district court’s approval of the cy pres recipients comported with the applicable standards, and found no abuse of discretion. Lowery argued that the district court abused its discretion by “blindly applying” a 25% benchmark for attorneys’ fees without regard for the actual benefit the settlement conferred on the class. The panel wrote that the district court’s reasoning makes clear that this was not a “blind” application of a benchmark to the circumstances of the case. The panel also explained that there is no uniform rule that district courts must discount the value of any cy pres relief, regardless of the feasibility of distribution to class members or other relevant circumstances. Affirming the fee award, the panel wrote that the district court properly considered all relevant circumstances, including the value to class members. Because the panel affirmed the district court’s finding that the settlement provides adequate value to the class, and because there is no indication that counsel accepted attorneys’ fees or favored third parties over class members, the panel rejected Lowery’s argument that class counsel and their class representatives breached their fiduciary duties by entering the settlement. 6 IN RE GOOGLE INC. STREET VIEW LITIG. Concurring, Judge Bade wrote separately to express some general concerns about cy pres awards. She wrote that she is not convinced that cy pres awards to uninjured third parties should qualify as an indirect benefit to injured class members, and that she is concerned that the cy pres remedy is purely punitive, with defendants paying millions of dollars in what are essentially civil fines to class counsel and third parties while providing no compensation to injured class members. She further questioned whether cy pres awards are inherently unfair when the class receives no meaningful relief in exchange for their claims, and whether such awards can be justified given the serious ethical, procedural, and constitutional problems that others have identified.
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