A federal appeals court tossed Google’s settlement of a class action suit accusing the company of privacy violations by using tracking cookies despite users’ privacy settings saying otherwise.
A three-member Third Circuit Court of Appeals panel said it was unclear if the proposed $5.5 million settlement was sufficient or fair and recommended the case be sent back the lower court that had approved the deal in 2017.
“The concerns voiced by the Third Circuit regarding the cy pres aspect of the Google settlement are only the tip of the iceberg. The problem is much more fundamental than that, as the supreme court has signaled, but not decisively ruled, on several occasions,” said Robert Cattanach, a partner at law firm Dorsey & Whitney. “It is this: demonstrating real and concrete damages for any alleged injuries arising out of privacy infringements, or even out right violations, is at best elusive, and at worst almost impossible.”
That’s why using cy pres, a doctrine, according to Cornell Law School, typically “used to give a gift to a similar beneficiary when the true beneficiary no longer exists or is not available” but now applied to the distribution of funds in a class action suit, “has become a convenient but poorly suited mechanism to resolve consumer class action’s: no one can show actual damages, but class counsel puts a multi- million dollar figure in the settlement document to justify an award of significant fees,” Cattanach said.
“At the end of the day, when no one can actually credibly prove actual damages, the money defaults to some ostensibly worthy cause. The problem is not with cy pres,” he explained. “It is with courts allowing privacy class actions with no real damages to proceed and then having to find some way to end the litigation.”