US Supreme Court returns challenge to ‘cy pres’ class action settlements to lower courts

The US Supreme Court has returned a case reviewing the fairness of ‘cy pres’ class action settlements in consumer privacy cases back to the lower courts to determine standing to take the case.

The case originated in the class action brought in Gaos v Google, which challenged the disclosure of Google search histories to third parties in breach of various privacy laws. A settlement was reached on behalf of over 100 million class members that Google would pay $8.5 million. From this, the Court decided that $3.2 million should be paid in attorneys’ fees, administration costs, and incentive payments to the named plaintiffs. As the remaining settlement per class member was small, the court distributed the outstanding $5.3 million to six cy pres recipients. A cy pres (meaning ‘as near as possible’ in French)settlement allows awards of all or part of the monetary relief to public interest or charitable recipients instead of the named plaintiffs. In this case, the cy pres recipients included universities that the legal counsel had attended and organisations that Google had already supported through donations.

The cy pres settlement was appealed, however the US Court of Appeals for the Ninth Circuit held that it was the appropriate route where a fund is non-distributable and that the selection of recipients promoted the interests of the silent class members.

Fresh proceedings were then initiated on the grounds that cy pres settlements benefit lawyers at the expense of class members, that they do not provide redress to the injured parties and that they are an inappropriate exercise of judicial power.

The Supreme Court turned its attentions to the standing of the plaintiffs which, under Spokeo v Robbins, requires a concrete injury necessary to confer standing. The Court therefore declined to rule on either the cy pres issue or the standing issue, vacated the decision of the Ninth Circuit and returned the case to the lower courts for review of standing.

Click here for the decision in Frank v Gaos.



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