Frank v. Gaos

Whether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and comports with the requirement that a settlement binding class members must be “fair, reasonable, and adequate” under Federal Rule of Civil Procedure 23(e)(2).

This petition centers on a cy pres class action award, that affords “no relief at all” to absent class members.  The Ninth Circuit affirmed the award, diverting from the practice of its sister circuits.  Petitioners argue that this deepening circuit split incentivizes forum shopping for nationwide class actions.  Historically, the cy pres doctrine has been used to prevent unclaimed portions of class action settlement awards from being returned to the defendant.  Instead, those remaining funds have been diverted to charities. Criticism of this doctrine focuses on the opportunities created for attorneys to reap high-yield awards while absent class members are inadequately recompensed.  In this case, the class action plaintiffs filed suit against Google for disclosing Google users’ search terms to third parties.  In exchange for the $8.5 million settlement, Google did not have to alter its practices, and the privacy related claims are released.  Counsel over $2 million of that settlement for attorneys’ fees.  The named plaintiffs received “a few thousand apiece,” and the remaining money was selected for donation to certain organizations. The District Court and Ninth Circuit both jettisoned Petitioners’ objections, because, in part, distributing the award the estimated 129 million class members is “infeasible.”  Petitioners urge the Supreme Court to resolve the conflict between the Ninth Circuit and the Third, Fifth, Seventh, and Eighth Circuits.