U.S. appeals court voids Google ‘cookie’ privacy settlement that paid users nothing

(Reuters) – A federal appeals court on Tuesday struck down
Google’s class-action settlement meant to resolve claims it invaded
the privacy of millions of computer users by installing “cookies”
in their browsers, but paying those users nothing for their
troubles.

In a 3-0 decision, the 3rd U.S. Circuit Court of Appeals in
Philadelphia said it could not tell whether the $5.5 million
settlement was fair, reasonable and adequate, and said a lower
court judge should revisit the case.

Google, a unit of Alphabet Inc, had been accused of exploiting
loopholes in Apple Inc’s Safari and Microsoft Corp’s Internet
Explorer browsers to help advertisers bypass cookie blockers.

The settlement approved in February 2017 by U.S. District Judge
Sue Robinson in Delaware called for Google to stop using cookies
for Safari browsers, and pay the $5.5 million mainly to the
plaintiffs’ lawyers and six groups, including some with prior
Google ties, to research and promote browser privacy.

But in Tuesday’s decision, Circuit Judge Thomas Ambro said the
settlement raised a “red flag” and possible due process concerns
because it broadly released money damages claims.

He also called the awards to the privacy groups “particularly
concerning.” The case was returned to the Delaware court.

Lawyers for Google and the plaintiffs, who both supported the
settlement, did not respond to requests for comment.

The decision is a victory for Ted Frank, the litigation director
at the Hamilton Lincoln Law Institute and prominent critic of many
class-action settlements.

Frank said the money awarded to the privacy groups, under a
legal doctrine known as “cy pres,” should have gone to class
members like himself. He drew support from a bipartisan group of 13
state attorneys general led by Arizona’s Mark Brnovich.

Cy pres, meaning “as near as possible,” is sometimes used in
settlements covering large numbers of class members who might
otherwise stand to receive only tiny amounts.

Google has faced this issue before, suffering a setback in March
when the U.S. Supreme Court questioned the legitimacy of a separate
$8.5 million privacy settlement involving cy pres.

Ambro noted that Chief Justice John Roberts has expressed
concerns about cy pres, and said many federal courts view cy pres
awards with “skepticism” because they could prompt class counsel to
put their own interests ahead of their clients’.

Google agreed in 2012 and 2013 to pay $39.5 million to settle
federal and state charges that it secretly tracked Safari users’
internet use. It did not admit wrongdoing.

The case is In re: Google Inc Cookie Placement Consumer Privacy
Litigation, 3rd U.S. Circuit Court of Appeals, No. 17-1480.

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