Google Referrer Header Privacy Litigation v. Holyoak
2017 U.S. App. LEXIS 15955
| 9th Cir. | 2017Background
- Three consolidated class actions alleged Google disclosed users’ search terms to third-party websites via referrer headers and stored Web History, violating the Stored Communications Act and various contract/unjust enrichment theories.
- The proposed pre-certification settlement: $8.5 million total; about $3.2 million for attorneys’ fees, admin costs, and named-plaintiff incentives; the remaining ~$5.3 million allocated solely to six cy pres recipients focused on Internet privacy education/research.
- The class was ~129 million U.S. Google Search users (Oct. 25, 2006–Apr. 25, 2014); notice was provided by web, phone, ads, and press; 13 opted out and five objected.
- District court preliminarily and finally approved the settlement, finding the fund non-distributable (de minimis per-member recovery), a sufficient nexus between recipients and class interests, adequate disclosure about prior donations, and reasonable attorneys’ fees ($2.125 million).
- Objectors appealed, challenging (1) the appropriateness of a cy pres‑only distribution, (2) selection of cy pres recipients given prior affiliations with Google or class counsel, and (3) the reasonableness/valuation used for attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Is a cy pres‑only settlement appropriate when direct payments would be de minimis? | Settlement fair because direct distribution would impose verification/transaction costs far exceeding per‑member recovery. | Same: cy pres proper where fund is non‑distributable and individual awards would be negligible. | Affirmed: cy pres allowed where fund non‑distributable and class action remains superior. |
| 2. Do the selected cy pres recipients satisfy the required nexus to class interests? | Recipients promote Internet privacy and will use funds to benefit the class; proposals disclosed prior Google donations. | Same; previous donations or prior recipients do not disqualify if nexus and qualifications exist. | Affirmed: district court did not abuse discretion—recipients have substantial nexus. |
| 3. Do prior affiliations (Google donations; counsel’s alma maters) taint the selection? | Objectors: affiliations raise substantial questions of merit-based selection; demand further inquiry/evidentiary hearing. | Defendants: prior relationships disclosed; mere alumni ties or past donations without evidence of collusion don’t bar approval. | Majority affirmed (no abuse of discretion); concurrence would remand for sworn inquiry regarding alumni ties. |
| 4. Were attorneys’ fees reasonable given a cy pres‑only settlement? | Objectors: cy pres nature should reduce valuation for fee calculation. | Class counsel: fee calculated by accepted methods (25% benchmark and lodestar cross‑check) is reasonable. | Affirmed: $2.125 million (25%) and costs reasonable under percentage‑of‑recovery and lodestar cross‑check. |
Key Cases Cited
- Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir. 2011) (cy pres must have a nexus to the class and underlying claims)
- Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012) (pre‑certification settlements require heightened scrutiny; cy pres appropriate where direct distribution infeasible)
- In re Zynga Privacy Litig., 750 F.3d 1098 (9th Cir. 2014) (explaining referrer headers and web privacy mechanics)
- Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir. 2011) (preference for direct distributions to class members over cy pres)
- In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (fee‑calculation approaches and heightened scrutiny for pre‑certification settlements)
- Rodriguez v. W. Publ’g Corp., 563 F.3d 948 (9th Cir. 2009) (standard of review for approval of class action settlements)
- Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) (cy pres distribution must reasonably benefit class members)
- Dennis v. Kellogg Co., 697 F.3d 858 (9th Cir. 2012) (rejecting cy pres recipients lacking nexus to underlying claims)
- In re Pacific Enterprises Securities Litigation, 47 F.3d 373 (9th Cir. 1995) (district court must give reasoned responses to settlement objections)