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Frank v. Gaos

The plaintiffs in this case brought a class action against Google for violating users’ privacy by disclosing their Internet search terms to third-party websites. The complaint alleged claims for violation of the Stored Communications Act and several state-law causes of action. The class includes approximately 129 million people. Following mediation, the parties entered into a settlement providing for injunctive relief, an $8.5 million settlement fund, and attorney’s fees. Because distribution to the individual class members was infeasible, the settlement provided for cy pres distribution of the fund to organizations dedicated to protecting Internet privacy. In accordance with federal Rule of Civl Procedure 23(e), the district court then evaluated the settlement to assess whether it was fair, reasonable, and adequate, and held that it was. Two objectors to the settlement appealed and, after losing the appeal, petitioned for Supreme Court review. The Court accepted the case to consider whether distributing the settlement fund as cy pres rather than directly to class members complies with Rule 23(e).

Public Citizen filed an amicus brief in support of the settling parties. The brief explained that, to allow appropriate use of cy pres settlements while preventing their misuse, the federal appellate courts have articulated a consistent set of standards to assess cy pres awards. The courts allow settlements involving cy pres payments when distributions to individual class members are impracticable or when class members to whom distributions are practicable have been fully compensated for their losses. And the courts agree that proposed cy pres awards must be carefully scrutinized to ensure that they adequately benefit class members in ways that have a sufficient relationship to the claims asserted by the class. In this case, the courts properly applied these broadly accepted standards. The brief also explained that, contrary to the suggestion in the amicus brief of the Solicitor General, Article III neither limits the ability of parties to settle a case nor addresses the form of distribution of compensatory relief.