Google Search Case Could Impact Class-Action Payouts

A case involving Google Search could change the way that class-action settlements are paid out, assuming the U.S. Supreme Court comes through with a decision on the matter.

The case involves a California resident who filed “a proposed class-action lawsuit in 2010 in San Jose federal court claiming Google’s search protocols violated federal privacy law by disclosing users’ search terms to other websites,” according to Reuters on Wednesday (Oct. 31).

Eventually, Google agreed to pay $8.5 million to settle the case and disclose more details about its search practices, but was “not required to change its behavior,” the news agency said, “The three main plaintiffs received $5,000 each for representing the class. Their attorneys received about $2.1 million.”

At issue Wednesday was the distribution of those payments, not Google’s search practices.

The rest of the money from the settlement went to groups that promote online privacy, with no money going to “millions of Google users who the plaintiffs were to have represented in the class action.” Those settlements, referred to as “cy pres” (pronounced “see pray”) awards, are described as giving “money that cannot feasibly be distributed to participants in a class-action suit to unrelated entities as long as it would be in the plaintiffs’ interests.”

Though reportedly rare, it was the cy pres process that was argued Wednesday before U.S Supreme Court justices. According to an account of those arguments in Reuters, liberal justices, via their questions, tended to express support for the cy pres system, which avoids “negligible per-person payments,” while conservative justices had “concerns about potential abuses in these awards, including excessive fees going to plaintiffs’ lawyers.”

It’s not certain whether the U.S. Supreme Court will issue a decision in this case involving Google Search and class actions. That’s because, according to Reuters, “during the arguments, several justices, both liberal and conservative, wondered whether the plaintiffs had suffered harm through their internet searches sufficient to justify suing in federal court, signaling they may dismiss the case rather than deciding the fate of cy pres settlements.”