Background
Mobile-device users alleged that Google violated their privacy rights by continuing to track and store their locations after they disabled the “Location History” setting. The consolidated litigation produced a settlement class of approximately 247.7 million U.S. residents whose location information Google stored while that setting was disabled.
The settlement required Google to change the challenged practices and pay $62 million without admitting liability. After attorneys’ fees, expenses, service awards, and administrative costs, approximately $42.64 million was allocated among 21 charitable organizations working on internet privacy issues. Three class members objected, arguing principally that the money should be offered directly to class members through a claims process and that several proposed cy pres recipients lacked an adequate connection to the class.
The Court’s Holding
A divided Ninth Circuit affirmed the order overruling the objections and granting final approval. The majority held that the district court considered the factors required by the 2018 amendments to Federal Rule of Civil Procedure 23(e)(2), including the effectiveness of the proposed distribution method, and did not improperly presume that the settlement was valid. Ninth Circuit precedent does not categorically prohibit settlements in which all monetary relief is distributed through cy pres, particularly where the settlement also supplies injunctive relief.
The district court did not abuse its discretion in finding direct distribution infeasible. Dividing the fund among the entire class would yield less than 25 cents per member before deductions, a claims process would impose substantial costs, and Google could not reliably identify qualifying users. The majority also held that the challenged recipients satisfied the substantial-nexus test because their proposed work addressed data privacy and could benefit U.S. class members. It declined to consider the objectors’ Article III challenge because they had not raised it below.
Judge Forrest dissented. She concluded that the record did not establish that the settlement funds were truly non-distributable, emphasizing that self-identification and ordinary claim-verification procedures might permit payments to claimants and that projected administrative costs would leave substantial funds available for direct distribution.
Key Takeaways
- Rule 23(e)(2) requires express consideration of the effectiveness of a settlement’s distribution method, but the court may also use the Ninth Circuit’s pre-2018 settlement factors in a holistic fairness review.
- Ninth Circuit precedent permits monetary relief to be distributed entirely through cy pres when direct payments are infeasible and the recipients have a substantial nexus to the class’s interests.
- A very small per-member recovery, substantial administrative expense, and the absence of a reliable method to identify and verify class members supported the finding that direct distribution was infeasible.
Why It Matters
The decision reaffirms substantial district-court discretion to approve cy pres distributions in exceptionally large consumer and privacy classes. It also confirms that amended Rule 23 did not categorically displace the Ninth Circuit’s existing cy pres precedents or require some direct monetary distribution in every settlement.
The dissent highlights a continuing dispute over when funds become genuinely non-distributable. Future objectors seeking direct payments will likely need to present a workable identification, verification, and claims-administration method in the district court rather than relying on the general possibility of claimant self-identification.