Google, Consumers Try To Resolve Battle Over Gmail Ads

Google and a group of consumers who have accused the company of violating their privacy by scanning Gmail messages will meet with a mediator next month, in an attempt to resolve the four-year-old lawsuit.

Google revealed the upcoming mediation in court papers filed last week. Going to mediation isn't in itself unusual, but the timing of the effort seems odd here. Not only was the lawsuit filed in 2010, but Google just won a huge victory in the case: Earlier this month, U.S. District Court Judge Lucy Koh refused to allow the case to proceed as a class-action.

A decision nixing a class-action usually spells doom for these types of privacy lawsuits, given that consumers can't realistically pursue such cases as individuals. That's because it's not worth it for consumers to pay hourly fees to lawyers in a privacy case, where any one person's damages are likely to be quite small. But when a lawsuit moves forward as a class-action, consumers' lawyers are able to obtain their fees from the other side -- assuming the attorneys win the case, or negotiate a favorable settlement.



Given that Google just defeated the consumers' bid for a class-action, it's not clear how serious the company is about forging a settlement now. But there's at least one reason why Google might want to do so: A settlement would prevent the consumers from appealing Koh's ruling on the class-action issue. Google might well want to avoid the time and expense of defending Koh's decision on appeal.

Despite Google's recent win in the battle, the company also lost a significant round earlier in the litigation. Last September, Koh ruled that Google potentially violates the wiretap law by scanning emails in order to surround them with ads. That decision appears to mark the first time that a court has indicated that companies might violate a federal law by serving targeted ads in email. The decision, hailed as groundbreaking by privacy advocates, also sparked several privacy lawsuits against Yahoo. Those cases are currently  pending in front of Koh.

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