Appeals Court Approves Google's $8.5 Million Data Leak Settlement

A federal appellate panel has upheld Google's $8.5 million settlement of a lawsuit alleging that the company "leaked" data about search users by transmitting their names to other companies.

The deal requires Google to pay $5.3 million to six nonprofits -- Carnegie Mellon University, World Privacy Forum, Chicago-Kent College of Law, Stanford Law, Harvard's Berkman Center and the AARP Foundation. The agreement also calls for Google to pay more than $2.1 million to the attorneys who brought the lawsuit, with the remainder of the settlement fund going to court costs.

Theodore Frank, an activist who founded the Class Action Fairness Center, objected to the deal on several grounds, including that some of the nonprofits had prior relationships with Google as well as the lawyers representing the consumers. He pointed out that two of the plaintiffs' lawyers were alumni of three schools slated to receive funds (Stanford, Harvard and Chicago-Kent College of Law) and that Google already donates money to Harvard, Stanford, AARP and Chicago-Kent.

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A 9th Circuit Court of Appeals appellate panel said the prior relationships don't bar the settlement from going forward.

"Given the burgeoning importance of Internet privacy, it is no surprise that Google has chosen to support the programs and research of recognized academic institutes and nonprofit organizations," Circuit Judge Margaret McKeown wrote in an opinion joined by Circuit Judge Jay Bybee. 

They added that some of the recipients have challenged Google's privacy policies in the past, noting that a study by the World Privacy Forum and Stanford Center for Internet and Society "played a key role" in an enforcement action brought by the Federal Trade Commission against Google. In that matter, Google was accused of violating its privacy policy by circumventing Safari's no-tracking default settings; Google settled with the FTC for $22.5 million and with state attorneys general for $17 million.

McKeown and Bybee added that objections based on the lawyers' school affiliations "can’t be entertained with a straight face."

"Each of these schools graduates thousands of students each year," the two judges wrote.

Circuit Judge J. Clifford Wallace, who dissented in part, said the relationship between the lawyers and the fund recipients requires further exploration.

"To me, the fact alone that 47% of the settlement fund is being donated to the alma maters of class counsel raises an issue which, in fairness, the district court should have pursued further in a case such as this," he wrote. "The district court made no serious inquiry to alleviate that concern."

The litigation, which dates to 2010, centered on allegations that Google violated users' privacy by including their search queries in "referer headers" -- the information that is automatically transmitted to sites that users click on when they leave Google.

Some queries, like people's searches for their own names, can offer clues to users' identities. Google no longer transmits search queries when people click on links in the results. 

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