The White House is asking the Supreme Court to vacate a deal that allows Google to settle a class-action privacy lawsuit by donating $5.3 million to nonprofits.
In a friend-of-the-court brief filed this week, the U.S. Solicitor General argues that Google and other companies shouldn't be able to resolve class-actions by making donations to charity unless trial judges have conducted a "rigorous" scrutiny of the deal. The White House specifically says that judges should examine whether the fund recipients will use the money to remedy the alleged harms that prompted the lawsuit.
The White House also argues that companies shouldn't be able to make donations to settle class-actions if it's feasible to give money directly to consumers. The administration is asking the Supreme Court to send Google's settlement back to a trial judge for re-evaluation.
The Solicitor General's papers mark the latest development in a dispute dating to 2010, when Google was sued for allegedly violating users' privacy by including their search queries in "referer headers" -- the information that's automatically transmitted to sites 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.)
Google and the plaintiffs resolved the case with a deal that calls for Google to donate $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 deal also calls for Google to pay more than $2.1 million to the attorneys who brought the lawsuit.
Class-action activist Ted Frank, who founded the Center for Class Action Fairness, is challenging the deal. He recently argued to the Supreme Court that the deal's structure is "a clear abuse" because some of the proposed recipients had prior relationships with Google and lawyers representing the plaintiffs.
Frank also argues that companies shouldn't be able to settle class-action lawsuits by making donations to charity, if it's "feasible" to pay class members in cash. He contends that those types of settlements -- called "cy pres" -- only "create the illusion of relief" for class members, while also potentially benefiting the companies that were sued. "Even if class-action defendants like Google and Facebook ultimately receive no direct benefit from cy pres awards, they still are able to take credit for their charity," he wrote in his Supreme Court papers.
Google, Facebook and Netflix are among companies that have resolved privacy class-actions by agreeing to donate money to nonprofits. For instance, Google recently agreed to donate more than $3 million to to six schools and nonprofits to settle a lawsuit alleging that it violated Safari users' privacy by circumventing their no-tracking settings. (Frank recently brought a separate challenge to that settlement.)
Several years ago, Netflix agreed to pay $6.5 million to a total of 20 nonprofits in order to resolve allegations that it violated the federal Video Privacy Protection Law by storing information about consumers' rental histories for at least two years. And Facebook agreed to settle a lawsuit stemming from its Beacon ad program -- which told people about their friends' e-commerce activity -- by paying $6.5 million to fund a privacy organization.