The Supreme Court issued its much-awaited ruling in Frank v. Gaos (17-961). Court watchers anticipated that the Court would resolve the circuit split concerning the propriety of the cy pre doctrine in class action settlements. Plaintiffs in the underlying litigation filed suit against Google alleging the company shared users’ search information with third-party vendors and, therefore, violated various common law privacy interests and state and federal statutes. Because the class consisted of approximately 129 million individuals who used Google’s search engine, any monetary award to individual class members would be incredibly small. Class counsel and Google proposed an $8.5 million cy pre-only settlement that awarded settlement proceeds to various privacy-related non-profits, including class counsels’ alma matters. The Ninth Circuit departed from nearly every other circuit to have addressed the same issue and approved a settlement that failed to provide any monetary relief to class members.
Petitioners argued that cy pre-only settlements raise fundamental issues of fairness and create a conflict between class counsel and class members. Indeed, Chief Justice Roberts even said as much when the Court denied cert in another case that tangentially addressed the issue. The apparent conflicts of interest and the cozy relationship between class counsel and Google made the case particularly appealing for the Court to define the limits of cy pre settlements, but the Court declined to reach the merits.
Instead, the Court remanded the case so that the parties could address potential standing issues in light of the Court’s ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). Spokeo held that litigants must allege more than a bare procedural violation of a statute to satisfy the injury-in-fact requirement for Article III standing. The Court’s decision to remand the case on standing grounds signals that the Supreme Court is particularly interested in the types of harms that may constitute a concrete and particularized injury in the context of data security and privacy interests. Lower courts have reached a multiplicity of different holdings in the age of what most view as an intangible concrete harm. The Supreme Court’s decision, however, suggests that the Court may be sending a message to lower courts to thoughtfully consider each of the required elements for Article III standing.