CALIFORNIA CLASS ACTION LAW

On Friday, plaintiffs submitted their unopposed motion for preliminary approval of a class action settlement in the In re Google Buzz User Privacy Litigation, Case No. 5:10-CV-00672-JW, Docket No. 41 (N.D. Cal. Motion Date Sept. 3, 2010).  The settlement calls for an $8.5 million cy pres fund, but no award to individual class members, other than $2,500 incentive awards to lead plaintiffs.

Plaintiff alleged the following: Google launched a social networking product, Google Buzz, on February 9, 2010.  Buzz suggests followers/following lists to users based in part upon who they email and chat with the most in Gmail. This list may be publicly viewable through their Google profile.   Plaintiffs alleged that this raised privacy concerns because email users did not necessarily want to be in social networks with their email contacts visible; and because a user’s most frequent email contacts was divulged without sufficient consent.

Plaintiffs alleged that aspects of the operations of Google Buzz violated: (i) the Electronic Communications Privacy Act, 18 U.S.C. §2510 et seq; (ii) the Stored Communications Act, 18 U.S.C. §2701 et seq; (iii) the Computer Fraud and Abuse Act, 18 U.S.C. §1030 et seq; (iv) the common law tort of Public Disclosure of Private Facts as recognized by California common law; and (v) the California Unfair Competition Law, California Business & Professions Code §17200.

The parties engaged in early informal settlement discussions and then a 14-hour mediation in front of Hon. Fern Smith, a retired federal district judge.  The parties reached a settlement at the mediation.  As part of the settlement, Google purportedly made available to class counsel all consumer feedback that it had received regarding the Buzz program from users worldwide.  Google also produced sworn statements by employees describing aspects of Buzz’s launch and operations.  Class counsel represented that “he could identify no class members who allege that they suffered out-of-pocket damages.”

Settlement Agreement

The settlement agreement provides for no monetary relief to class members, but an $8.5 million cy pres fund.  The terms are below:

3.1 Google agreed to and has produced to Lead Class Counsel documents and information regarding the operation of Google Buzz, changes made to Google Buzz after it launched, and consumer feedback regarding Google Buzz.

3.2 Google has made changes to the Google Buzz user interface that clarify Google Buzz’s operation and users’ options regarding Google Buzz, including, in particular, changes regarding user information and control over Buzz’s privacy settings.

3.3 Google agrees to disseminate wider public education about the privacy aspects of Google Buzz. Google agrees that it will consider the suggestions that it has received from Class Counsel and any other suggestions it may receive from Class Counsel on this issue within thirty (30) days after this Settlement Agreement is executed by all Parties. The parties agree that Google will select and design the final content of the public education efforts in its discretion. Google agrees that it will provide a report to Lead Class Counsel within three months after the Final Order and Judgment describing the public education efforts concerning the privacy aspects of Google Buzz that it undertook pursuant to this Settlement Agreement.

3.4 Google agrees to and shall deposit in an interest-bearing bank account established by Google the total sum of Eight Million Five Hundred Thousand Dollars ($8,500,000.00) as a Common Fund for Class Administrator fees and expenses, cy pres relief, class representative incentive payments, attorneys’ fees, and costs. The First installment, of Five Hundred Thousand Dollars ($500,000.00) shall be deposited within ten (10) business days of entry of the Preliminary Approval Order. The remainder shall be deposited within thirty (30) Days after entry of the Final Order and Judgment. The interest earned on such deposits shall accrue to the benefit of the Common Fund, and the interest shall be transferred to the cy pres recipients per subsection 3.4(d), below. The Class Action Administrator will maintain control over the Common Fund and shall be responsible for all disbursements. Google shall have no other financial obligation under this Settlement Agreement. In addition, under no circumstances will Google have any liability for taxes or tax expenses under this Settlement Agreement.

(a) The cy pres recipients will be existing organizations focused on Internet privacy policy or privacy education.

(b) The Parties shall mutually agree on the cy pres recipients and the amounts for each.

(c) Payments to the cy pres recipients shall be made out of the Common Fund by the Class Action Administrator within thirty (30) Days after the latest of (1) agreement by the Parties on the cy pres recipients and amounts for each, and (2) the Settlement Date.

(d) All monies in the Common Fund shall be paid out in full, and no monies shall revert to Google, unless the Court rejects the Final Order and Judgment, in which case all monies paid into the Common Fund shall immediately be returned to Google.

Class Counsel Fees and Incentive Awards

The parties negotiated a percentage-of-the-fund attorneys’ fee award of up to 30% to be paid out of the common fund.  Plaintiff’s counsel represented his intention to apply for a 25% of the fund fee award.  The parties also agreed to  an incentive award to each class representative of up to $2,500 to be paid from the common fund.

Judge and Attorneys

In front of Hon. James Ware.

Gary Mason of Mason LLP and others for plaintiffs.

David Burman of Perkins Coie LLP for defendant Google.

By CHARLES H. JUNG