Frank v. Gaos

2019-03-20

Headline: Privacy lawsuit over Google sharing users’ search terms is sent back as the Court vacates approval of a class settlement that paid only charities and orders lower courts to reassess standing after Spokeo.

Holding: The Court vacated the Ninth Circuit’s approval of the class settlement and remanded so lower courts can decide whether any named plaintiff had a concrete injury and thus standing in light of Spokeo.

Real World Impact:

Requires lower courts to reexamine named plaintiffs’ standing before approving class settlements.
Pauses final approval of a settlement that paid no money to absent class members.
Leaves open whether Google must change practices or pay class members after further proceedings.

Topics: online privacy, class action settlements, who can sue (standing), charity payments instead of payouts

Summary

Background

Named plaintiffs sued Google after it sent users’ search terms to third-party websites via so-called referrer headers when users clicked links. The plaintiffs brought claims under the federal Stored Communications Act and state laws. The parties negotiated a settlement requiring Google to add disclosures on some webpages and to pay $8.5 million; none of that money would go to absent class members, and most was allocated to charities (cy pres recipients).

Reasoning

The central question the Court asked was whether the people who sued had a concrete injury and therefore the right to sue after this Court’s decision in Spokeo. Because earlier lower-court rulings had relied on a now-questioned theory that a statutory violation alone creates standing, the Justices concluded that the lower courts must reexamine whether any named plaintiff actually had standing to bring the case. The Court vacated the Ninth Circuit’s judgment and remanded for the district court and court of appeals to decide standing in the first instance. The Court did not resolve whether cy pres-only settlements are fair or adequate.

Real world impact

The remand means the settlement approval is not final. Absent class members received no direct payments under the agreement, and the lower courts must determine whether the named plaintiffs can properly bind the class. The outcome on remand could undo the settlement, lead to changes in how class settlements are structured, or prompt further litigation over relief distribution.

Dissents or concurrances

Justice Thomas dissented, arguing the plaintiffs had standing by alleging violations of private statutory rights and that a settlement giving no meaningful relief to class members should not have been approved.