Photo: Jason Doiy Photo: Jason Doiy

 

A federal appeals panel grilled lawyers in a case against Google over a claim of conflict of interest in steering funds from an $8.5 million class action settlement to the alma maters of two of the plaintiffs’ attorneys, including Harvard and Stanford universities.

The case focuses on class action settlements that provide no money to class members but fund charitable organizations under the cy pres doctrine, a controversial practice normally used to distribute unclaimed funds. In the case before the U.S. Court of Appeals for the Ninth Circuit, objector Ted Frank said the Google accord gave nothing to the class while funding six entities, including Harvard’s Berkman Klein Center for Internet & Society, the Stanford Center for Internet and Society and the Center for Information, Society and Policy at the Illinois Institute of Technology’s Chicago-Kent College of Law..

Lead plaintiffs’ attorney Kassra Nassiri is an alumnus of Harvard University Law School and Stanford University, and another lawyer bringing the case, Michael Aschenbrener, of KamberLaw, graduated from Chicago-Kent College of Law.

In oral arguments on Monday, Ninth Circuit Judge John Clifford Wallace asked whether the federal judge in San Jose, California, who approved the settlement, did enough to protect class members from potential conflicts of interest.

“I’m just wondering why there was not more done by the court,” he said. “This is very important. There are millions of dollars at stake, and they just seem to go to alumni of counsel. I’m not saying that’s wrong. I’m just saying there should have been more of a record by the district court.”

In his 2015 decision, U.S. District Judge Edward Davila of the Northern District of California acknowledged the potential conflicts of interest but granted approval, noting “there is no indication that counsel’s allegiance to a particular alma mater factored into the selection process.” He also relied on the 2012 decision by the Ninth Circuit in Lane v. Facebook that upheld a $9.5 million class action settlement involving cy pres funds alone.

“This was not a rubber stamped process,” said Nassiri of San Francisco’s Nassiri & Jung, speaking for the plaintiffs. “The court spent a lot of time looking at this and put us in the hot seat.”

The case alleged that Google was illegally sending personal information to third parties about users of its search function. It bore many resemblances to other online privacy class actions, like a $5.5 million settlement with Google approved last month in which Frank, of the Competitive Enterprise Institute’s Center for Class Action Fairness, also objected.

In that case, which also involved cy pres payouts to six entities, including Harvard’s Berkman Klein Center, a federal judge in Delaware found that delivering money to the class would have been impractical.

Lawyers backing the $8.5 million settlement made similar arguments before the Ninth Circuit, noting that the class size in this case would be 130 million people—practically every internet user in the country.

But Frank relied on Fraley v. Facebook, a $20 million settlement in which lawyers managed to arrange the distribution of $15 to each class member.

“The fact of the matter is Fraley v. Facebook was 130 million class members, and they figured out a way to get millions of dollars to the class,” Frank said.

Contact the reporter at abronstad@alm.com.