What’s that Buzz? It’s the Sound of Class Action Lawyers Celebrating their Impending Fees

Cross-posted at Forbes.com’s On the Docket blog

When Google launched a new social networking service, Google Buzz, last February, it apparently “opted-in” all users of their free email service, Gmail, and set those users up to automatically “follow” those with whom they most often e-mailed or chatted.  Some users who felt their privacy was violated didn’t simply complain to Google; they took the all-American approach and filed class action lawsuits on behalf of each and every Buzz user, alleging violations of the Electronic Communications Privacy Act and other federal and state laws.  Changes made by Google to the Buzz privacy protections failed to please the plaintiffs’ lawyers plaintiffs, and the suits went forward.

Yesterday, the Associated Press reported that Google and the plaintiffs agreed to a settlement of all the class action suits.  This settlement is yet another example of how class action lawsuits can be a one-sided sham. 

Google has agreed to create an $8.5 million “Common Fund” out of which the class representatives will get their rewards (“of up to $2,500 dollars” each), the class action lawyers will be paid, and court costs.  What’s left will be distributed to third party groups using the court’s “cy pres” authority.  Notice that absolutely no awards will be paid out to class members.  One can certainly question whether any compensable harm occurred from Google’s alleged actions, but like so many class actions before them, these suits enriched only the lawyers, who will be seeking fees of “up to 30% of the Common Fund” (i.e. $2,550,000).  The settlement prohibits Google from opposing the court’s award of a fee (though hopefully some class members [that is, if anyone is even aware they are a member or that there is a settlement] will).

So where is the money going?  — to “organizations focused on Internet privacy policy or privacy education.”  It seems that this class action amounted to little more than a shakedown of a successful business for charitable donations, with the trial lawyers charging $2.55 million to facilitate the donation.  These types of “cy pres” payouts have been the subject of judicial and academic criticism.  Let’s hope that at least the organizations chosen direct their “education” at consumers like those who use Google Buzz, rather than at federal or state legislators or regulators, or at the judiciary via more privacy lawsuits.   

5 thoughts on “What’s that Buzz? It’s the Sound of Class Action Lawyers Celebrating their Impending Fees

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