Google settles a class action, and every single penny of the multi-million dollar settlement goes to (1) the attorneys, and (2) an award of cy pres funds to various privacy organizations -- most of which are at the alma matters of the plaintiffs' counsel. Objectors object and appeal.
But lose. The majority says:
"[W]e reject the proposition that the link between
the cy pres recipients and class counsel’s alma maters raises
a significant question about whether the recipients were
selected on the merits. There may be occasions where the
nature of the alumni connections between the parties and the
recipients could cast doubt on the propriety of the selection
process. But here, we have nothing more than a barebones
allegation that class counsel graduated from schools that
house the Internet research centers that will receive funds.
The claim that counsel’s receipt of a degree from one of
these schools taints the settlement can’t be entertained with
a straight face."
But Judge Wallace dissents. And isn't laughing. He says:
To me, the fact alone
that 47% of the settlement fund is being donated to the alma
maters of class counsel raises an issue which, in fairness, the
district court should have pursued further in a case such as
this. The district court made no serious inquiry to alleviate
that concern. . . . In our
case, we have a cy pres-only settlement. That alone raises a
yellow flag. Furthermore, we have a class settlement before
formal class certification. That raises another yellow flag.
Lastly, we have almost half of the settlement fund, several
million dollars, being given to class counsel’s alma maters.
To me, that raises a red flag. I am especially dubious of the
inclusion of the Center for Information, Society and Policy
at Chicago-Kent Law School (a law school attended by class
counsel), which center appears to have inaugurated only a
year before the parties herein agreed to their settlement."
That's a lot of flags.
Now, personally, as a professor at a law school, I'm more than happy to see millions of dollars flow my way (or the way or my institution). And, truthfully, we could definitely do some good stuff with such funds.
But Judge Wallace has a point. Though the majority does as well. We want to be a little careful about cy pres settlements that may not actually be the best way to spend the underlying money.
But not too careful.
