
U.S. Supreme Court to hear case about who gets paid in class action lawsuits - chatmasta
https://www.reuters.com/article/us-usa-court-google/u-s-supreme-court-to-hear-google-privacy-settlement-dispute-idUSKBN1I11DO
======
chatmasta
For anyone who only reads the HN comments, the title does not really include
the interesting part of the article. This case revolves around the question of
who gets remunerated in class action lawsuits against a company. The case in
question was a privacy lawsuit against google where the two representative
plaintiffs received $5,000 each, the lawyers received $2.1m, and the rest of
the money went to privacy non-profits.

~~~
394852034
I think there is a risk that some will say something along the lines of that
in the example you give it is unfair for the plaintiffs to only get $5k and
the lawyers $2.1M. Reality though is that not only would a lot of these cases
never see the courts at all if the Lawyers were not paid, but also it is
expensive as fuck to bring these cases and to the research and front end work,
with a huge risk that you may not win the case at all.

I would be for courts to calculate compensation to plaintiffs as a ratio of,
but on top of the award, i.e., if the punitive or compensatory award is X, the
plaintiff's ratio is a minimum of 1/5, with total award being 1.2X.

I am not all that against blood sucking lawyers taking a pound of flesh and am
open to the notion of their compensation being controlled and limited (which
would NEVER happen considering the power and strangle hold the legal
profession has on government ... bar (yes, that's intentional) lawyers from
government and lobbying maybe???).

~~~
mark212
in class actions, the compensation is very much "controlled and limited." The
lawyers have to make a separate motion to be awarded fees and there is intense
scrutiny by the court and potential objectors of every dollar requested.

The benchmark in the Ninth Circuit is 25% of the common fund, but district
courts almost always also ask for a "lodestar cross-check," which is the hours
expended by the plaintiffs' firms multiplied by their customary hourly rates,
plus expenses. It's often a very contentious battle to establish a reasonable
hourly rate and will turn on the relevant legal market (SF has higher rates
than, say, Tulsa even for the same sort of work), the attorney's experience,
the results obtained, and so on. And the judges often cut hours, saying they
were duplicative or excessive for whatever reason. This can be used to
increase or (more commonly) decrease from the 25% benchmark.

------
Lionsion
> The deal’s opponents were led by Ted Frank, director of litigation for the
> Competitive Enterprise Institute, a Washington-based conservative think
> tank. They said the deal violated procedural rules in U.S. law requiring
> settlements to be fair, reasonable and adequate.

What's the Competitive Enterprise Institute's goal in this lawsuit? I once
read an editorial once by a CEI guy that was very pro-forced-arbitration, a
view which often goes hand-in-hand with an opposition to class action
lawsuits.

Is this lawsuit part of the legal campaign to to neuter class actions?

~~~
forapurpose
I think this is the interesting question about the situation; what is the
conservative movement's agenda here? I don't see a clear one. (Let me be
clear: I'm not writing this to criticize or support the movement or its agenda
in this case; I'm just wondering what the agenda is.)

It's broader than the Competitive Enterprise Institute. For example, the U.S.
Justice Department under Sessions instituted a policy banning (or reducing?)
settlements with the Justice Department that paid money to 3rd parties. When
the Sessions' Justice Department did it, I assumed they wanted to defund
'liberal' institutions (meaning, those not in the conservative ideological
movement). As another example, there is also the effort to defund Planned
Parenthood and the successful one to defund ACORN.

Note that the Supreme Court case matches a modus operendi of the conservative
movement: Change policy and law via the courts rather than through Congress.
They develop legal strategies, find good test cases, get Federalist Society
judges appointed (especially to the Supreme Court), and incrementally change
law and cement policy changes that way. Other groups in other parts of the
political spectrum adopt the same approach, of course; it's not just the
conservative movement, but they have been particularly strategic.

But why this issue? Perhaps someone in the conservative movement decided that
these settlements are a valuable revenue stream for "liberal" groups. If
someone read through the literature, I'd bet we could find the reasoning and
the strategy. Perhaps someone here already has and will share with us?

~~~
mark212
the pro-business agenda is to eliminate or reduce class actions as much as
possible because they can be a huge cost of doing business. Litigation
generally is how businesses are held accountable for their actions because in
the US there tends to be very little governmental regulatory enforcement in
most industries.

Cy pres settlements are generally easy headlines: "Charities get $X million,
lawyers get $Y million, regular folks get nothing." Which means it's easy to
demagogue.

The larger picture is that having to pay $8.5 million plus whatever O'Melveny
& Meyers was charging for defense costs led Google to change its business
practices. Where that money goes is largely beside the point, though plenty of
free market legal scholars will note that large attorneys' fees encourage more
such suits, which means more zealous enforcement of consumer protection laws.

------
mark212
So just to be clear because I don't think this article does a very good job of
explaining the background.

Google was sued in 2010 for a privacy violation as a class action. They chose
to settle and the terms of that settlement (according to Federal Rule of Civil
Procedure 23) were carefully reviewed by Judge Davila, an experienced federal
district court judge in San Jose. He approved the settlement's terms as fair
based on the transaction costs of giving small amounts of money to a large
number of persons. Instead, Google would make a donation to a charity, some of
which would be diverted to the attorneys who brought the case. This is called
a "cy pres" award, from the latin meaning "as near as possible." Cy pres only
settlements are quite rare in class action practice and are strongly
disfavored.

Here are the terms, as described by the Ninth Circuit:

    
    
       Of the $8.5 million settlement fund, approximately $3.2
       million was set aside for attorneys’ fees, administration
       costs, and incentive payments to the named plaintiffs. The
       remaining $5.3 million or so was allocated to six cy pres
       recipients, each of which would receive anywhere from 15 to
       21% of the money, provided that they agreed “to devote the
       funds to promote public awareness and education, and/or to
       support research, development, and initiatives, related to
       protecting privacy on the Internet.” The six recipients were
       AARP, Inc.; the Berkman Center for Internet and Society at
       Harvard University; Carnegie Mellon University; the Illinois
       Institute of Technology Chicago-Kent College of Law
       Center for Information, Society and Policy; the Stanford
       Center for Internet and Society; and the World Privacy
       Forum. Each of the recipients submitted a detailed proposal
       for how the funds would be used to promote Internet privacy.[1]
    

Between preliminary approval and final approval, Ted Frank from the CEI filed
an objection. (He's done this dozens of times and cy pres is a particular
hobby horse of his.) When Judge Davila overruled his objection, he took an
appeal. The Ninth Circuit denied that appeal, so he asked the US Supreme Court
for a writ of certiorari.

The news is that this was granted. It takes four sitting US Supreme Court
justices to grant cert so it doesn't necessarily mean the law is going to
change, just that at least a significant minority of the court want to opine
on this particular issue.

[1] See page 6 --
[http://cdn.ca9.uscourts.gov/datastore/opinions/2017/08/22/15...](http://cdn.ca9.uscourts.gov/datastore/opinions/2017/08/22/15-15858.pdf)

------
RcouF1uZ4gsC
Apart from the case, why are privacy non-profits accepting donations from
Google? This seems like a huge conflict of interest.

~~~
mark212
why not? If Google wants to give them money knowing their particular interests
and motivations, take every penny.

