Reported / Citable
Background
Users alleged that Google kept tracking and storing their locations even after they turned off the Location History setting. The proposed nationwide class contained an estimated 247.7 million people. After years of litigation in the Northern District of California, the parties agreed to injunctive relief and a $62 million fund, but no direct cash payments to class members.
Instead, the fund would go to court-approved nonprofit organizations under the cy pres doctrine, which directs otherwise non-distributable class funds to work intended to benefit the class indirectly. Objectors argued that Federal Rule of Civil Procedure 23 required a more effective method of delivering relief, that direct payments were feasible, and that several recipients lacked a sufficient connection to the privacy claims. The district court held a fairness hearing, rejected those objections, and approved the settlement.
The Court’s Holding
A divided Ninth Circuit panel affirmed. The majority held that the district court addressed Rule 23(e)(2)’s post-2018 factors, including the effectiveness of the proposed distribution method, and gave reasoned answers to the objections. Rule 23 does not categorically prohibit a cy pres-only settlement, and Ninth Circuit precedent permits one where direct distribution is infeasible. Here, even before fees and administrative costs, an equal share would have been no more than about 25 cents per class member.
The majority also upheld the selected recipients under the circuit’s substantial-nexus test. The organizations had documented privacy-protection work connected to the lawsuit’s objectives and could indirectly benefit class members. The court declined an Article III challenge that had not been preserved below. Judge Forrest dissented, reasoning that administrative expense must make direct distribution truly infeasible and that a tiny individual recovery, standing alone, should not turn third-party donations into the first choice.
Key Takeaways
- Rule 23(e)(2) requires an explicit, reasoned examination of how effectively a class settlement distributes relief.
- In the Ninth Circuit, a settlement may direct all monetary relief to cy pres recipients when direct payments are shown to be infeasible.
- Recipient organizations must have a substantial nexus to the lawsuit’s objectives and the interests of the class.
- Objectors should raise constitutional and distribution-method arguments in the district court or risk forfeiting them on appeal.
- The dissent signals continuing scrutiny of settlements that give class members no money while directing large funds to third parties.
Why It Matters
The decision preserves an important settlement option for California privacy and consumer class actions involving enormous classes and very small per-person values. Parties seeking approval should build a concrete record comparing claims administration, available identifying information, transaction costs, probable participation, and the likely value of direct payments.
Approval is not automatic. Courts must apply the current Rule 23 factors rather than rely on a generalized presumption favoring settlement, and recipients must closely match the class’s interests. The dissent gives objectors and future courts a roadmap for demanding evidence that direct relief is genuinely impracticable rather than merely inconvenient.