Legal aid groups may have dodged a challenge to a source of important funding when the U.S. Supreme Court
this week kicked questions surrounding a class action settlement with Google
back to the lower courts, but there were no sighs of relief.
Leaders of several access to justice groups told Law360 the court's decision in Frank v. Gaos, which didn't address the case's attack on class action settlements that give some or all of the money to charities, leaves the future of needed funds for representing the poor and other causes in limbo. The class is made up of 129 million Google users who claim the company illegally shared their search information.
"There's certainly no celebrations going on right now based on the decision today," said Don Saunders, the vice president of civil legal services at the National Legal Aid & Defender Association.
There are more cases like this in the pipeline, Saunders said, and the Gaos case could make its way back to the high court as well.
"No one thinks this issue has gone away as a matter of interest to the Supreme Court," he said.
The case, which saw a pair of objectors challenge the fairness of a class action settlement with Google that awarded $8.5 million to charities, universities and others but nothing to the class, gave the high court a chance to dramatically alter such "cy pres" awards.
But instead of addressing the issue, the court's decision Wednesday said questions about whether the class actually had standing to sue needed to be resolved.
The unsigned 8-1 ruling sent the case back to the Ninth Circuit to address whether the class had met the Spokeo
v. Robins standard, which says standing can't be based exclusively on statutory violations.
The objectors are Ted Frank and Melissa Holyoak, attorneys with the Center for Class Action Fairness
, which represents class members in objections to settlements the group deems abusive or unfair.
Frank and Holyoak, who objected on their own behalf, criticized the settlement, which gave the $8.5 million Google had agreed to pay — minus attorney's fees and incentive awards for the named plaintiffs — to groups like Carnegie Mellon University, the World Privacy Forum and the Illinois Institute of Technology's Chicago-Kent College of Law Center for Information, Society and Policy.
That use of the funds contravened the Federal Rule of Civil Procedure requiring settlements to be "fair, reasonable and adequate," the objectors told the court.
In response, Google and the class said it did not make sense to try to distribute the money, which amounted to a little more than $5 million after fees and other costs, to the 129 million class members.
The Supreme Court decided to hear the case in April 2018.
For legal aid advocates, the court's decision to take up a case addressing cy pres had been a long time coming.
In 2013, the court denied certiorari in another case, Marek v. Lane, brought by objectors to a $9.5 million settlement Facebook
had reached with a class of its users over claims one of its programs violated privacy laws. Like the Gaos settlement, charities would be receiving the bulk of that money, according to court records.
Following the court's decision in that earlier case, Chief Justice John Roberts wrote a statement noting that the court had not yet had a chance to address cy pres in settlements.
"In a suitable case, this court may need to clarify the limits on the use of such remedies," he wrote.
Other justices expressed similar concerns in considering the Gaos case.
During oral arguments in October, Justice Samuel Alito Jr. questioned whether any effort was made to see if the class members wanted to support the chosen organizations, or if that would even be possible. And last week in a dissent from his colleagues' decision not to reach the merits of the case, Justice Clarence Thomas agreed with Frank and Holyoak that the settlement suggested the Google users' interests were not represented.
David Stern, executive director at Equal Justice Works, said he was at the oral arguments and definitely got the sense the court had an interest in weighing in.
"You could see ... the justices were very strongly leaning toward a very tight tie-in between the underlying case and the cy pres award," he said.
But the Gaos case also showed them that there will be situations when distributing the remainder of a settlement, or the settlement as a whole, will cost more than it is worth to the class members, he said.
The court will take up the issue again, Stern said, and that's why he sees the most likely outcome as increased restrictions on who exactly can receive the money. That's the direction the federal appellate courts are going towards, he added.
"If legal aid thinks it's just going to go into general support, I think those days are numbered," he said.
That may not mean much of a shift for legal aid organizations like Equal Justice Works and the National Consumers League, who say they have already been putting cy pres money towards work that closely tracks the class action's themes.
"You have to make a case, talk about the specific work that you're doing, and that goes into the judge's order," said Sally Greenberg, executive director of the National Consumers League. "It's not a slam dunk."
But Greenberg said there's no predicting how the Supreme Court will rule, and it's clear cy pres's critics are seeking major changes.
In response, "We will continue to argue how important a legal concept it is," Greenberg said.
--Additional reporting by Ben Kochman and Jimmy Hoover. Editing by Brian Baresch.
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