Cy Pres Awards Are an Important Tool to Protect Privacy

CDT thanks the exceptionally talented lawyers at Ropes & Gray for their assistance and representation on this issue.

Earlier today, CDT, the Electronic Frontier Foundation (EFF), and the National Consumers’ League (NCL) filed an amicus brief before the Supreme Court in a case called Frank v. Gaos. The case, which sprung out of an earlier litigation alleging Google violated its users’ privacy with its handling of search queries, has come to focus on how, and to whom, the award for damages should be distributed. To be precise, the case asks whether it’s appropriate to distribute damages to charitable organizations working to advance the relevant interests of the class rather than attempting to divide and distribute the funds among class members.

This practice derives from a judicial doctrine called “cy pres,” (an old Norman french phrase meaning ‘as near as possible’) which began in cases in which it was impossible to execute a will, as written, so the judge would improvise in hopes of achieving a similar outcome. The doctrine has come to be used in the distribution of class action awards where the standard method (mailing each class member an equal portion of the winnings) is infeasible.

Class action suits like the underlying Gaos v. Google, which centered around the use of popular web services, often involve millions or hundreds of millions of class members. With classes of this size, at least two problems arise: identifying class members and distributing awards. Identification requires determining the names and mailing addresses of each person harmed by the defendant’s actions. In Gaos v. Google, this includes every person in America who has conducted a Google web search and clicked one of the search results. In such cases, compiling an accurate list of individuals wishing to join the class can be a herculean task.

Assuming class members can be identified, distributing their awards can be equally difficult. Even when the resulting award is millions or tens of millions of dollars, each individual class member may only be entitled to receive a few cents. For example, in Gaos, Google was ordered to pay out around $5.5 million to an estimated 130 million class members, which works out to about 4 cents per impacted class member. In this situation, the costs of distributing the award to class members can significantly exceed the value of the award. It just doesn’t make much sense to spend 10 times as much on postage as the value of the check being mailed.

On top of that, a vanishingly tiny award may do little to either compensate individual class members or help them take action against future harms. What would you do with a check for a nickel? A significant portion of class members never cash the checks, essentially leaving the defendant with a windfall of unclaimed award funds.

To avoid the problems with identification and distribution while also advancing the interests of the class, courts sometimes allocate some or all of the award to charitable organizations who are already working on issues relevant to those interests. This type of distribution does more to benefit the class than a miniscule payout. In the amicus, CDT, EFF, and NCL describe how they use cy pres awards to advance the privacy interests of class members and the general public. For example, CDT’s work on privacy issues includes everything from drones and VPNs to student privacy and ISP’s data collection practices.

As technology continues to permeate all aspects of our lives, there will be more privacy class action lawsuits in the future. It will not always be possible to award each individual plaintiff a sufficient sum to compensate them for the privacy harm. However, through cy pres awards, courts can ensure that settlement funds actually contribute to the protection and advancement of class interests. It may not be perfect, but it is cy pres.