Hibnick v. Google Inc.

Filing 125

REPLY in Support of OBJECTION TO CLASS counsel's proposed Cy Pres Distribution ) filed by Electronic Privacy Information Center. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2)(Friedman, Philip) (Filed on 4/8/2011) Modified on 4/11/2011 (cv, COURT STAFF).

Hibnick v. Google Inc.

Doc. 125

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Attorneys for the Cy Pres Applicant the Electronic Privacy Information Center IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION IN RE GOOGLE BUZZ USER PRIVACY LITIGATION ) ) ) This Pleading Relates To: ) ) ALL CASES ) ____________________________) Case No. 5:10-CV-00672-JW CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION MARC ROTENBERG1 (to be admitted pro hac vice) [e-mail] JOHN VERDI2 GINGER MCCALL3 Electronic Privacy Information Center 1718 Connecticut Avenue, N.W. Suite 200 Washington, D.C. 20009 [phone] (telephone) [phone] (facsimile) PHILIP S. FRIEDMAN (California Bar No. 131521) [e-mail] Friedman Law Offices, PLLC 2401 Pennsylvania Ave., NW Suite 410 Washington, DC 20037 Telephone: [phone]

The Electronic Privacy Information Center ("EPIC") respectfully files this reply in support of its objection (Dkt. No. 121) to Class Counsel's March 25, 2011 submission (Dkt. No. 119) on behalf of itself, the Center for Digital Democracy, Consumer Action, 1 Mr. Rotenberg is barred in the District of Columbia, the Commonwealth of Massachusetts, the U.S. Supreme Court, and several federal Circuits Courts. 2 Mr. Verdi is barred in the District of Columbia and the State of New Jersey. 3 Ms. McCall is barred in the State of Pennsylvania.
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Patient Privacy Rights, Privacy Activism, the Privacy Rights Clearinghouse, U.S. PIRG, and the World Privacy Forum. Regarding the allocation of settlement funds in this matter, EPIC presented to the Court a list of eight organizations dedicated to protecting the interests of Class Members, with a proven track record in the Internet privacy field, and with no significant financial ties to Google. All of these organizations submitted timely proposals to the Rose Foundation in accordance with the stated guidelines. EPIC further noted its specific role in the Federal Trade Commission ("FTC") investigation of the Google Buzz matter that led to the recent Consent Order. That FTC Order provides far-reaching benefits to Class Members and others who are similarly situated. The Court Order of February 16, 2011, Dkt. No. 117 (the "Court Order"), set out criterion to evaluate the organizations that would apply for settlement funds. The Court also stated that "the final approval list of cy pres organizations may draw, but need not be drawn, entirely from the submission of nominations by Class Counsel." Id. The Court further said that it "reserves the right to designate cy pres recipients who would reasonably benefit the Class through established Internet privacy education and policy programs on its own motion." Id. For reasons set forth below, and in accordance with the Court Order and the doctrine of cy pres, the Court should reject the proposed cy pres allocation of Class Counsel and adopt instead the proposed cy pres allocation of Objectors, or consolidate the two proposals, or make other modifications as it chooses. Of these various alternatives, the least desirable outcome for the Class Members is to accept Class Counsel's proposal exactly as submitted.
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 distribution should be made in the `next best' fashion in order as closely as possible to approximate the intended disposition.'" Wilson v. Sw. Airlines, Inc., 880 F.2d 807, 811 (5th Cir. 1989) (citing In Re Folding Cart Anti-Trust Litigation, 557 F. Supp. 1091, 1108 (N.D. Ill. 1993), rev'd on other grounds, 744 F.2d 1252, 1254 (7th Cir. 1984)). The allocation of settlement funds should be aligned with the interests of the underlying class and the objectives of the litigation. Consideration should also be given to those who are similarly situated. Funds "should be distributed for a purpose as near as possible to the legitimate objectives underlying the lawsuit, the interests of class members, and the interests of those similarly situated." In re Airline Ticket Comm'n Antitrust Litigation, 307 F.3d 679, 682 (8th Cir. 2002). Courts "emphasize the importance of tailoring a cy pres distribution to the nature of the underlying lawsuit." In re Airline Ticket Comm'n Antitrust Litig., 307 F.3d 679, 683 (8th Cir. 2002). Moreover, there is "scholarly support for the notion that the unclaimed portion of a class action recovery may be applied cy-pres ­ `as nearly as possible' ­ to the failed or
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

The Cy Pres Doctrine Requires that the Distribution Represent the "Next Best" Use of Settlement Funds "[T]he term `cy pres' derives from the Norman French expression cy pres comme possible, which means `as near as possible.'" Democratic Cent. Comm. v. Washington Metro. Area Transit Comm'n, 84 F.3d 451, 455 n.1 (D.C. Cir. 1996). The cy pres doctrine arose in the law of equity and originated as a rule of construction to save a testamentary charitable gift that would otherwise fail, allowing "the `next best' use of the funds to satisfy the testator's intent `as near as possible.'" Id. A cy pres distribution is not proper simply because it is "fair, reasonable, and adequate." Class Counsel's Response at 8, Dkt. No. 124. Rather, "`[T]he [cy pres]

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 process to determine cy pres recipients and the amounts granted to each recipient lacks the requisite specificity and oversight required to provide a reasonable benefit to the Class." Dkt. No. 117 at 1. Therefore, the Court ordered the parties to "nominate the cy pres recipients" based on the following criteria: (i) (ii) (iii) (iv) (v) (vi) (vii) Name Address Description of an established program currently undertaking policy or education efforts directed specifically at Internet privacy. Years that the program has been established and focused on Internet privacy. A short statement as to how the particular program will benefit the Class. Overall annual operating budget of the organization as a whole and the specific Internet privacy or education program. Amount received, if any, in contributions from Google, Inc. in 2010 independent of this Settlement. unachievable purpose for which the recovery is collected. Wilson v. Sw. Airlines, Inc., 880 F.2d 807, 811 (5th Cir. 1989). Ultimately, "The district court's choice among distribution options should be guided by the objectives of the underlying statute and the interests of the silent class members." Six Mexican Workers, 904 F.2d 1301, 1307 (9th Cir. 1990). The distribution cannot simply be reasonable. The funds must be put to the "next best" use, the use that matches the class's interests "as nearly as possible." In Re Folding Cart Anti-Trust Litigation, 557 F. Supp. at 1108; Wilson, 880 F.2d at 811. The Court's February 16, 2011 Order Seeks to Identify the Next Best Use of Settlement Funds On February 16, 2011, the Court found "that the [parties'] proposed nomination

Id. at 2. The Order identifies seven criteria for determining organizations' ability to ensure the "next best" use of cy pres distributions in this case: the organization's name and
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Name (Organizations with "Privacy" in title)7 Years that the program has been established8 Total Contributions From Google, Inc. in 20109 Overall annual operating budget10 Total annual Internet programs budget11 Total Amount Requested12
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address (factors (i) and (ii)); the existence of an "established program ... directed specifically at Internet privacy" that "will benefit the class"(factors (iii) and (v)); the duration of the program (factor iv); the program and organizational budgets (factor vi); and the "Amount received, if any, in contributions from Google, Inc. in 2010 independent of this Settlement" (factor vii). Id. The chart below compares the Objecting Organizations' proposed distribution to Class Counsel's proposed distribution, based on a key descriptive factor (the actual names of the organizations) and four numeric factors set forth in the Court Order. Comparison of Proposed Cy Pres Allocations (As per the Court Order In re Google Buzz User Privacy Litigation4) Cy Press Allocation Class Counsel Proposal 5 1 9 $5,570,359 $234,209,502 $6,034,104 $6,065,000 Cy Pres Allocation Objector Proposal 6 5 11 $120,000 (including in-kind) $7,576,495 $1,960,628 $6,114,000

Order Re Nomination Process for Cy Pres Recipients ("Order"), Dkt. 117, February 16, 2011, (hereinafter "Court Order") at Section (d)(iv). 5 Class Counsel's Submission of Cy Pres Organizations and Distribution Amounts for Court Approval, Dkt. 119, March 25, 2011, and Exhibits A & B. 6 Cy Pres Applicants' Objection to Class Counsel's Proposed Cy Pres, Dkt. 121, March 30, 2011. 7 Order at (d)(i). 8 Order at (d)(iv). 9 Order at (d)(v) 10 Order at (d)(vi). 11 Order at (d)(vi). 12 Order at (a). (Several of the proposals accumulated in this category are for multiple years.) Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The chart demonstrates that the Objecting Organizations' proposed distribution is far preferable to the proposal set forth by Class Counsel. First, Objector organizations are in fact "privacy" organizations. Second, Objector organizations have, on average, a longer period of time working on Internet privacy. Third, the Objector organizations do not receive any significant funding from Google. (The $120,000 is the assigned value of advertising provided by Google to one of the organizations.) Fourth, Objector organizations are clearly devoted to the work of consumer privacy as a much higher percentage of their annual budgets are directed to this work. It is also notable that under the allocation proposed by Class Council, defendant Google would disburse to recipient organizations in 2011 slightly more than it gave to these same organizations in 2010. A cy pres settlement fund should not be used to offset ongoing obligations. The Objecting Organizations' Proposed Distribution is the Next Best Use of Settlement Funds Class Counsel's Response alleges that its nominated groups are "well-situated to pursue the class's interests." Dkt. No. 124 at 4. Though many of the groups included in Class Counsel's proposal perform meritorious work, it is clear that Class Counsel purposefully excluded the one group ­ EPIC ­ whose work matches the class's interests "as nearly as possible" and represents the "next best" use of settlement funds. Wilson, 880 F.2d at 811; In Re Folding Cart Anti-Trust Litigation, 557 F. Supp. at 1108. Nor can Google's self-interest in the selection of recipient organizations set out by Class Counsel be ignored. Class Counsel's proposed distribution is therefore deeply flawed. The Court should favor Objectors' proposed distribution, which includes a substantial award to EPIC, as well as awards to other groups who routinely represent the interests of the class.
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 · · EPIC's unique role in this matter is plainly apparent by the FTC's investigation and subsequent Order in the Google Buzz matter. On February 16, 2010, EPIC filed a complaint with the FTC highlighting several aspects of the Google Buzz service that threatened Gmail users' privacy. Dkt. No. 121 at Appendices 11-12. The EPIC complaint reflected substantial work by EPIC, on behalf of Gmail users who objected to Google's change in business practice, exactly the same issue underlying this litigation. EPIC worked full-time to develop a substantial complaint for the Federal Trade Commission so that the FTC could act on behalf of Gmail users. EPIC canvassed blog posts and user comments. EPIC tested the service, took screen shots, and carefully reviewed what Google had told users about the service. EPIC's complaint argued that Google's change in business practices and service terms violated user privacy expectations, diminished user privacy, contradicted Google's own privacy policy, and may have also violated federal wiretap laws. EPIC's complaint asked for the following relief: 54. EPIC requests that the Commission investigate Google, enjoin its unfair and deceptive business practices, and require Google to protect the privacy of Gmail users. Specifically, EPIC requests the Commission to: · Compel Google to make Google Buzz a fully opt-in service for Gmail users; · Compel Google to cease using Gmail users' private address book contacts to compile social networking lists; Compel Google to give Google Buzz users more control over their information, by allowing users to accept or reject followers from the outset; and Provide such other relief as the Commission finds necessary and appropriate.

Dkt. No. 121, Appendix 11 at 15.
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 On March 30, 2011, the FTC announced settlement of its charges concerning Google Buzz. Federal Trade Commission, FTC Charges Deceptive Privacy Practices in Google's Rollout of Its Buzz Social Network, http://ftc.gov/opa/2011/03/google.shtm. The Commission determined that "personal information of Gmail users was shared without consumers' permission through the Google Buzz social network" and that Google made statements that were "false or misleading and constitute a deceptive act or practice." Exhibit 1 at 4-5. These findings mirror the analysis contained in EPIC's FTC Complaint. Dkt. No. 121 at Appendices 11-12. The Commission entered an Order and set out a draft Agreement that provided comprehensive privacy safeguards not only for users of Google Buzz but of all Google products and services. Exhibits 1 and 2. Under the Agreement, Google must establish a "Comprehensive Privacy Program" and it will be subject to biennial independent privacy audits for a twenty-year period. Exhibit 2 at 4-5. The Agreement requires Google to accurately inform users of "the extent to which [Google] maintains and protects the privacy and confidentiality" of user data and bars Google from transmitting users' information to third parties without "obtain[ing] express affirmative consent." Exhibit 2 at 4. The Agreement states that Google shall implement "a comprehensive privacy program that is reasonably designed to: (1) address privacy risks related to the development and management of new and existing products and services for consumers, and (2) protect the privacy and confidentiality of covered information." Exhibit 2 at 4. In addition, Google shall maintain records and make available to the FTC upon request information concerning:
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 representatives having supervisory responsibilities relating to the subject matter of this order." Id. at 6-7. The Commission found that Google "used deceptive tactics and violated its own privacy promises to consumers when it launched [Buzz]" and stated that EPIC's Complaint provided the basis for the Commission's investigation. Id. ("Google's data practices in connection with its launch of Google Buzz were the subject of a complaint filed with the FTC by the Electronic Privacy Information Center shortly after the service was launched."). The FTC did not cite the work of any other organization concerning the Commission's settlement regarding Google Buzz. The FTC's investigation and subsequent Order followed directly from the careful research, study, and articulation of legal theories set out in the initial EPIC complaint regarding Google Buzz. It was EPIC that reviewed and compiled the concerns of Class Members who expressed concerns about the introduction of Buzz and presented them to the FTC so that the privacy of Internet users would privacy.
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

- "the extent to which [Google] maintains and protects the privacy and confidentiality of any covered information, with all materials relied upon in making or disseminating such statements; - "consumer complaints directed at [Google], or forwarded to respondent by a third party, that allege unauthorized collection, use, or disclosure of covered information and any responses to such complaints; - "documents, whether prepared by or on behalf of [Google], that contradict, qualify, or call into question respondent's compliance with this order; and - "materials relied upon to prepare the Assessment, whether prepared by or on behalf of respondent, including but not limited to all plans, reports, studies, reviews, audits, audit trails, policies, training materials, and assessments. Id. At 6. Further, Google shall provide the FTC Order to "all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 for lobbying, consulting, or similar services. Six of the 12 groups designated by Class Counsel were funded by Google last year. Dkt. No. 119, Ex. B at 4-6, 10. Class Counsel proposes that these Google-funded groups receive $3,315,000 of the cy pres funds in this matter, accounting for 54% of the total distribution. Id; Dkt. No. 119 at 1. The Court Order does not preclude cy pres awards to groups who otherwise receive funding from Google. But the Order acknowledges that the "amount received, if any, in contributions from Google, Inc. in 2010 independent of this Settlement" is a relevant factor in analyzing the propriety of a proposed cy pres distribution. Dkt. No. 117 at 2. Receipt of such funding by a group weighs against a cy pres distribution to that organization. Google should not be permitted to use settlement funds to advance Google's own business purposes or to meet its ongoing obligations. And Class Counsel's proposed cy pres awards to Google-supported organizations are substantial. Class Counsel asserts that its proposed organizations receive, at most, a "negligible amount" of funding from Google. However, this assertion is misleading. The
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

Subsequent to the filing of the EPIC complaint with the Federal Trade Commission, Class Counsel initiated its own lawsuit, raising many of the same claims set out originally in the EPIC materials. It is almost absurd at this point that Class Counsel would propose a cy pres allocation in the Google Buzz litigation that would exclude EPIC, the organization that actually and successfully pursued the interests of Class Members concerning Google Buzz. Class Counsel's Submission Improperly Supports Organizations That Routinely Receive Funding from Google The majority of funds in the cy pres allocation set forth in the submission of Class Counsel would be allocated to organizations that currently receive support from Google

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 correct measure of influence is the comparison Google's funding proportional to each organization's Internet program budget, which as Class Counsel's own filing reveals, is substantial. Regarding the involvement of the Rose Foundation in the determination of proposed cy pres recipients presented to the Court by Class Counsel, it is Objectors' understanding that the Foundation does not approve of Class Counsel's proposal but is prohibited from communicating its views on the matter to the Court because of a nondisclosure agreement. The Court may wish to contact the Foundation directly regarding this. It is noteworthy, for example, that the Foundation's involvement in the matter has been so thoroughly "scrubbed" that all of the materials regarding the widely publicized request for proposals for the settlement funds -- Class Counsel noted that more than 75 detailed applications were submitted -- have been removed from the Foundation's web site. The link to the webpage "Rose Foundation: Google Buzz Privacy Settlement" no longer works and a search on the site for "Buzz" produces 0 results.13 Conclusion This litigation arises from a claim that Google acted improperly with the introduction of Buzz and that, in lieu of an actual award to Class Members, the Court should approve a cy pres settlement that would promote Internet privacy. EPIC is the organization that successfully pursued the underlying claim on behalf of Class Members at the Federal Trade Commission. Under the cy pres doctrine, the proposed allocation of settlement funds put forward by Objectors is clearly preferable to the one put forward by Class Counsel. 13 "Rose Foundation: Google Buzz Privacy Settlement," ("We are soliciting applications from
organizations who want to apply for monies from the Google Buzz Settlement. Deadline is March 14, 2011.") www.rosefdn.org/article.php?list=type&type=140 (last visited Apr. 8, 2011). Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 Mr. Rotenberg is barred in the District of Columbia, the Commonwealth of Massachusetts, the U.S. Supreme Court, and several federal Circuits Courts. 15 Mr. Verdi is barred in the District of Columbia and the State of New Jersey. 16 Ms. McCall is barred in the State of Pennsylvania.
Case No. 10-00672-JW ­ CY PRES APPLICANTS' REPLY IN SUPPORT OF OBJECTION TO CLASS COUNSEL'S PROPOSED CY PRES DISTRIBUTION

Respectfully submitted, ________/s/ Philip S. Friedman ________ PHILIP S. FRIEDMAN (California Bar No. 131521) [e-mail] Friedman Law Offices, PLLC 2401 Pennsylvania Avenue, NW Suite 410 Washington, DC 20037 Telephone: [phone]

___________/s/ Marc Rotenberg________ MARC ROTENBERG14 (to be admitted pro hac vice) John Verdi15 Ginger McCall16 ELECTRONIC PRIVACY INFORMATION CENTER 1718 Connecticut Avenue, N.W. Suite 200 Washington, D.C. 20009 [phone] (telephone) [phone] (facsimile) [e-mail] (email) Attorneys for the Cy Pres Applicant the Electronic Privacy Information Center Dated: April 7, 2011

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