In the Google Privacy case, the Ninth Circuit approved a class action settlement in which the parties agreed to an $8.5 million settlement fund where the class members would not receive any monetary relief. Class counsel would receive 25 percent of the settlement fund, the named plaintiffs would receive $5,000 incentive awards, and the remainder would go to nonprofits via cy pres awards. The Supreme Court has agreed to consider this case, which will address the propriety of cy pres only settlements, and it may address cy pres awards more generally.
Courts must approve class action settlements and the settlement must be fair and reasonable. In circumstances where none of the settlement funds go to class members, some courts begin to question how that type of agreement could be fair. This is especially true in scenarios, take the Google case for example, where the settlement agreement did not even provide for an injunction. However, where any settlement distribution would be so de minimis as to not be feasible, a cy pres only settlement may be appropriate. In the Google case, for instance, the class was so large that even with an $8.5 million settlement fund, class members would receive only pennies.
The Supreme Court had previously cautioned that it would need to decide when, if ever, a cy pres award is appropriate. Parties on both sides of the “v” will likely welcome the Court’s guidance here.