Opposition Brief — Theodore H. Frank, et al., Petitioners v. Paloma Gaos, Individually and on Behalf of All Others Similarly Situated, et al.

No. 17-961

IN THE

Supreme Court of the United States

THEODORE H. FRANK AND MELISSA ANN HOLYOAK,

v.

Petitioners,

PALOMA GAOS, ON BEHALF OF HERSELF AND ALL

OTHERS SIMILARLY SITUATED, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF FOR THE CLASS

RESPONDENTS IN OPPOSITION

KASSRA P. NASSIRI

Counsel of Record

NASSIRI & JUNG LLP

47 Kearny Street

Suite 700

San Francisco, CA 94108

(415) 762-3100

kass@njfirm.com

MICHAEL ASCHENBRENER

KAMBERLAW, LLC

201 Milwaukee Street

Suite 200

Denver, CO 80206

(212) 920-3072

masch@kamberlaw. com

i

COUNTER STATEMENT OF QUESTION

PRESENTED

Whether approval of this class-action settlement

providing the class with cy pres relief directly and

substantially relating to the complained-of harm as

“fair, reasonable, and adequate” was an abuse of the

district court’s discretion.

ii

PARTIES TO THE PROCEEDING

Petitioners, who were the appellants in the court

of appeals, are Theodore H. Frank and Melissa Ann

Holyoak.

Respondents, who were appellees in the court of

appeals, are Paloma Gaos, Anthony Italiano, and

Gabrial Priyev, on behalf of themselves and the

settlement-certified class (plaintiffs-appellees), and

Google, Inc. (defendant-appellee).

iii

TABLE OF CONTENTS

COUNTER STATEMENT OF QUESTION

PRESENTED ..................................................... i

INTRODUCTION ....................................................... 1

STATEMENT OF THE CASE .................................... 3

REASONS FOR DENYING THE

PETITION ........................................................ 7

I. There Is No Circuit Conflict on the Legal

Standard for when a Cy Pres Provision Is

Fair, Reasonable, and Adequate. ..................... 8

II. This Case Does Not Provide a Proper Vehicle

to Consider the Inclusion of Cy Pres

Provisions in Settlement Agreements. .......... 18

A. The Petition Presents a Fact-Bound

Question of No Significance Beyond the

Settlement of this Litigation..................... 18

B. The Settlement Does Not Allow the Court

to Address the Concerns Identified by

Chief Justice Roberts. ............................... 19

CONCLUSION .......................................................... 25

iv

TABLE OF AUTHORITIES

CASES

Adickes v. S.H. Kress & Co.,

398 U.S. 114 (1970) ............................................. 16

Graver Tank & Nfg. Co. v. Linde Air Prods. Co.,

336 U.S. 271 (1949) ............................................. 18

Hughes v. Kore of Indiana Enter., Inc.,

731 F.3d 672 (7th Cir. 2013) ............................... 10

In re Baby Prod. Antitrust Litig.,

708 F.3d 163 (3d Cir. 2013) ............................ 9, 15

In re BankAmerica Corp. Securities Litigation,

775 F.3d 1060 (8th Cir. 2015) ....................... 13, 14

In re Pharm. Indus. Average Wholesale Price

Litig.,

588 F.3d 24 (1st Cir. 2009) ...................................9

Klier v. Elf Atochem N. Am., Inc.,

658 F.3d 468 (5th Cir. 2011) ..................... 8, 10, 14

Lane v. Facebook, Inc.,

696 F.3d 811 (9th Cir. 2012) ............................... 12

Mace v. Van Ru Credit Corp.,

109 F.3d 338 (7th Cir. 1997) ......................... 12, 13

Marek v. Lane,

134 S. Ct. 8 (2013) ......................................... 19-21

v

Marshall v. Nat’l Football League,

787 F.3d 502 (8th Cir. 2015) ............................... 10

Masters v. Wilhelmina Model Agency, Inc.,

473 F.3d 423 (2d Cir. 2007) ...................... 9, 15-16

Mirfasihi v. Fleet Mortg. Corp.,

356 F.3d 781 (7th Cir. 2004) ......................... 10, 12

Nachshin v. AOL, LLC,

663 F.3d 1034 (9th Cir. 2011) ................. 11-13, 21

Pearson v. NBTY, Inc.,

772 F.3d 778 (7th Cir. 2014) ............................... 12

Six (6) Mexican Workers v. Ariz. Citrus

Growers,

904 F.2d 1301 (9th Cir. 1990) ............................. 14

Tennille v. W. Union Co.,

809 F.3d 555 (10th Cir. 2015) ............................. 10

RULES

SUP CT. R. 10. .................................................... 17-18

SUP CT. R. 14(a) ...................................................... 16

OTHER AUTHORITIES

3 Alba Conte & Herbert B. Newberg,

Newberg on Class Actions § 10:17 (4th ed.

2012) .................................................................... 11

vi

American Law Institute’s Principles of the

Law of Aggregate Litigation § 3.07 cmt. A

(2010) ................................................................... 11

American Law Institute’s Principles of the

Law of Aggregate Litigation § 3.08 (Draft) ..........9

1

INTRODUCTION

The petition proclaims that a square circuit

conflict and important policy issues require this

Court’s immediate attention. Neither contention is

true. The reality is more mundane. This case simply

presents a commonplace dispute about the fairness of

an arm’s-length settlement, one that was overseen by

a respected, neutral mediator and extensively

scrutinized by the courts below.

Petitioners contend that, in the context of class

action settlements, the Ninth Circuit’s affirmance

breaks with other circuits regarding the cy pres

allocation of settlement benefits. But petitioners do

not challenge the settlement’s size or amount, do not

argue monetary injury, and do not contest the award

of attorneys’ fees. And they identify no circuit split

concerning the legal standards at issue. At bottom,

petitioners challenge only the district court’s factual

findings that: (i) distributing the roughly $5.3 million

net settlement fund to a class consisting of

approximately 129 million people was not feasible,

and (ii) that the cy pres recipients’ use of funds was

tethered to the alleged injury and interests of the

class. On these factual questions, there is no circuit

split.

Every circuit has approved the use of cy pres where

direct distribution to class members is not feasible.

The cases cited by petitioners are nothing more than

distinguishable, fact-bound applications of wellestablished circuit law, and are consistent with the

law applied by the Ninth Circuit in this case.

2

To create the appearance of a circuit split,

petitioners advance the straw-man argument that the

standard in the Ninth Circuit is that “it is not

considered ‘feasible’ to provide any compensation to

class members when it would be infeasible to

compensate all of them.” Pet. 17. The lower courts,

however, did not announce or apply any such

standard. Rather, like other circuits in cases cited by

petitioners, the lower courts in this case found that

the record supported a finding that the settlement

fund was non-distributable and noted that the

relatively small amount of the settlement fund

equated to just 4 cents per class member before taking

into account administration and distribution costs.

The underlying questions here are inherently case

specific, requiring this Court to upset factual findings

concerning the feasibility of direct distribution, the

relationship between the cy pres remedies and the

harm alleged, and the class benefit of the cy pres

relief. And there is no cause to do so, because each of

these findings was demonstrably correct.

Petitioners have not identified any disagreement

among courts concerning the factors that should be

considered when determining whether a cy pres

provision is fair, reasonable, and adequate. The lower

courts’ fact-bound application of uniform standards

does not warrant this Court’s review.

3

STATEMENT OF THE CASE

This petition arises from the settlement of a

consolidated class action between respondents in this

Court.

Plaintiffs-Respondents

alleged

that

Defendant-Respondent Google, Inc. (“Google”)

improperly transmitted user search queries to third

parties in order to enhance advertising revenue and

profitability. Plaintiffs brought claims for breach of

contract and violations of the Stored Communications

Act (“SCA”), 18 U.S.C. § 2702(a), as well as claims

under various California statutes and common laws.

Pet. App. 3. 1 Plaintiffs sought statutory damages

under the SCA and damages based on the value of the

information misappropriated by Google.

The parties made several attempts to resolve the

matter without success. SER 1:61. 2 On January 28,

2013—while Google’s third motion to dismiss the

consolidated complaint was under submission—the

parties mediated the case before Randall Wulff, an

experienced and well-respected mediator of classaction disputes. Pet. App. 71. After a full day of arm’slength negotiations, Mr. Wulff made a “mediator’s

proposal” for settlement based upon his review of the

facts and applicable law. SER 1:62. All parties

accepted this proposal and used it to form the

material terms of the instant settlement agreement

1 “Pet. App.” refers to the appendix to the instant petition for a

writ of certiorari.

2 “SER” refers to Plaintiff-Respondents’ Supplemental Excerpts

of Record filed with the Ninth Circuit. The SER are available via

PACER for the Ninth Circuit at ECF 27-1, 27-2, and 27-3 (Case

No. 15-15858).

4

(“Agreement”), which was further negotiated for

nearly two months before being fully executed on

March 16, 2013. Pet. App. 69-111.

As part of the Agreement, Google agreed to make

a total cash payment of $8,500,000 into a settlement

fund, to be used for payment of settlement notice and

administration expenses, cy pres distributions, any

court-approved attorney fee or cost award to class

counsel, and any court-approved incentive awards to

the named Plaintiff-Respondents and class

representatives. Id. None of the settlement funds

would revert to Google under any circumstances.

In addition, Google agreed—for the first time—to

disclose to users the ways in which it treats search

queries entered in Google.com, so that users can make

informed choices about whether and how to use

Google search. Id. at 109-111. Google’s obligation is

permanent. Id. at 82. This relief is flatly ignored by

petitioners, who misrepresent the settlement as

containing “no alteration of defendant’s allegedly

injurious conduct.” Pet. 1.3

The parties originally discussed more than twenty

potential cy pres recipients. SER 2:385. As a result of

the negotiations, the parties agreed to seven potential

recipients, one of which (the MacArthur Foundation)

later withdrew from consideration. SER 3:531.

3 Petitioners either mischaracterize or misunderstand plaintiff-

respondents’ claims below. The practice challenged here was not

the practice of forward referring headers itself, but rather the

failure to obtain user consent (or misleading consumers to

believe that defendant would not forward referrer headers)

before doing so.

5

The Settlement was designed to ensure that the cy

pres recipients, each experienced in addressing

privacy issues, could decide how to best spend the

funds without influence from the parties. Google had

no say whatsoever as to what any recipient would or

could do with cy pres funds; its role in the cy pres

process ended once the Agreement was executed. SER

2:383-85; 387-93.

In order to be considered for an award, each of the

proposed cy pres recipients was required to

demonstrate that it: (1) was independent and free

from conflict; (2) had exemplary service records

promoting public awareness and education, or

support research, development, and initiatives

related to protecting privacy on the Internet, with an

emphasis on consumer-facing efforts; (3) would reach

and target Internet users of all demographics across

the country; (4) was willing to provide detailed

proposals to the court and the class; and (5) was

capable of using the funds to educate the class about

risks attendant with disclosing personal information

to Internet service providers, inform policy makers

about the challenges associated with internet privacy

and possible solutions, develop tools allowing

consumers to understand and control the flow of their

personal information to third parties, or develop tools

to prevent third parties from exploiting consumer

data. SER 1:63 n.1.

Far from distributing the money to cy pres

recipients for “unspecified uses,” as petitioners

contend (Pet. 2), each potential cy pres recipient was

required to and did submit a detailed grant-like

proposal detailing exactly how the money would be

6

put to use. 4 Pet. App. 48, n.1. These proposals were

publicly disclosed on a settlement website, along with

the percentage of the $8.5 million (minus attorneys’

fees and costs, any potential incentive awards, and

administration costs) that each cy pres recipient

would receive upon settlement approval.

The district court carefully reviewed these

proposals at both preliminary and final approval. At

the district court’s request on preliminary approval,

Plaintiff-Respondents submitted a supplemental

declaration that provided further information about

the selection process for cy pres recipients and what

the recipients would do with proceeds, along with a

revised proposed order and opt-out forms. SER 3:531.

Seven months after the hearing, on March 26, 2014,

the district court issued an order granting

preliminary approval. Pet. App. 34.

The district court held a final fairness hearing on

August 29, 2014. Id. It stated that it had “carefully

reviewed” the “detailed” cy pres proposals (Pet. App.

48) and held the motions under submission for more

than seven months before issuing its orders granting

the motion for final approval and for attorneys’ fees,

costs, and incentive awards on March 31, 2015. Pet.

App. 6. 5 The district court found that plaintiffs had

made a sufficient showing that the cost of distributing

the settlement fund to the class members would be

prohibitive. Specifically, the district court found that:

4 The proposals are available in the SER 2:257-381.

Although petitioners include argument about “clear sailing”

attorney fee agreements (Pet. 2), the Agreement did not contain

any clear sailing agreement.

5

7

The settlement fund, while sizeable,

is ‘non-distributable.’ Since the

amount of potential class members

exceeds

one

hundred

million

individuals, requiring proofs of claim

from this many people would

undeniably impose a significant

burden to distribute, review and then

verify. Similarly, the cost of sending

out very small payments to millions of

class members would exceed the total

monetary benefit obtained by the

class.

Pet. App. 47. See also id. at 9.

The district court further found that “the cy pres

distribution accounts for the nature of this suit, meets

the objectives of the SCA, and furthers the interests

of class members . . . Having carefully reviewed the

proposals submitted by counsel, the court is satisfied

that the proposed cy pres distribution ‘bears a

substantial nexus to the interests of the class

members,’ as required by the Ninth Circuit.” Pet. App.

48-49.

Objector-petitioners timely filed a notice of appeal

that ultimately led to the Ninth Circuit’s affirmation

of the district court’s decisions on August 22, 2017.

REASONS FOR DENYING THE PETITION

The petition seeks review of a case-specific

decision that applies settled and uniform law to the

unique facts of a class-action settlement. Petitioners,

who have identified no circuit conflict, object to the

8

district court’s factual findings that: (1) the

settlement fund was non-distributable, and (2) the cy

pres recipients provided sufficiently detailed, lineitem disclosures of how the money will be used to

remediate the harms identified in the complaint. This

Court should deny certiorari.

I.

There Is No Circuit Conflict on the Legal

Standard for when a Cy Pres Provision Is

Fair, Reasonable, and Adequate.

Petitioners incorrectly argue that the Third, Fifth,

Seventh, and Eighth Circuits apply a categorical rule

that limit cy pres remedies to cases where direct

distributions are “impossible,” while the Ninth

Circuit applies a legal standard permitting cy pres

remedies whenever distribution to all class members

is infeasible. Pet. 16-17. Petitioners misstate these

legal standards. The reality is that in common-fund

cases with a cy pres component, all circuits apply

nearly identical factors to approval of cy pres

remedies. Petitioners twist the uniform circuit law

governing the approval of settlement with a cy pres

component in order to create the appearance of a

circuit conflict.

The Ninth Circuit recognized in this case that “cy

pres–only settlements are considered the exception,

not the rule.” Pet. App. 8 (citing Klier v. Elf Atochem

N. Am., Inc., 658 F.3d 468, 474 (5th Cir. 2011)). The

legal standard applied by the Ninth Circuit here was

that a settlement fund is “non-distributable” where

“the proof of individual claims would be burdensome

or distribution of damages costly.” Id.

9

Likewise, other circuit courts have recognized that

cy pres distributions are permissible where direct

distributions are infeasible or not economically viable:

x

First Circuit: In re Pharm. Indus. Average

Wholesale Price Litig., 588 F.3d 24, 34 (1st

Cir. 2009) (recognizing that cy pres is

permissible when “distribution of all funds

to the class can be infeasible, for example,

when class members cannot be identified,

when the class changes constantly, or when

class members’ individual damages—

although substantial in the aggregate—are

too small to justify the expense of sending

recovery to individuals”).

x

Second Circuit: Masters v. Wilhelmina

Model Agency, Inc., 473 F.3d 423, 436 (2d

Cir. 2007) (“The Second Circuit has

recognized that cy pres distributions may be

appropriate in ‘circumstances in which

direct distribution to individual class

members is not economically feasible . . . .’)

(quoting the American Law Institute’s

Principles of the Law of Aggregate

Litigation § 3.08 (Draft) (“ALI Principles”)).

x

Third Circuit: In re Baby Prod. Antitrust

Litig., 708 F.3d 163, 169–72 (3d Cir. 2013)

(recognizing that cy pres distributions are

appropriate where “amounts involved are

too small to make individual distributions

economically viable . . .” and “[i]t may also

be economically or administratively

infeasible to distribute funds to class

10

members if, for example, the cost of

distributing individually to all class

members exceeds the amount to be

distributed”) (emphasis added).

x

Fifth Circuit: Klier, 658 F.3d at 475 (a cy

pres distribution is permissible when it is

not economically viable to make direct

distributions to the class).

x

Seventh Circuit: Mirfasihi v. Fleet Mortg.

Corp., 356 F.3d 781, 784, (7th Cir. 2004) (cy

pres is intended to accommodate the

“infeasibility of distributing the proceeds of

the settlement.”). See also Hughes v. Kore of

Indiana Enter., Inc., 731 F.3d 672, 675-78

(7th Cir. 2013) (where direct distribution

infeasible, a “foundation that receives

$10,000 can use the money to do something

to minimize violations of the Electronic

Funds Transfer Act; as a practical matter,

class members each given $3.57 cannot”).

x

Eighth Circuit: Marshall v. Nat’l Football

League, 787 F.3d 502, 521 (8th Cir. 2015)

(recognizing the Eighth Circuit’s approval

of cy pres distributions where distributions

are not sufficiently large enough to make

individual

distributions

economically

viable).

x

Tenth Circuit: Tennille v. W. Union Co.,

809 F.3d 555, 560 (10th Cir. 2015)

(recognizing that “[t]he cy pres doctrine

allows a court to distribute unclaimed or

11

non-distributable portions of a class action

settlement fund to the ‘next best’ class of

beneficiaries”) (citing Nachshin v. AOL,

LLC, 663 F.3d 1034, 1036 (9th Cir. 2011).

Similarly, the American Law Institute's Principles

of Law of Aggregate Litigation, cited by petitioners

(Pet. 25), specifically approve the use of an all-cy pressettlement in class actions, with no direct payment to

class members, “when distribution of the funds

directly to class members is not feasible and the third

party’s interests approximate those of the class

members.” ALI Principles § 3.07 cmt. A (2010); see

also 3 Alba Conte & Herbert B. Newberg, Newberg on

Class Actions § 10:17 (4th ed. 2012) (“When all or part

of the common fund is not able to be fairly distributed

to class members, the court may determine to

distribute the unclaimed funds with a cy pres . . .

approach.”).

The ALI standard for determining feasibility of

direct distribution is nearly identical to that applied

by the Ninth Circuit here. “If individual class

members can be identified through reasonable effort,

and the distributions are sufficiently large to make

individual

distributions

economically

viable,

settlement proceeds should be distributed directly to

individual class members.” ALI Principles § 3.07(a).

See also comment (b) (stating that direct distributions

to class members are not feasible “either because class

members cannot be reasonably identified or because

distribution would involve such small amounts that,

because of the administrative costs involved, such

distribution would not be economically viable.”)

12

Petitioners’ cases do not illustrate any conflict in

the legal standard applied by the circuit courts.

Rather, each of those cases applies the same legal

standards to a different set of facts, which accounts

for the differences in the ultimate outcomes of each of

those cases.

The Seventh Circuit’s opinion in Pearson v. NBTY,

Inc., 772 F.3d 778 (7th Cir. 2014) neither conflicts

with the Ninth Circuit’s decision nor counsels (let

alone compels) disapproval of the settlement under

review here. On the contrary, the Pearson decision

merely recognized, like all other circuits, that a “cy

pres award is supposed to be limited to money that

can’t feasibly be awarded to the . . . class members.”

Id. at 784; see Lane v. Facebook, Inc., 696 F.3d 811,

819 (9th Cir. 2012) (explaining that cy pres is

permissible only when “‘the proof of individual claims

would be burdensome or the distribution of damages

costly’”) (quoting Nachshin, 663 F.3d at 1038).

Moreover, the Seventh Circuit in Pearson did not hold

that cy pres awards never benefit the class; it simply

found that the specific award in that settlement did

not. Pearson, 772 F.3d at 784. 6

6 Petitioners also misconstrue the reasoning in Mirfasihi v. Fleet

Mortg. Corp., 356 F.3d 781 (7th Cir. 2004). Pet. 2, 18, 23. The

“careful scrutiny” cited by the court there refers not to whether

the settlement fund could be distributed to the class, but to the

adequacy of the size of the settlement fund in the first instance—

emphasizing “the district judge’s duty in a class action

settlement situation to estimate the litigation value of the claims

of the class and determine whether the settlement is a

reasonable approximation of that value.” Id. at 786. Here,

petitioners do not contest the size of the settlement fund.

Likewise, Mace v. Van Ru Credit Corp., 109 F.3d 338 (7th Cir.

1997), is inapposite. Pet. 18. In Mace, the district court denied

13

Nor is there any inconsistency between the Ninth

Circuit Court’s precedents and the Eighth Circuit’s

decision in In re BankAmerica Corp. Securities

Litigation, 775 F.3d 1060 (8th Cir. 2015). The Eighth

Circuit noted that, like in every other circuit, a

finding that a fund is non-distributable must be based

on whether “amounts involved are too small to make

individual distributions economically viable.” Id. at

1065. On the facts before it, the Eighth Circuit found

that the district court improperly ordered a cy pres

distribution of residual funds because a second direct

distribution of $2 million could be made to class

members who had already received and cashed

settlement checks, and that the further direct

distribution would cost only $27,000. Id. at 1064.

The Eighth Circuit also expressly “agree[d] with

the Ninth Circuit” that cy pres awards are permissible

so long as they provide an “indirect class benefit” by

going to “uses consistent with the nature of the

underlying action.” Id. at 1066-67 (citing Nachshin,

663 F.3d at 1040; other citations omitted). The court

rejected the proposed cy pres award in BankAmerica

because the single recipient—a Missouri legalservices organization—had an insufficient nexus to

class certification on the grounds that the FDCPA claims

brought by plaintiffs could not be certified on state-wide basis

(which would have resulting in a projected $12 per class

member), but instead required a nation-wide class (which would

have resulted in a projected recovery of 20 cents per class

member). The Seventh Circuit reversed, finding that a statewide class (with its projected $12 per class member recovery)

could be certified. The Seventh Circuit thus concluded that,

unlike here, the projected $12 recovery “though small, would not

be either difficult to assign or difficult to distribute.” Id.at 345.

14

the securities fraud claims asserted by the nationwide

class. See In re BankAmerica, 775 F.3d at 1067. No

similar objections have been or could be raised

against the targeted projects proposed by the cy pres

recipients here, whose activities have nationwide

scope and effects.

The Fifth Circuit’s decision in Klier involved the

unusual situation in which a district court sua sponte

ordered cy pres distribution of unclaimed settlement

funds to the detriment of one of the subclasses. See

Klier, 658 F.3d at 476-77. In contrast to the

settlement here, the settlement agreement in that

case explicitly directed that any leftover funds in a

subclass fund “‘shall be distributed pro rata to all

Claimants in that subclass.’” Id. at 476. That is, Klier

involved a district court’s attempt to override a

settlement rather than approve or enforce it; “the

district court’s decision to distribute the unused funds

via cy pres [found] no support in the text of the

settlement documents.” Id. at 476-77. In rejecting

that reallocation of funds contrary to the agreement

of the parties, the Fifth Circuit recognized the

limitation of its holding and made clear that its

decision did not “implicate the line of authority giving

careful scrutiny to class settlement agreements in

which the parties agree to a cy pres distribution.” Id.

at 478 n.29 (citing, inter alia, Six (6) Mexican Workers

v. Ariz. Citrus Growers, 904 F.2d 1301, 1304, 1307

(9th Cir. 1990)). It is that “line of authority” that

governs review of the settlement at issue here; Klier

is irrelevant. 7

Notably, the Klier court found that it was not feasible to

distribute $830,000 in leftover funds to 12,657 class members—

or $65 per class member. Id. at 472-76.

7

15

The decisions below also do not conflict with the

Third Circuit’s Baby Products decision, which cited

the Ninth Circuit’s decision in Lane with approval in

“join[ing] other courts of appeals in holding that a

district court does not abuse its discretion by

approving a class action settlement agreement that

includes a cy pres component.” Baby Prods., 708 F.3d

at 172. Baby Products further explained that,

although “cy pres distributions are most appropriate

where further individual distributions [to class

members] are economically infeasible,” it declined to

“hold that cy pres distributions are only appropriate

in this context.” Id. at 173. Instead, cy pres relief is

permissible when it is “fair, reasonable, and

adequate” under “the same framework developed for

assessing other aspects of class action settlements.”

Id. at 174. That is, the Third Circuit rejected the

inflexible rule petitioners press here, in a way that

raises no questions about the order under review

here. 8

Petitioners’ reliance on the Second Circuit’s

decision in Masters is also misplaced. In that case, the

feasibility of direct distribution was not at issue.

Rather, the district court ordered a cy pres

distribution rather than further distributions to the

class because it believed that the class had already

been fully compensated, and further direct

distributions

would

have

resulted

in

an

impermissible windfall. The Second Circuit expressed

8 In Baby Prods., the court vacated certification of the antitrust

settlement class because the district court “was apparently

unaware of the amount of the fund that would be distributed to

cy pres beneficiaries rather than being distributed directly to the

class.” 708 F.3d at 170.

16

concern that the district court may not have

appreciated the “breadth of its discretion” under the

specific settlement agreement, which empowered the

court to “allocate [additional] funds to the members of

the class as treble damages” rather than to cy pres.

Masters, 473 F.3d at 435.

Each of the cases cited by petitioners applies the

same general standard for when the use of cy pres is

appropriate. These cases are simply fact-bound

applications of settled circuit law, evaluating classaction settlements on their relative merits in the

context of the particular litigation at hand. Each case

turned on the court’s fact-specific determination of

whether, under the circumstances presented, resort

to cy pres was fair, reasonable, and adequate. At

bottom, these cases provide no support for petitioners’

claim that there is any circuit split on the question of

when a cy pres provision is fair, reasonable, and

adequate. Petitioners have attempted to create a

circuit split where none exists. 9

9 The amicus curiae briefs present the additional argument, not

contained in the petition or advanced below, that cy pres awards

“implicate[] . . . First Amendment rights of class members

because such settlement compel class members to subsidize

speech.” Brief of Center for Individual Rights, p. 1. Because this

argument is not raised in the petition, and was not advanced in

the court of appeals, this Court should not consider it on the

petition for writ of certiorari. SUP CT. R. 14(a) (“Only the

questions set out in the petition, or fairly included therein, will

be considered by the Court.”). See also Adickes v. S.H. Kress &

Co., 398 U.S. 114, 147 n.2 (1970) (“Where issues are neither

raised before nor considered by the Court of Appeals, this Court

will not ordinarily consider them.”).

17

There is no basis to find an abuse of discretion in

the lower courts’ findings that the settlement fund

here was non-distributable. Petitioners do not present

any basis to undermine the district court’s conclusion

that, in light of the enormous size of the class and the

comparatively small value of the settlement fund,

that fund is “nondistributable” directly to class

members. Even if there were such a basis, this Court

does not engage in error correction. SUP CT. R. 10.

Instead, petitioners contend that this Court

should hold for the first time that, as a matter of law,

a settlement must offer a mechanism to provide a

windfall to a minuscule portion of class members—

chosen either by lottery or by a claims process that

petitioners themselves acknowledge is likely to have

a very small claims rate—rather than providing an

indirect benefit to the class as a whole through the cy

pres mechanism. 10 Yet, petitioners do not explain why

the interests of the class as a whole are better served

by giving a windfall to a very few and nothing to the

rest. Certainly nothing in any circuit precedent

supports—much less requires—a rigid requirement

favoring small payments to a tiny fraction of class

Petitioners present no evidence of any circuit conflict

concerning the Ninth Circuit’s statement below that its “review

of the district court’s settlement approval is not predicated

simply on whether there may be ‘possible’ alternatives,” or “the

fact that there are other conceivable methods of distribution does

not mean that the district court abused its discretion by

declining to adopt them.” Pet. 14. Likewise, no circuit has ever

held that if “any distribution to class members was infeasible,

then that should call into question class certification, because it

would not be, as Rule 23(b)(3) requires, superior to other

available methods for fairly and efficiently adjudicating the

controversy.” Pet. 11.

10

18

members over payments to fund research, analysis,

education, and advocacy on Internet privacy issues

that, as the lower courts found here, will benefit a

much greater proportion (and quite possibly all) of the

class. 11

II.

This Case Does Not Provide a Proper

Vehicle to Consider the Inclusion of Cy

Pres

Provisions

in

Settlement

Agreements.

A.

The Petition Presents a Fact-Bound

Question of No Significance Beyond

the Settlement of this Litigation.

This Court does not engage in correcting

misapplication of law by lower courts, or in error

correction, much less wade into the morass of the

terms of a settlement agreement. See Graver Tank &

Nfg. Co. v. Linde Air Prods. Co., 336 U.S. 271, 275

(1949) (declining to review concurrent findings of fact

by two courts below absent “a very obvious and

exceptional showing of error”); SUP. CT. R. 10.

This case presents nothing more than a dispute

about the relative merits of the benefits of this classaction settlement. The settlement benefits were the

subject of thorough factual findings by two courts

below concerning its value to the class. Reversing

approval of the Settlement would necessarily require

Petitioners do not mount a serious challenge to the lower

courts’ findings that the detailed cy pres proposals demonstrate

a proper nexus between the cy pres recipient(s) and the class, as

is uniformly required by every circuit.

11

19

this Court to substitute its own judgment about the

facts for that of the courts below.

Petitioners’ legal arguments are wholly predicated

on facts directly contrary to those found by the courts

below. Thus, prior to even reaching the questions

petitioners ask the Court to review, this Court would

have to comb the record and reverse two lower courts’

(correct) findings of fact, including the factual

findings that the settlement fund was nondistributable 12 and that the cy pres recipients had a

substantial nexus to the interests of the class

members. 13

B.

The Settlement Does Not Allow the

Court to Address the Concerns

Identified by Chief Justice Roberts.

In Marek v. Lane, 134 S. Ct. 8 (2013), Chief Justice

Roberts agreed with the Court’s decision to deny the

petition for certiorari under facts and circumstances

somewhat similar to the instant matter. Chief Justice

Roberts also identified several concerns the Court

may want to address when the right vehicle comes

before it. This case is not that vehicle. Just as in

Marek, “[petitioners’] challenge is focused on the

particular features of the specific cy pres settlement

at issue[,]” and thus does “not afford[] the Court an

12 The Ninth Circuit panel was unanimous in finding that the

settlement fund was non-distributable. Pet. App. 8-11.

Moreover, to the extent petitioners now contend that the

requisite nexus is lacking, that argument is waived because it

was not raised below. Pet. App. 12 (“Objectors do not dispute that

the nexus requirement is satisfied here.”)

13

20

opportunity to address more fundamental concerns

surrounding the use of such remedies in class action

litigation[.]” Id. at 9.

The first concern raised by Chief Justice Roberts

is “when, if ever, such relief should be considered[.]”

Id. If Marek was not the right case for the Court to

consider this concern, then the instant matter is

surely also not the right case. In Marek, the net

settlement fund totaled $6.5 million and there were

3.6 million class members—approximately $1.81 per

person. See Pet. App. 8-9. In the instant case, the net

settlement fund totals $5.3 million and there are at

least 129 million class members—approximately

$0.04 per person before taking administration and

distribution costs into account. Id. While no objector

contested the size of the Settlement fund, the instant

Settlement was even less feasibly distributable than

the fund in Marek, making this Settlement less

attractive as a vehicle to consider when cy pres is

appropriate.

The second concern is “how to assess its fairness

as a general matter[.]” Marek, 134 S. Ct. at 9. For the

same reasons described above, this case does not

present the opportunity Chief Justice Roberts seeks

to evaluate cy pres relief. Here, the Ninth Circuit

followed its own undisturbed precedent—which, as

argued above, is consistent with precedent in other

circuits—in affirming the district court’s finding that

the Settlement is “fair, reasonable, and adequate.”

Third, this case does not concern “whether new

entities may be established as part of such relief.” Id.

None of the cy pres recipients in the Settlement is a

21

new entity. In fact, the Ninth Circuit affirmed the

district court’s findings that the recipients are

“established,” “independent” organizations. Id.

Fourth, petitioners do not seriously object to the

method by which the recipients were selected, so

Chief Justice Roberts’s concern regarding “how

existing entities should be selected” is not at issue in

this matter. Id.

Fifth, for the same reasons as described

immediately above, this case does not present an

optimal backdrop to address Chief Justice Roberts’s

concern regarding “what the respective roles of the

judge and parties are in shaping a cy pres remedy[.]”

Id.

Sixth and finally, Ninth Circuit precedent requires

“cy pres awards to meet a ‘nexus’ requirement by

being tethered to the objectives of the underlying

statute and the interests of the silent class members.”

Pet. App. 12 (quoting Naschin, 663 F.3d at 1039). The

lower courts, on a detailed and voluminous factual

record, found that the cy pres recipients were

committed to using the funds in a manner closely

corresponding to the interests of the class.

The Ninth Circuit noted that “the cy pres

recipients were six organizations that have pledged to

use the settlement funds to promote the protection of

Internet privacy.” Pet. App. 7. The Ninth Circuit went

on to state that:

“[t]he district court found that the six

cy pres recipients are ‘established

22

organizations,’ that they were

selected

because

they

are

‘independent,’ have a nationwide

reach and ‘a record of promoting

privacy protection on the Internet,’

and ‘are capable of using the funds to

educate the class about online privacy

risks.’”

Pet. App. 12.

“Accordingly, the district court appropriately

found that the cy pres distribution addressed the

objectives of the Stored Communications Act and

furthered the interests of the class members.” Pet.

App. 12-13.

Moreover, contrary to the assertions of petitioners,

the funds were not to be used by the recipients for

“unspecified” purposes or uses. Pet. 1. Rather, each cy

pres recipient was required to submit proposals

detailing how the cy pres funds would be used. See,

e.g., Pet. App. 47-48. The grant-like proposals were

designed to address the alleged harm in this lawsuit

and included detailed budgeting associated with each

project. The funding covers projects aimed at:

x

improving user privacy online, by: (1)

furthering researchers’ understanding of

user privacy behaviors and online threats to

users’ privacy; (2) improving user-facing

interfaces and technologies to increase

users’ understanding and control of their

privacy; and (3) developing computational

mechanisms to help ensure the systems and

organizations adhere to privacy regulations

23

or policies (Carnegie Mellon) (SER 1:56;

2:284-97);

x

a research project into third-party data

flows to uncover consumer harms stemming

from search queries typed into online search

boxes; and (2) a national consumer

education project focused on bringing online

privacy education to all consumers, with a

particular focus on vulnerable consumers

who often miss online privacy educational

campaigns due to financial, linguistic,

education, medical, or other barriers (World

Privacy Forum) (SER 1:56-57; 2:348-81);

x

privacy preparedness, which will combine

academic research, public education, and

outreach to safeguard individuals’ online

privacy and to help users implement

privacy protections when they interact with

the Internet (Chicago-Kent College of Law

Center for Information, Society, and Policy)

(SER 1:57; 2:298-314);

x

original research to advance best practices

for mobile phone privacy; (2) controlled

trials to improve existing Privacy

Enhancing Technologies (“PETs”) and

develop new ones; (3) analysis of proposed

privacy legislation; and (4) an educational

speaker and public outreach series to

educate, inform, and train users about

online privacy risks and available tools to

mitigate those risks (Stanford Law School

24

Center for Internet and Society) (SER 1:57;

2:315-47);

x

develop concrete proposals for safeguarding

Internet privacy more effectively via legal

and policy reform, company action,

technological

innovation,

targeted

education, and user outreach (Berkman

Center for Internet & Society at Harvard

University) (SER 1:58; 2:263-83);

x

develop a national initiative to educate and

inform 1,000,000 individuals over a threeyear period on how to protect their online

privacy and proactively avoid the harmful

impact of Internet fraud and identity theft

(AARP Foundation) (SER 1:58; 2:257-62).

Petitioners contend that approval of the cy pres

recipients was in error, but never once address these

detailed proposals. The reason for this is clear: the

recipients’ proposals all require the funds to be spent

on Internet privacy initiatives closely related to the

harms alleged by the class. Thus, the concern

regarding “how closely the goals of any enlisted

organization must correspond to the interests of the

class” simply cannot be addressed in this case.

25

CONCLUSION

For the foregoing reasons, the petition for writ of

certiorari should be denied.

Respectfully submitted,

KASSRA P. NASSIRI

Counsel of Record

NASSIRI & JUNG LLP

47 Kearny Street

Suite 700

San Francisco, CA 94108

(415) 762-3100

kass@njfirm.com

Dated: March 9, 2018

MICHAEL

ASCHENBRENER

KAMBERLAW, LLC

201 Milwaukee Street

Suite 200

Denver, CO 80206

(212) 920-3072

masch@kamberlaw.com