Enforcing Privacy pp 307-333

Part of the Law, Governance and Technology Series book series (LGTS, volume 25) | Cite as

Enforcing Privacy Rights: Class Action Litigation and the Challenge of cy pres

Chapter

Abstract

The enforcement of rights is a critical requirement of privacy law. Absent actual enforcement, there is little meaningful incentive for companies to comply with privacy requirements. Enforcement also helps to ensure that the individuals whose privacy is placed at risk are fairly compensated. In matters involving a large number of consumers, providing a remedy to all users affected by a company’s practice is difficult and often times inefficient. For this reason, courts in the US provide for “class action litigation”, lawsuits brought on behalf of a large number of individuals in similar circumstances. The theory is that it is more efficient to merge all of the individual suits that might otherwise be brought. But class action litigation has its own shortcomings. Attorneys who represent the class members frequently settle these cases with the companies and agree to terms that provide benefits to the company, such as eliminating the possibility of all future lawsuits, and sacrifice the benefits that the individuals who they purport to represent might otherwise achieve. US courts are sensitive to the problem of collusion between the lawyers in class action settlements and have increasingly scrutinised these agreements to ensure that the settlements protect the interests of class members and are consistent with the purposes for which the lawsuit was brought. In the area of consumer privacy, the problem is particularly serious with class action attorneys increasingly trading the privacy rights of Internet users for their own private benefit. As a consequence, US consumer privacy organisations are challenging the settlements and turning to the Federal Trade Commission and others to block their adoption. In this article, the authors recommend that the US courts continue to closely scrutinise these agreements for fairness to the class members. Regarding the allocation of funds from such settlements, the authors propose that courts adopt objective criteria to ensure that the monies will be distributed for purposes that serve the interests of the class and are consistent with the reason for the litigation. The authors contend that these factors are the fundamental requirements for cy pres allocations.

References

  1. American Law Institute, Principles of the Law of Aggregate Litigation, 2010. http://www.ali.org/index.cfm?fuseaction=publications.ppage&node_id=80
  2. Barnett, Kerry, “Equitable Trusts: An Effective Remedy in Consumer Class Actions”, Yale Law Journal, Vol. 96, No. 7, June 1987, pp. 1591–1614. http://www.jstor.org/stable/796495;
  3. Campaign for a Commercial Free Childhood, Letter of Amicus Curiae, Supporting the Objector-Appellants Schachter et al., 12 Feb 2014. http://www.commercialfreechildhood.org/sites/default/files/CCFCAmicusLetter.pdf
  4. Campaign for a Commercial Free Childhood, “Why we turned down $290,000”, 13 Feb 2014. http://www.commercialfreechildhood.org/blog/why-we-turned-down-money
  5. DeJarlais, Natalie A., “The Consumer Trust Fund: A Cy Pres Solution to Undistributed Funds in Consumer Class Actions”, Hastings Law Journal, Vol. 38, April 1987, pp. 729–767.Google Scholar
  6. EPIC, Fraley v. Facebook, http://epic.org/amicus/facebook/fraley/
  7. Federal Rules of Civil Procedure (FRCP).Google Scholar
  8. Federal Trade Commission (FTC), Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for businesses and policymakers, March 2012. http://online.wsj.com/public/resources/documents/PrivacyReport_FINAL.pdf
  9. Fisch, Edith L., The Cy Pres Doctrine in the United States, Matthew Bender, New York, 1950.Google Scholar
  10. Gayle, Damien, “Is Facebook ‘impersonating’ users to promote stories they’ve never seen to all their friends?”, Daily Mail, 24 Jan 2013. http://www.dailymail.co.uk/sciencetech/article-2267575/Is-Facebook-impersonating-users-promote-stories-theyve-seen-friends.html
  11. Goel, Vindu, “Facebook Privacy Deal is Under Attack,” The New York Times, 13 Feb 2014. http://www.nytimes.com/2014/02/13/technology/facebook-deal-on-privacy-is-under-attack.html
  12. Gray, Hamish, “The History and Development in England of the Cy-Pres Principle in Charities”, Boston University Law Review, Vol. 33, 1953, pp. 30–51.Google Scholar
  13. Grimmelmann, James, “Future Conduct and the Limits of Class-Action Settlements”, North Carolina Law Review, Vol. 91, Issue 2, 2013, pp. 387–474. http://www.nclawreview.org/category/archives/91/issue-2/ Google Scholar
  14. Harris, Elizabeth, and Nicole Perlroth, “For Target, the Breach Numbers Grow”, The New York Times, 11 Jan 2014.Google Scholar
  15. Harris, Elizabeth, et al., “A Sneaky Path into Target Customers’ Wallets”, The New York Times, 18 Jan 2014.Google Scholar
  16. Hay, Bruce, and David Rosenberg, “‘Sweetheart’ and ‘Blackmail’ Settlements in Class Actions: Reality and Remedy”, Notre Dame Law Review, Vol. 75, Issue 4, 2000, pp. 1377–1408.Google Scholar
  17. Koniak, Susan P., and George M. Cohen, “Under Cloak of Settlement”, Virginia Law Review, Vol. 82, No. 2, 1996.Google Scholar
  18. Privacy Laws and Business, “German Consumer Protection Organizations to be Empowered to Sue Businesses for Data Protection Law Violations”, 14 Feb 2014. www.bitkom.org/de/presse/8477_78620.aspx
  19. Redish, Martin H., et. al., “Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis”, Florida Law Review, Vol. 62, No. 3, July 2010, pp. 617–666. http://www.floridalawreview.com/wp-content/uploads/2010/01/Redish_BOOK.pdf
  20. Reuters, “Neiman Marcus data breach occurred as far back as July”, published in The Chicago Tribune, 17 Jan 2014. http://articles.chicagotribune.com/2014-01-17/business/chi-neiman-marcus-data-breach-occurred-as-far-back-as-july-20140117_1_cyber-attack-neiman-marcus-ginger-reeder
  21. Roberts, Jeff John, “Why privacy settlements like Facebook’s ‘Sponsored Stories’ lawsuit aren’t working”, GigaOm, 19 Sept 2013. http://gigaom.com/2013/09/19/why-privacy-settlements-like-facebooks-sponsored-stories-lawsuit-arent-working/
  22. Roberts, Jeff John, “Target hit with dozens of lawsuits over mass data breach”, GigaOm, 27 Dec 2013. http://gigaom.com/2013/12/27/target-hit-with-dozens-of-lawsuits-over-mass-data-breach/
  23. Rotenberg, Marc, “Fair Information Practices and the Architecture of Privacy”, Stanford Technology Law Review, February 2001. http://stlr.stanford.edu/pdf/rotenberg-fair-info-practices.pdf
  24. Rotenberg, Marc, Letter to Judge Lucy H. Kohn concerning Fraley v. Facebook Proposed Settlement, No. 11-01726 from EPIC Executive Director Marc Rotenberg, on behalf of the Electronic Privacy Information Center, the Center for Digital Democracy, the Privacy Rights Clearinghouse and the Institute for Public Representation, Georgetown University Law Center, 11 July 2012. http://www.epic.org/privacy/EPIC-et-al-Fraley-Cy-Prs-Ltr-7-12-12.pdf
  25. Schectman, Joel, “Target Faces Nearly 70 Lawsuits Over Breach”, The Wall Street Journal, 15 Jan 2014. http://blogs.wsj.com/riskandcompliance/2014/01/15/target-faces-nearly-70-lawsuits-over-breach/
  26. Shepherd, Stewart R., “Damage Distribution in Class Actions: The Cy Pres Remedy”, University of Chicago Law Review, Vol. 39, No. 2, Winter 1972, pp. 448–465. http://www.jstor.org/stable/1599010
  27. The White House, Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy, 2012.Google Scholar
  28. US Department of Health, Education and Welfare (HEW), Records, Computers and the Rights of Citizens, Report of the Secretary’s Advisory Committee on Automated Personal Data Systems, Washington, DC, 1973. http://epic.org/privacy/hew1973report/

Court cases

  1. Abdullah v. U.S. Sec. Associates, Inc., 731 F.3d 952, 963–64 (9th Cir. 2013).Google Scholar
  2. Allison v. Citgo Petroleum Corp., 151 F.3d 402, 410 (5th Cir. 1998).Google Scholar
  3. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997).Google Scholar
  4. Berry et al. v. LexisNexis Risk & Analytics Group Inc., No. 11-00754 (E.D. Va. 2011).Google Scholar
  5. Dennis v. Kellogg Co., 697 F.3d 858, 865 (9th Cir. 2012).Google Scholar
  6. Fraley v. Facebook, No. 11-1726 (N.D. Cal. filed 8 Apr 2011).Google Scholar
  7. Geraghty, 445 U.S., pp. 402–03.Google Scholar
  8. Jeff D. v. Evans, 743 F.2d 648, 651 (9th Cir. 1984) rev’d, 475 U.S. 717 (1986).Google Scholar
  9. Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468, 474–75 (5th Cir. 2011).Google Scholar
  10. Lane v. Facebook, Inc., 696 F.3d 811, 828 (9th Cir. 2012) cert. denied, 134 S. Ct. 8 (U.S. 2013).Google Scholar
  11. Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir.1997).Google Scholar
  12. Marek v. Lane, 134 S. Ct. 8, 8–9 (2013).Google Scholar
  13. Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 436 (2d Cir. 2007).Google Scholar
  14. Miller v. Steinbach, No. 66 Civ. 356, 1974 WL 350, at *2 (S.D.N.Y. 3 Jan 1974).Google Scholar
  15. Murray v. GMAC Mortgage Corp., 434 F.3d 948, 953 (7th Cir. 2006).Google Scholar
  16. Nachshin v. AOL, LLC, 663 F.3d 1034, 1036 (9th Cir. 2011).Google Scholar
  17. Park v. The Thomson Corp., 05 CIV.2931 (WHP), 2008 WL 4684232 (S.D.N.Y. Oct. 22, 2008).Google Scholar
  18. Perkins v. Am. Natl Ins. Co., No. 3:05–CV–100 (CDL) (M.D. Ga. 10 July 2012).Google Scholar
  19. Pelt v. Utah, 539 F.3d 1271, 1284 (10th Cir. 2008).Google Scholar
  20. Re Am. Express Merchs. Litig., No. 03 CV 9592, 2006 WL 662341, at *1 (S.D.N.Y., 16 Mar 2006).Google Scholar
  21. Re Amino Acid Lysine Antitrust Litig., 918 F. Supp. 1190, 1196 (N.D. Ill. 1996).Google Scholar
  22. Re Gen. Motors Corp. Pick-Up Truck Fuel Tank Products Liab. Litig., 55 F.3d 768, 785 (3d Cir. 1995).Google Scholar
  23. Re Google Referrer Header Privacy Litigation, No. 10-4809 (N.D. Cal. filed 25 Oct 2010).Google Scholar
  24. Re Compact Disc Minimum Advertised Price Antitrust Litigation, No. MDL 1361, 2005 WL 1923446 (D.Me. 9 Aug 2005).Google Scholar
  25. Re Google Buzz Privacy Litig., C 10-00672 JW, 2011 WL 7460099 (N.D. Cal. 2 June 2011).Google Scholar
  26. Re Google Referrer Header Privacy Litigation, No. 10-4809 (N.D. Cal. filed 25 Oct 2010).Google Scholar
  27. Re Lupron Mktg. & Sales Practices Litig., 677 F.3d 21 (1st Cir. 2012) cert. denied, 133 S. Ct. 338, 184 L. Ed. 2d 239 (US 2012).Google Scholar
  28. Re Motorsports Merch. Antitrust Litig., 160 F.Supp.2d 1392, 1396–99 (N.D. Ga. 2001).Google Scholar
  29. Re Netflix Privacy Litigation, No. 11–00379 (N.D. Cal. filed 26 Jan 2011).Google Scholar
  30. S.E.C. v. Bear, Stearns & Co. Inc., 626 F. Supp. 2d 402, 414 (S.D.N.Y. 2009).Google Scholar
  31. Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1303–04 (9th Cir. 1990).Google Scholar
  32. Superior Beverage Co., Inc. v. Owens-Illinois, Inc., 827 F. Supp. 477, 480 (N.D. Ill. 1993).Google Scholar
  33. Thorogood v. Sears, Roebuck & Co., 547 F.3d 742, 744–45 (7th Cir. 2008).Google Scholar

Additional references not mentioned in the chapter, but germane to the subject:

  1. Allen, Anita, and Marc Rotenberg, eds., Privacy Law and Society, 3d. ed., West, 2016.Google Scholar
  2. JDSupra, “EPIC Objects to Facebook Settlement, Cites Failure to Benefit Class Members (Letter two)”, 16 July 2012.Google Scholar
  3. Marketwatch, “Five Public Interest Groups Underscore Opposition To Settlement In Google Privacy Suit”, 16 Oct 2013.Google Scholar
  4. Roberts, Chief Justice John, Statement respecting the denial of certiorari, Mark v. Lane, 571 U.S. ___ (2013).Google Scholar
  5. Rotenberg, Marc, Julia Horwitz and Jeramie Scott (eds.), Privacy in the Modern Age: The Search for Solutions, The New Press, 2015.Google Scholar
  6. The Register, “Judge: Google class action ‘usual suspects’ cash-fling ‘smells’: Proposed payout gives class members nothing – objectors”, 5 Sept 2014.Google Scholar

Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.Electronic Privacy Information Center (formerly EPIC Consumer Protection Counsel)Washington, DCUSA

Personalised recommendations