[00:00:06] Speaker 00: You may proceed. [00:00:08] Speaker 04: Thank you, your honor. [00:00:09] Speaker 04: May it please the court, Ted Frank, for the object of repellence. [00:00:12] Speaker 04: I'd like to reserve eight minutes for rebuttal. [00:00:16] Speaker 04: This is a settlement that pays $19 million to the attorneys and gives nothing to the class that they would not get if they opted out. [00:00:26] Speaker 04: $42 million or so of side prey. [00:00:30] Speaker 04: is in large chunks going to organizations that many and perhaps a majority of class members would oppose, including for projects that many or a majority of class members would oppose. [00:00:45] Speaker 04: And it's being administered over a course of several years by an Article III judge acting as a grant administrator. [00:00:53] Speaker 04: Now, many of the strongest arguments against that are indeed foreclosed by Ninth Circuit precedent. [00:01:00] Speaker 04: But the Ninth Circuit has not reached, I think, three major issues here. [00:01:06] Speaker 04: One, the effect of Rule 23E2C2 on a monetary fund and whether a monetary fund that can be distributed as, I think, the empirical evidence that's undisputed demonstrates a 2ER77 through 80. [00:01:26] Speaker 04: Two, whether controversial [00:01:30] Speaker 04: beneficiaries of SIPRE are appropriate when many class members or even a majority of class members would oppose what these organizations are doing and indeed propose to do with the money, including in some cases explicitly violate the law against racial discrimination. [00:01:49] Speaker 04: For example, the Rose Foundation application at 3ER 356. [00:01:55] Speaker 04: And then third, whether it's appropriate for [00:01:58] Speaker 04: given the possible conflicts of interest for the district court to act as a grant administrator over the course of several years. [00:02:09] Speaker 05: I want to go back, I guess, to your first issue and the court's approval of this in the first instance. [00:02:15] Speaker 05: As I read the district court's order, it seems like a premise of the decision is that it's not appropriate to consider feasibility for less than the entire class population. [00:02:28] Speaker 05: that you have to analyze that question, both sort of the payout amount and the feasibility of it, as though you were going to administer this settlement to every single member of the class. [00:02:41] Speaker 05: Do you agree that that was a premise of the district court's decision? [00:02:44] Speaker 04: Yes, I do. [00:02:45] Speaker 05: Can you tell me, at least on page 18 of the district court's order where it seems to be talking about the feasibility side more, it cites Lane for the idea that you can't assess feasibility based on administering to less than all of the class, and it cites Lane for that proposition. [00:03:03] Speaker 05: I'm curious what your reaction to that is. [00:03:05] Speaker 05: I don't see Lane as talking about that issue at all. [00:03:07] Speaker 04: Well, Lane doesn't talk about that. [00:03:09] Speaker 04: The parties in Lane conceded that it was not feasible to distribute the money, and they were just complaining about the conflicts of interest. [00:03:16] Speaker 05: Did you present evidence to the district court about the feasibility of paying out a settlement amount to something less than the full class population? [00:03:27] Speaker 04: Absolutely. [00:03:29] Speaker 04: We identified dozens of settlements. [00:03:31] Speaker 04: And again, those are listed at 2ER 76 through 80, including a Google settlement for a class just as large of a substantially smaller sum, $23 million. [00:03:41] Speaker 04: That was the Google referrer case. [00:03:43] Speaker 04: that went up to the Supreme Court, went back down on remands rather than try to do side prey, they said, okay, we'll give the money to the class and they were able to distribute $7.70 checks to the 1.5% of the class that made claims. [00:04:00] Speaker 04: Even though it was not 23 cents a class member, it was 11 cents a class member in the $23 million settlement fund. [00:04:12] Speaker 04: But we also identified dozens of other settlements. [00:04:17] Speaker 04: The complaint that the settlement administration costs might be 2 to 12 percent of the entire settlement fund. [00:04:27] Speaker 04: Well, we identified settlements that were successfully distributed where settlement administration costs were 20 percent of the settlement fund. [00:04:35] Speaker 04: Much smaller amounts have been distributed to much larger, to classes of the same or a similar size. [00:04:43] Speaker 04: Absolutely you have, most class actions distribute to a tiny fraction of the class because the median recovery, the median claims rate is under percent and it only goes substantially higher than that when [00:04:57] Speaker 04: It's a relatively small compact class that's getting direct notice for a very large sum. [00:05:03] Speaker 04: So when you have a Facebook settlement for a particular group of people and you're giving them direct notice that they can get $600 if they make a claim, you get a 22% claims rate. [00:05:15] Speaker 04: When you have this sort of thing where there isn't direct notice and there's just generalized Internet advertisements and whatever press coverage there is you get a claims rate of under a percent or maybe a percent and a half in Google refer You got a percent and a half and that was just through direct notice through email [00:05:33] Speaker 04: But all of that is in the record, and none of that got considered by the district court. [00:05:36] Speaker 04: The only thing it considered was the declaration saying, well, it will cost $1 million, $7 million to do the distribution, and therefore it's too difficult. [00:05:46] Speaker 04: But that's every class action, and we demonstrated that. [00:05:50] Speaker 05: Why doesn't Google Street View control here in terms of feasibility? [00:05:54] Speaker 04: In Google Street View, the only way you could identify a class member, at least the premise of the Ninth Circuit opinion, was you could not identify class members without several years of forensic examination. [00:06:06] Speaker 04: And class members could not self-identify. [00:06:09] Speaker 00: They couldn't self-identify because they didn't know when the car was going by their house. [00:06:16] Speaker 00: Right. [00:06:16] Speaker 04: In Google Street View, it was a Google car going by. [00:06:20] Speaker 04: And by the way, we're going to collect your Wi-Fi information as you're going by. [00:06:24] Speaker 04: And nobody knew if their Wi-Fi was on if the car was going by. [00:06:28] Speaker 05: Do you think they can self-identify here? [00:06:30] Speaker 05: What would that look like in terms of what are they going to have to demonstrate to show that they're a member of the class? [00:06:36] Speaker 04: It looks like every other settlement that gets approved in this circuit, the class member goes forward and says, you know, I purchased ConAgra oil or I had my Google location history turned off on my iPhone or on my Android and in this time frame. [00:06:58] Speaker 04: How would somebody know that? [00:07:00] Speaker 04: Well, that's a conscious decision, whether to have your location history on or off. [00:07:06] Speaker 04: Certainly, the representative class members knew that, and nobody contested that they were class members. [00:07:12] Speaker 05: So I was trying to figure out, what's the burden of proof? [00:07:15] Speaker 05: How would this get administered right? [00:07:17] Speaker 05: So I assume that they're going to file a declaration and say, I did this. [00:07:20] Speaker 05: I turned this off during the relevant period. [00:07:23] Speaker 05: So I'm a member of the class. [00:07:24] Speaker 05: Would you just take that as face value? [00:07:27] Speaker 04: You could audit if you have reason to believe that there's fraud. [00:07:31] Speaker 04: The reason we don't have an ascertainability requirement, and this is the first Brasenio opinion, is because we trust class members under penalty of perjury to say, I'm not committing perjury for $7. [00:07:46] Speaker 04: And right now, [00:07:50] Speaker 04: The notice just went out for an Apple settlement, which is almost the exact same privacy violation that Siri was collecting voice information when people thought that they had Siri turned off. [00:08:04] Speaker 04: And again, that's just going to be a class member attesting that I had Siri turned off, but Siri heard my class. [00:08:12] Speaker 04: Siri turned on when I thought I was off. [00:08:16] Speaker 04: And that's going to allow them to make a claim. [00:08:18] Speaker 04: We allow people to make claims on the right. [00:08:21] Speaker 04: Nobody saves their receipt for Wesson Oil, but you can make a claim for it. [00:08:26] Speaker 04: Nobody saves what their settings were. [00:08:30] Speaker 04: They will just attest it under penalty of perjury. [00:08:32] Speaker 04: I turned off location services. [00:08:35] Speaker 04: And during this time, Google was collecting information from everybody, not just the people who kept location services on. [00:08:44] Speaker 05: So I'm going to come back to a question I was asking before. [00:08:46] Speaker 05: I asked you about evidence of what's in the record in terms of the likely claim rate on a class population like this. [00:08:55] Speaker 05: The pages that you gave me are about class size and approval of very large class sizes, but I don't think it gets to the question I'm asking, which is, [00:09:03] Speaker 05: What information does the district court have to know that in a class like this that's going to be administered with sort of public notice, as you indicated, that you're only going to get a very low claim rate? [00:09:14] Speaker 04: Certainly. [00:09:14] Speaker 04: We cited the Carrier IQ case, which cited empirical studies about this. [00:09:19] Speaker 04: That's in our brief, and I can get you the direct site for that. [00:09:23] Speaker 04: And the Google Referrer case, which was in front of the very same district court judge with the very same size class with the very same defendant had a 1.5% claims rate. [00:09:35] Speaker 04: And that was with direct notice. [00:09:39] Speaker 01: By direct notice you mean a mailed card? [00:09:42] Speaker 01: An email. [00:09:43] Speaker 01: An email? [00:09:44] Speaker 01: Yes sir. [00:09:44] Speaker 01: Okay. [00:09:45] Speaker 01: And so you think that the 247 million people here could be contacted by email? [00:09:50] Speaker 04: I don't know if that's in the plans. [00:09:53] Speaker 04: I don't remember if they were contacted by email the first time around. [00:09:56] Speaker 04: I don't think they were, given what the administrative costs were. [00:10:01] Speaker 04: But I could be corrected on that if I'm wrong, if they've already been contacted by email. [00:10:06] Speaker 04: But that would just mean that the claims rate's going to be even lower. [00:10:11] Speaker 04: because we would we would be able to get notice to many people the notice would be through some sort of internet advertising which does result in lower claims rates and that's what carrier IQ stands for or the the evidence cited in carrier IQ uh... Pearson versus NBTY in the Seventh Circuit cites uh... similar empirical studies that's 772 F3rd 778 [00:10:38] Speaker 05: I mean this is just a background question just to figure out the scope of a district court's discretion here. [00:10:44] Speaker 05: In a case like this where the damages to the class are unliquidated in the sense of like it's not like you paid, you were unfairly charged a fee that is known, it's an unliquidated amount. [00:10:57] Speaker 05: Can the district court [00:10:59] Speaker 05: say we're going to go through a claims process and see what kind of a return we get in terms of how many people seek their amount for the settlement and then figure out how much to pay them. [00:11:12] Speaker 04: Certainly the district court could say, we're going to go through the claims process and if it turns out we have a 37% claims rate and everybody's going to get 37 cents, then it's not feasible to distribute. [00:11:27] Speaker 04: Though I think even then in 2025 with modern electronic cash technology, that's not true anymore. [00:11:38] Speaker 04: I'm happy to take the risk that... Well, I guess let me ask it a different way. [00:11:42] Speaker 05: So here the presumption is it's 25 cents if every class member were to make a claim. [00:11:47] Speaker 05: So you go through the claims process and you get 3% of people making a claim or whatever. [00:11:51] Speaker 05: Could at that point the district court after considering the administrative costs or whatever say, we're giving everybody $2? [00:11:57] Speaker 04: Well, at a 3% claims rate, it would be about $7, or $6 or $5 after the attorney's fees. [00:12:04] Speaker 04: But then you're asking the court to spend the administrative costs of claim intake, which is the reason why the court didn't want to do it in the first place. [00:12:15] Speaker 00: Could I interrupt for a second? [00:12:17] Speaker 00: Were you sharing time with co-counsel? [00:12:21] Speaker 04: No. [00:12:22] Speaker 04: OK. [00:12:24] Speaker 04: The state AGs followed the amicus and asked for argument time, and that was denied. [00:12:28] Speaker 04: Okay. [00:12:28] Speaker 04: I'll reserve the rest of my time for rebuttal unless the court has something. [00:12:31] Speaker 00: Do you have a question? [00:12:33] Speaker 00: No. [00:12:33] Speaker 00: Okay, thank you. [00:12:33] Speaker 00: Thank you, Your Honor. [00:12:53] Speaker 00: Okay. [00:12:53] Speaker 00: You can proceed. [00:12:55] Speaker 03: Good morning, Your Honor. [00:12:55] Speaker 03: Samuel Zacharoff for the appellee class below. [00:12:59] Speaker 03: I think that the place to start is what is this Court's standard of review? [00:13:06] Speaker 03: What should this Court be reviewing at this point? [00:13:09] Speaker 03: The heart of Mr. Frank's argument [00:13:11] Speaker 03: is that the normal discretion afforded to the district court does not apply because it was an error of the law made below, and that prior cases of this court, like Naxen, like Google Street View, do not apply because of the change legal circumstances arising from the 2018 amendments to Rule 23E. [00:13:35] Speaker 03: In Section 1B of his brief on page 25 where he makes this argument, he says this is mandated by the plain language of Rule 23E as amended in 2018. [00:13:47] Speaker 03: The part that is quoted on that page is a misquote because he inserts a period at the end of the first of two clauses of the amended text of Rule 23E [00:14:02] Speaker 03: and drops the subordinate clause which puts the context of what the rules committee was concerned about, which is how do we know that when there are claims to be made on a class settlement that in fact those claims were made and were honored and class members got paid. [00:14:21] Speaker 03: And that was the thrust of the reform in 2018. [00:14:24] Speaker 03: The advisory committee notes [00:14:27] Speaker 03: make that absolutely clear that again is unsighted by Mr. Frank and Mr. Frank has not a single case [00:14:35] Speaker 03: that indicates that any court has read the 2018 reforms in the way that he did. [00:14:41] Speaker 03: In fact, in the Google Street View case where Judge Baby not only wrote the majority opinion but wrote a special concurrence in which she listed all the concerns arising from the use of Cypre, notably the 2018 reforms to Rule 23E is not listed as one of them. [00:15:03] Speaker 03: This is just [00:15:04] Speaker 03: not an argument that has been credited by any court. [00:15:08] Speaker 03: And there's a reason for this. [00:15:11] Speaker 03: Mr. Frank quotes me, so I'm in an odd position here as a witness to myself, but he quotes me from 2007 saying that there's something wrong with the Cyprus system in the court. [00:15:24] Speaker 03: And that was my view then, and that continues to be my view, that there was something wrong. [00:15:30] Speaker 03: And then in 2013, most notably, Chief Justice Roberts says, we have to do something about Cyprus. [00:15:36] Speaker 03: We have to address it. [00:15:38] Speaker 03: In 2018, the rules committee did not take that up. [00:15:43] Speaker 03: Now, the Rules Committee is normally exceedingly attentive to the views of the Chief Justice because, among other things, he appoints the Rules Committee. [00:15:51] Speaker 03: And the reason they didn't take it up, I would submit to you, is that between 2007, when I said, made those comments, [00:15:59] Speaker 03: And 2010, when the ALI handed down the principles of aggregate litigation, for which I was the reporter, and my quote referred to the work that was being done by the ALI at the time, when that came down, and then after Chief Justice Roberts's comments, [00:16:16] Speaker 03: every circuit in some form or other adopted the ALI principles of aggregate litigation suggestion. [00:16:24] Speaker 03: Now, Mr. Berkowitz says that the Ninth Circuit has a stronger test that it adopted in Nixon. [00:16:30] Speaker 03: The substantial nexus test, the language of the ALI was proximate to the interests of the class, but I think that's a distinction without a difference. [00:16:41] Speaker 03: I think it's all the same test. [00:16:43] Speaker 03: It has to further the interests [00:16:45] Speaker 03: of the class. [00:16:46] Speaker 03: And Nation began the process by which this court assessed whether that had been done. [00:16:52] Speaker 03: Lane continued that, and Google Refer certainly made that, took up that point. [00:16:59] Speaker 03: And in Google Refer, Judge Forrest, you asked about this, Judge McEwen took up the exact arguments [00:17:08] Speaker 03: that Mr. Frank is making here, that there is an obligation, not a permissible outcome, but an obligation to distribute pennies as broadly as you can, and the court rejected that. [00:17:21] Speaker 03: Rejected that to say there's no foundation for that. [00:17:23] Speaker 03: At some point it becomes trivial, it becomes silly, and in fact the heart of Mr. Frank's argument [00:17:29] Speaker 03: is that we should structure a system, we as class council, and we have, I heard the last argument, we have a fiduciary duty as class council, we should structure a system that's premised on the idea that 98% of our class members will get nothing. [00:17:43] Speaker 03: Were we ever to go into an approval process and say, we have a great system here, it's designed so that 98% of our class members get nothing, [00:17:51] Speaker 03: Mr. Frank would be crying bloody murder at the opposition to that because how could we be discharging our responsibility as class counsel? [00:18:00] Speaker 05: Well, of course, the comeback to that is in the settlement that got approved here, 100% of them got nothing. [00:18:06] Speaker 03: Well, that's not the law of this circuit, Your Honor. [00:18:08] Speaker 05: I understand that that's the next best option will do Cypre. [00:18:12] Speaker 03: That is right. [00:18:13] Speaker 05: I guess I want to ask you what I started with your friend across the aisle in terms of the district court seemed to think that we can only assess the amount that's going to be paid and the feasibility, more importantly, I think, based on 100% administration of this settlement. [00:18:33] Speaker 05: And she cites, or sorry, I think it's Dabla, cited Lane for that. [00:18:38] Speaker 05: I see nothing in Lane that speaks to that issue at all. [00:18:41] Speaker 05: And I'm trying to wrestle with what is the district court saying here? [00:18:45] Speaker 03: I think he, I think the district court meant to cite Google refer for that proposition. [00:18:50] Speaker 03: That's the case from the Ninth Circuit where Judge McEwen takes up this argument directly and rejects it. [00:18:55] Speaker 05: And of course, that case is not, that's the case that the Supreme Court vacated, right? [00:19:01] Speaker 03: It vacated on other grounds, and as I understand the rules of this circuit, it continues to have precedential authority as a decision of this court, because it was vacated on other grounds. [00:19:16] Speaker 03: Or it should at least have instructive authority, that that's what that panel... There's a wide gap between [00:19:25] Speaker 05: binding authority and instructive authority. [00:19:27] Speaker 03: I agree. [00:19:27] Speaker 03: I agree. [00:19:28] Speaker 03: Which do you think it is? [00:19:29] Speaker 03: I think it's at the very least instructive. [00:19:34] Speaker 03: I'm not here to argue that it's binding. [00:19:38] Speaker 03: So going back to Rule 23E, what it actually was addressed to was the question of when you have a claims process, making sure that the district court maintains oversight over the distribution of the claims process. [00:19:55] Speaker 03: I want to be careful that I'm not entrenching on Mr. Berkowitz's time. [00:19:59] Speaker 03: So in order not to entrench on his time, I'd like to turn to one point that's a little bit different than what we argued in our brief, and that is the court's discomfort with Cy Prey. [00:20:14] Speaker 03: And I understand that. [00:20:15] Speaker 03: That was the thrust of the ALI principles was [00:20:19] Speaker 03: It's the class's money, give it to them if you can, but be realistic about it. [00:20:25] Speaker 03: And this is a particular kind of case that I think cries out for Cy Prey. [00:20:29] Speaker 03: Not that it should be an exception, but that the court should be thinking about what's really in the best interest of the class. [00:20:37] Speaker 03: Going back to the Cooley torts treatise from 1870 going back to the famous Warren and Brandeis article from 1890 there is a right to be let alone there's a right to privacy, it is difficult to protect that right and in 1890 already. [00:20:54] Speaker 03: Warren and Brandeis were warning that technology was going to expand the scale by which we can invade privacy interests across the country and that the tort system had to address that. [00:21:06] Speaker 03: We are now at a scale that's unimaginable. [00:21:09] Speaker 03: Here we're talking about [00:21:10] Speaker 03: most of the American population that is affected by this. [00:21:14] Speaker 03: And in those circumstances, trying to have something meaningful in order to deter improper behavior and perhaps to protect the class, and I would submit to you that much as Mr. Frank does not like the recipients, [00:21:28] Speaker 03: Judge Davila was particularly impressed with the MIT proposal, as was I, because that's a proposal that says we're trying to develop, through engineering processes, technologies that will allow individuals to monitor the privacy mechanisms that are potentially being infringed through the application of technology. [00:21:49] Speaker 03: I would submit to you that that's much more in the interest [00:21:53] Speaker 03: of the class, which is basically the American population, then is a distribution of a few pennies to a very, very, very small subset of this class. [00:22:04] Speaker 03: And I don't want to take up with [00:22:19] Speaker 02: Good morning, Your Honors, and may it please the Court, Ben Berkowitz for Google. [00:22:23] Speaker 02: I'd like to start, Your Honor, with Judge Forrest's question about where is the authority regarding Mr. Frank's argument that funds should or could be distributed to some members of the class. [00:22:37] Speaker 02: I would point, Your Honors, to page 1114 of Google Street View. [00:22:44] Speaker 02: There, this Court, [00:22:48] Speaker 02: expressly rejected objectors' argument represented by the same counsel in this case, that the standard for feasibility asks only whether some members could receive a payment through a claims-based distribution. [00:23:04] Speaker 02: The court in Street View considered that question and answered, quote, we disagree. [00:23:09] Speaker 02: So I think that is law of the circuit. [00:23:12] Speaker 02: It's also [00:23:12] Speaker 02: been opined on by courts and other circuits in the same answer, that merely because the parties could have agreed to a settlement in which perhaps 1% of class members would have received a payment [00:23:26] Speaker 02: and 99% would have received nothing, even though that may be an agreement that different parties may have agreed to, that's not what the court is evaluating. [00:23:36] Speaker 02: And that goes to, I believe, the Lane issue that the court was referencing and that the district court quoted. [00:23:42] Speaker 02: In Lane, this circuit held that the question in evaluating the district court's review of a settlement [00:23:51] Speaker 02: is not whether the parties agreed to an ideal resolution or an ideal set of CyPrey recipients, but whether one is fair, one that is fair, reasonable, and adequate. [00:24:07] Speaker 05: Your arguments make sense to me for the most part. [00:24:09] Speaker 05: And I think Google Street View is different than this case in the sense that feasibility just seems completely [00:24:15] Speaker 05: unworkable in that case. [00:24:17] Speaker 05: I don't know how you would identify the class, as we've talked about a little bit already. [00:24:21] Speaker 05: Here, I don't think that's true. [00:24:22] Speaker 05: I think that you would be able to find at least some subset of this class. [00:24:29] Speaker 05: So boiling it way down to just common sense, the thing that keeps nagging me is in that situation, when it is feasible to identify some class members, why [00:24:41] Speaker 05: Why is it fair to this class to just forego that entirely and say we think the better thing is to give all this money to public interest organizations? [00:24:53] Speaker 05: And not even try. [00:24:54] Speaker 05: Not even try to go through the class process. [00:24:56] Speaker 05: I could see that if the numbers didn't make sense, right? [00:25:00] Speaker 05: If the administrative costs really would undermine the ability to even pay some subset of class that would show up, but those aren't the numbers here. [00:25:07] Speaker 05: Here, you got at least $30 million even after considering the administrative cost to distribute. [00:25:14] Speaker 02: So there's two, I think there's two answers to that, both in this court's case law and then on the particular facts of this case. [00:25:21] Speaker 02: So in, with respect to this court's case law, the feasibility question is essentially a two-part disjunctive test. [00:25:27] Speaker 02: One is, is there enough money to do a pro rata distribution? [00:25:32] Speaker 02: Here, plainly, the answer to that is no, because you're looking at 25 cents per person before costs and fees of distribution if, as the district court [00:25:43] Speaker 02: I believe at page 31, the cost of distribution here would likely consume the entirety of the settlement, right? [00:25:53] Speaker 05: I don't see how those numbers shake out. [00:25:54] Speaker 05: I mean, based on how it was approved, $42 million is going to go to all the SIPRE entities. [00:26:01] Speaker 05: And the highest administrative cost I think we saw based on the estimates of, I can't remember if it was 3% or 4% of a claim rate would be $8 million. [00:26:09] Speaker 02: That was for, I believe, right, for a tiny percentage of the class, but I think what the court is asking... But isn't all the evidence in the... I mean, I guess this goes to the question I was asking the other side. [00:26:18] Speaker 05: What's the evidence in terms of, in cases like this, how many... what percentage of class actually shows up? [00:26:24] Speaker 05: And everything I've seen is it's a pretty small number. [00:26:27] Speaker 02: I think that, but I think the point, and I wouldn't dispute that in claims made settlements, the percentage of classes that quote unquote show up is typically a small percentage. [00:26:38] Speaker 02: The question under this court's case law in Street View is not whether, and under Lane, is not whether an alternative distribution is possible, but whether or not it is practically feasible. [00:26:52] Speaker 02: And the test for evaluating that [00:26:54] Speaker 02: under all of the Ninth Circuit precedents has been this question of pro rata distribution. [00:26:59] Speaker 02: In Lane, I believe it was something like $1.80 per person. [00:27:04] Speaker 02: In EasySaver Rewards, I believe it was $3 per person. [00:27:07] Speaker 02: Here we're looking at 25 cents per person. [00:27:10] Speaker 05: But is that, I mean, in an unliquidated case like this, [00:27:15] Speaker 05: Does it have to be 25 cents? [00:27:17] Speaker 05: I think I've seen cases where they've sort of set aside a chunk of money for a claims process, went through that process, saw how many claims were actually made, figured out what that pro rata share should be, and then if there was money left, then you do a SIPRI or something like that. [00:27:32] Speaker 05: So there's not a windfall, so to speak, to the people who actually make a claim. [00:27:37] Speaker 05: It seems like there's other ways to do this that would actually get at serving the goal of making sure that class members get some sort of recovery through an action like this. [00:27:45] Speaker 02: So I think, I mean, so there's a couple answers to that. [00:27:47] Speaker 02: Let me give you the case law answer and then let me give you the answer that's related to the specific facts of this case, which I think also gets to the questions you were asking counsel before in terms of the feasibility of identifying the class. [00:27:58] Speaker 02: So in terms of the case law, I think Lane, Street View, Refer, Header, all speak to the fact, as well as EasySaver Rewards, all speak to the fact that it's [00:28:10] Speaker 02: The fact that it is possible that the parties could have reached a different agreement or an agreement that the court might feel or an objectors council might feel is more ideal is not the test. [00:28:21] Speaker 02: The question is whether as a whole we're within the goalposts of the court's case law and clearly in terms of fairness, reasonableness, [00:28:30] Speaker 02: and adequacy, and clearly we are. [00:28:33] Speaker 02: I mean, this is a de minimis under any of the court's cases, 25 cents per person on a pro rata basis is de minimis. [00:28:40] Speaker 02: But let me answer your question about the feasibility of identifying the class members, because I do think this case is closer to Google Street View than it is to in re referr header. [00:28:51] Speaker 02: The reason is has to do with the class definition, which deals not with collection of information or transmission of information, but with storage of information. [00:29:00] Speaker 02: No class member. [00:29:01] Speaker 02: Now remember, this is a class where plaintiffs have alleged Google tracked, among other things, you know, logged out data, anonymized data, de-identified data, synonymous data. [00:29:12] Speaker 02: Class members are simply not going to know [00:29:15] Speaker 02: even if they know whether they had the setting turned off, they are not going to know whether Google stored location information about them in some type of anonymized or de-identified way. [00:29:25] Speaker 02: And this is precisely the issue that came up on the first motion to dismiss in this case in which the [00:29:32] Speaker 02: the class allegations really related to collection. [00:29:36] Speaker 02: We pointed out that there are real problems with that. [00:29:40] Speaker 00: Are you saying that a large percentage of the class was not injured? [00:29:44] Speaker 00: Is that your suggestion? [00:29:46] Speaker 02: My suggestion is that there are going to be problems of proof that like Street View, it is not practically feasible without some large [00:29:57] Speaker 02: forensic project to have a claims verification process. [00:30:03] Speaker 02: So it's precisely the same issue in Street View. [00:30:05] Speaker 01: I thought that Mr. Frank's point was that you just ask people to self-identify, and they'll just tell you that they have location services turned off. [00:30:13] Speaker 01: And then we simply would presume that Google was tracking them without any further obligation to actually prove that. [00:30:19] Speaker 02: And the court considered this issue in Street View. [00:30:21] Speaker 02: I mean, this was part of the court's analysis in Street View, right? [00:30:23] Speaker 02: In Street View, [00:30:24] Speaker 02: The court considers the question, basically says the class members are going to have no way of knowing whether or not Google in fact stored information about them without this expensive forensic project. [00:30:38] Speaker 02: We have the same issue here. [00:30:39] Speaker 05: I mean, I think the problem in Street View is the class members aren't even going to know that the bad thing even happened. [00:30:44] Speaker 05: Because who knows how if somebody [00:30:48] Speaker 05: going by on the sidewalk or on the street or whatever is connecting into your home network. [00:30:52] Speaker 05: Like, how would you even know that? [00:30:53] Speaker 05: But you would know if you had your location services on or off, perhaps. [00:30:56] Speaker 05: I don't know if I do, but. [00:30:58] Speaker 02: Well, you would know. [00:30:58] Speaker 02: I mean, in street view, obviously, the class members would have known whether they had an unencrypted Wi-Fi, right? [00:31:03] Speaker 02: And they would have known whether they lived in cities where Google was doing this. [00:31:06] Speaker 02: I think the question there is the same question here. [00:31:08] Speaker 02: Would they know whether or not location information or, in that case, payload data was actually stored by Google? [00:31:17] Speaker 02: And that's something that was unknowable in that case, and it's unknowable in this case without some expensive forensic investigation. [00:31:26] Speaker 05: I have one more practical question, and that is just, why does Google care? [00:31:30] Speaker 05: I mean, the settlement amount is what it is. [00:31:32] Speaker 05: Why do you care how it gets spent? [00:31:35] Speaker 02: Well, I think in this case, I mean, I think the party's obviously engaged in a very lengthy settlement negotiation process. [00:31:46] Speaker 05: Just protection of the effort and the work which I'm not to minimize deminimizing. [00:31:49] Speaker 02: I understand that that's the interest No, but I what I would say your honor is that the question in this I guess I would push back a little bit on the question only in the following sense the the question for this court and and this is talked about and again in refer header in Lane and Street view is an extremely limited one and [00:32:07] Speaker 02: It's not whether the parties could or should have agreed to a more ideal outcome, either from objectors counsel's perspective or even from the court's perspective. [00:32:16] Speaker 02: It's whether or not the deal that the party struck is fair, reasonable, and adequate. [00:32:22] Speaker 05: What I'm trying to get at is, I understand that's legal standard, I'm trying to get at is there something different for Google if this goes to Cypree entities versus if this goes through a claims process, at least as a first step to see if there can be a distribution? [00:32:35] Speaker 02: I would say I think there are real feasibility practical problems from Google's perspective. [00:32:41] Speaker 02: But I think, again, I don't know that that's part of the standard of review for the court. [00:32:45] Speaker 02: Because I think the question is whether, as a whole, the settlement is fair, reasonable, and adequate. [00:32:51] Speaker 01: Google's going to be on the hook for what, $62 million? [00:32:53] Speaker 01: Is that the bottom line figure? [00:32:55] Speaker 01: They're going to be on the hook for $62 million. [00:32:58] Speaker 01: Whether they give it to the side prey recipients, whether they give it in 25 cent increments to the class members, or whether they held a lottery and just chose one class member and gave it all to the class member. [00:33:13] Speaker 01: They're going to be out $62 million. [00:33:16] Speaker 01: So from Google's perspective, it doesn't really seem to matter, except for one thing. [00:33:19] Speaker 01: And that is that the money that would be used by the CyPrey recipients may actually be used to do things that Google might not enjoy, might not approve, because it will take away from Google's ability to access things, whereas a $0.25 distribution doesn't seem to go very far. [00:33:40] Speaker 02: It is certainly the case that among these CyPrey recipients, there are [00:33:45] Speaker 02: recipients who have sued Google, who have brought cases against Google, and so forth. [00:33:51] Speaker 02: So I would agree with that summary. [00:33:56] Speaker 00: All right. [00:33:56] Speaker 00: Do you have any other questions? [00:33:59] Speaker 00: Thank you. [00:34:00] Speaker 02: Thank you, Your Honors. [00:34:01] Speaker 00: We have some time for rebuttal. [00:34:09] Speaker 04: Thank you, Your Honor. [00:34:10] Speaker 04: To answer Judge Forrest's question where in the record was the claims rate evidence, and that's at 3ER 389 through 390, where we cite several cases, several declarations from other cases from settlement administrators, all of which say you can expect a claims rate of well under 2%. [00:34:30] Speaker 05: Was there any challenge from the other side to the validity of that evidence? [00:34:34] Speaker 04: They gave counter anecdotal examples for cases like Facebook BIPA where the claims rate was 22% because they were making hundreds of dollars available and there was direct notice and it was a relatively small class. [00:34:47] Speaker 05: I guess what I'm getting at is was there any challenge that the district court couldn't consider, couldn't properly consider that information that you presented? [00:34:54] Speaker 04: The argument was is that the district court didn't need to consider that information. [00:34:58] Speaker 04: And again, I would... [00:35:02] Speaker 04: My friend Sam says that the adoption of ALL 3.09 by every Court of Appeals makes moot any need for the Rules Committee to consider, so I pray. [00:35:19] Speaker 04: That wasn't what happened at the World's Committee. [00:35:21] Speaker 04: There was just a lot of dispute and they said, let's let it percolate in the courts some more. [00:35:26] Speaker 04: But I think even the premise is wrong because Google Street View expressly rejects 3.09. [00:35:32] Speaker 04: 3.09 would reject this settlement because the money is going to class councils, alma maters, a board. [00:35:41] Speaker 04: The class council sits on the board of one of the largest recipients. [00:35:47] Speaker 04: There are all sorts of [00:35:49] Speaker 04: Prior representations and and inner relationships between the class council defense council and the recipients that would be impermissible under 3.09 and We're not raising at this stage solely because Street View has already ruled that out I Asked mr. Berkowitz. [00:36:11] Speaker 01: It's more of a policy question. [00:36:13] Speaker 01: Google is going to be on the hook for 62 million dollars there that that [00:36:16] Speaker 01: That's coming out of their bank account, no matter what we decide here today. [00:36:20] Speaker 01: The only question is, who do you cut the check to? [00:36:22] Speaker 01: Do you have to cut a whole bunch of checks for 25 cents? [00:36:25] Speaker 01: You cut one big check to somebody, we could have a lottery. [00:36:28] Speaker 01: That would generate a lot of interest among class members, and might generate a much, much better return rate, making people aware of what Google had done here. [00:36:42] Speaker 01: From some perspective, that might be a better outcome. [00:36:45] Speaker 04: uh... and there are a lot of your articles suggesting that that one reason defendants like side praise because then the class never finds out what the allegations are against them uh... on the on the other hand if you if you're if the ACLU is going to be engaging in in [00:37:00] Speaker 01: in litigation or EFF or the Berkman Center is undertaking studies that say big corporations that access the internet like Google and Facebook are stealing your privacy. [00:37:11] Speaker 01: Or if MIT is working on technology that will sort of counter what Google did. [00:37:16] Speaker 01: That feels like that's maybe more beneficial in the long run. [00:37:22] Speaker 01: So these are policy questions, not strict legal questions. [00:37:25] Speaker 01: I'm just trying to figure out. [00:37:26] Speaker 04: And let me throw in another policy issue, which is that the class action is not a substantive law. [00:37:33] Speaker 04: It's a procedural device. [00:37:35] Speaker 04: It's a method of aggregating claims. [00:37:39] Speaker 04: And you still have attorneys who are representing class members and have fiduciary duties to those class members. [00:37:45] Speaker 04: So let's take a possible client who everybody agrees is odious. [00:37:50] Speaker 04: Let's say an attorney is representing Jeffrey Epstein and has access to a pot of Jeffrey Epstein's money and says, you know, this money would be much better for society if I just take it and give it to sexual abuse victims. [00:38:03] Speaker 04: And I think 100 out of 100 people would agree that, yes, that money is better off going to sexual abuse victims than staying in Jeffrey Epstein's bank account. [00:38:12] Speaker 04: But if the attorney did that, [00:38:14] Speaker 04: be criminally prosecuted, he'd be disbarred. [00:38:17] Speaker 04: You can't take your client's money and say, you know, I think I have a better way to spend it than you do. [00:38:24] Speaker 04: And all we're saying is that class members should have rights at least equal to Jeffrey Epstein's. [00:38:32] Speaker 01: So to push this just a little bit now. [00:38:36] Speaker 01: So do the class representatives have an obligation to all of their class representatives and an obligation to treat them equally? [00:38:43] Speaker 01: And treating them equally would say, instead of giving you an equal settlement, I'm going to give it out to all of you who respond. [00:38:53] Speaker 01: All of you who are paying attention or have time to fill out a form or return the postcard or whatever it is. [00:38:59] Speaker 04: I think that's absolutely a problem with the underlying class action system as a whole. [00:39:06] Speaker 04: And that's, I think, the problem with opposing counsel's interpretation of feasibility and Rule 23, E2, C2, because that's every class action. [00:39:17] Speaker 04: Every class action, except maybe one or two a year, maybe four or five a decade, where they just [00:39:26] Speaker 04: deposit the money in your bank account because the money is big enough and the defendant is a bank and so they just augment people's bank accounts. [00:39:37] Speaker 04: But every other one, we settle for a claims process and we necessarily settle for a claims process and the reality is it's not worth it for most class members to respond to these things. [00:39:47] Speaker 04: You get the postcards in the mail. [00:39:51] Speaker 04: I imagine that even sophisticated consumers like this court get these postcards in the mail and then don't spend the time filling them out to make their claims. [00:39:59] Speaker 01: So what's the public interest then in authorizing a settlement when we know that only three percent of class members will ever see anything from it? [00:40:08] Speaker 04: I think that that's a real existential question for Rule 23 and consumer class actions as a whole, but we've [00:40:18] Speaker 04: determined that we can aggregate these consumer class actions and you can have claims processes, and it's either good enough for everybody or good enough for nobody. [00:40:34] Speaker 04: They are proposing a rule where the exception for Cy Prey swallows everything. [00:40:39] Speaker 04: Every single settlement out there can be turned into Cy Prey if you adopt the rule. [00:40:44] Speaker 04: Well, it's just minimus because if you average out every single class member across what we're being offered to compromise claims that are pretty small to begin with, it's going to be $2 or $3 a class member. [00:40:58] Speaker 04: That's going to be de minimus. [00:41:00] Speaker 04: And only one or two. [00:41:02] Speaker 04: And what's wrong with that? [00:41:04] Speaker 04: I mean certainly certainly there would there be a constitutional objection if Congress adopted a side prey rule if Congress adopted that rule that instead of having a procedural device to aggregate litigation we have a substantive cause of action where a [00:41:20] Speaker 04: Attorneys can act as private attorneys general and then funnel the money. [00:41:25] Speaker 04: You know, Brian Fitzpatrick says you get just as much deterrence if you just set the money on fire. [00:41:30] Speaker 04: And certainly charity would be preferable to that, though, then I think we need to start. [00:41:36] Speaker 01: I answer my question. [00:41:38] Speaker 01: Would there be a constitutional objection to Congress adopting a Cypre rule? [00:41:44] Speaker 04: I mean, that's an interesting question, whether there's a taking that you're depriving class members of extinguishing rights that they would have otherwise. [00:41:55] Speaker 04: And the Supreme Court seems to be going the other way, right? [00:42:01] Speaker 01: They had that recent bankruptcy case. [00:42:03] Speaker 01: Mr. Pratt, if there would be a constitutional objection to Congress adopting a Cypree rule, wouldn't there be the same constitutional objection to this court adopting a Cypree rule? [00:42:17] Speaker 01: That's an all-out assault on Cypre, if I read your answer correctly. [00:42:23] Speaker 01: That may be your position. [00:42:25] Speaker 01: Maybe that's what you're thinking when you go home at night. [00:42:27] Speaker 01: But it's an odd answer in this context. [00:42:30] Speaker 04: We haven't yet contemplated a constitutional challenge, because I think just Rule 23 covers it. [00:42:36] Speaker 04: And basic attorney fiduciary duty to clients covers it. [00:42:39] Speaker 00: I thought you were saying that such a legislation would be substantive and here the rule is procedural. [00:42:46] Speaker 00: You're changing the law. [00:42:47] Speaker 00: Yeah, you'd be changing the law. [00:42:49] Speaker 04: You're creating this new substantive cause of action that says give the money. [00:42:56] Speaker 04: You do have one congressional provision creating SIPRE actually. [00:43:00] Speaker 04: I think it's in Section 1712, 28 U.S.C. [00:43:04] Speaker 04: 1712 around there, maybe 13 or 14. [00:43:10] Speaker 04: But where in coupon settlements you can distribute some of the coupons to non-profits but then attorneys can't get attorney's fees for doing so. [00:43:21] Speaker 00: Okay, you're over time now so unless there are any other questions. [00:43:28] Speaker 00: We thank both sides for the argument. [00:43:30] Speaker 00: The case of Pataxel and Andrin against Google is submitted. [00:43:37] Speaker 00: And we're adjourned for this session.