Court Opinion

ID: 4378645
Source: CourtListenerOpinion
Date Created: 2019-03-20 15:00:33.486876+00
Date Added: 2024-06-11T14:49:06.847559
License: Public Domain

(Slip Opinion)            Cite as: 586 U. S. ____ (2019)                              1

                                     Per Curiam

       NOTICE: This opinion is subject to formal revision before publication in the
       preliminary print of the United States Reports. Readers are requested to
       notify the Reporter of Decisions, Supreme Court of the United States, Wash-
       ington, D. C. 20543, of any typographical or other formal errors, in order
       that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES
                                     _________________

                                     No. 17–961
                                     _________________

    THEODORE H. FRANK, ET AL., PETITIONERS v.
   PALOMA GAOS, INDIVIDUALLY AND ON BEHALF OF ALL
         OTHERS SIMILARLY SITUATED, ET AL.

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
            APPEALS FOR THE NINTH CIRCUIT
                                  [March 20, 2019]

   PER CURIAM.
   Three named plaintiffs brought class action claims
against Google for alleged violations of the Stored Com-
munications Act. The parties negotiated a settlement
agreement that would require Google to include certain
disclosures on some of its webpages and would distribute
more than $5 million to cy pres recipients, more than $2
million to class counsel, and no money to absent class
members. We granted certiorari to review whether such
cy pres settlements satisfy the requirement that class
settlements be “fair, reasonable, and adequate.” Fed. Rule
Civ. Proc. 23(e)(2). Because there remain substantial
questions about whether any of the named plaintiffs has
standing to sue in light of our decision in Spokeo, Inc. v.
Robins, 578 U. S. ___ (2016), we vacate the judgment of
the Ninth Circuit and remand for further proceedings.
   Google operates an Internet search engine. The search
engine allows users to search for a word or phrase by
typing a query into the Google website. Google returns a
list of webpages that are relevant to the indicated term or
2                     FRANK v. GAOS

                         Per Curiam

phrase. The complaints alleged that when an Internet
user conducted a Google search and clicked on a hyperlink
to open one of the webpages listed on the search results
page, Google transmitted information including the terms
of the search to the server that hosted the selected
webpage. This so-called referrer header told the server
that the user arrived at the webpage by searching for
particular terms on Google’s website.
   Paloma Gaos challenged Google’s use of referrer head-
ers. She filed a complaint in Federal District Court on
behalf of herself and a putative class of people who con-
ducted a Google search and clicked on any of the resulting
links within a certain time period. Gaos alleged that
Google’s transmission of users’ search terms in referrer
headers violated the Stored Communications Act, 18
U.S. C. §2701 et seq. The SCA prohibits “a person or
entity providing an electronic communication service to
the public” from “knowingly divulg[ing] to any person or
entity the contents of a communication while in electronic
storage by that service.” §2702(a)(1). The Act also creates
a private right of action that entitles any “person ag-
grieved by any violation” to “recover from the person or
entity, other than the United States, which engaged in
that violation such relief as may be appropriate.”
§2707(a). Gaos also asserted several state law claims.
   Google moved to dismiss for lack of standing three
times. Its first attempt was successful. The District Court
reasoned that although “a plaintiff may establish standing
through allegations of violation of a statutory right,” Gaos
had “failed to plead facts sufficient to support a claim for
violation of her statutory rights.” Gaos v. Google, Inc.,
2011 WL 7295480, *3 (ND Cal., Apr. 7, 2011). In particu-
lar, the court faulted Gaos for failing to plead “that she
clicked on a link from the Google search page.” Ibid.
   After Gaos filed an amended complaint, Google again
moved to dismiss. That second attempt was partially
                 Cite as: 586 U. S. ____ (2019)           3

                          Per Curiam

successful. The District Court dismissed Gaos’ state law
claims, but denied the motion as to her SCA claims. The
court reasoned that because the SCA created a right to be
free from the unlawful disclosure of certain communica-
tions, and because Gaos alleged a violation of the SCA
that was specific to her (i.e., based on a search she con-
ducted), Gaos alleged a concrete and particularized injury.
Gaos v. Google Inc., 2012 WL 1094646, *4 (ND Cal., Mar.
29, 2012). The court rested that conclusion on Edwards v.
First American Corp., 610 F.3d 514 (2010)—a Ninth
Circuit decision reasoning that an Article III injury exists
whenever a statute gives an individual a statutory cause
of action and the plaintiff claims that the defendant vio-
lated the statute. 2012 WL 1094646, *3.
   After the District Court ruled on Google’s second motion
to dismiss, we granted certiorari in Edwards to address
whether an alleged statutory violation alone can support
standing. First American Financial Corp. v. Edwards, 564
U.S. 1018 (2011). In the meantime, Gaos and an addi-
tional named plaintiff filed a second amended complaint
against Google. Google once again moved to dismiss.
Google argued that the named plaintiffs did not have
standing to bring their SCA claims because they had failed
to allege facts establishing a cognizable injury. Google
recognized that the District Court had previously relied on
Edwards to find standing based on the alleged violation of
a statutory right. But because this Court had agreed to
review Edwards, Google explained that it would continue
to challenge the District Court’s conclusion. We eventually
dismissed Edwards as improvidently granted, 567 U.S.
756 (2012) (per curiam), and Google then withdrew its
argument that Gaos lacked standing for the SCA claims.
   Gaos’ putative class action was consolidated with a
similar complaint, and the parties negotiated a classwide
settlement. The terms of their agreement required Google
to include certain disclosures about referrer headers on
4                      FRANK v. GAOS

                          Per Curiam

three of its webpages. Google could, however, continue its
practice of transmitting users’ search terms in referrer
headers. Google also agreed to pay $8.5 million. None of
those funds would be distributed to absent class members.
Instead, most of the money would be distributed to six cy
pres recipients. In the class action context, cy pres refers
to the practice of distributing settlement funds not ame-
nable to individual claims or meaningful pro rata distribu-
tion to nonprofit organizations whose work is determined
to indirectly benefit class members. Black’s Law Diction-
ary 470 (10th ed. 2014). In this case, the cy pres recipients
were selected by class counsel and Google to “promote
public awareness and education, and/or to support re-
search, development, and initiatives, related to protecting
privacy on the Internet.” App. to Pet. for Cert. 84. The
rest of the funds would be used for administrative costs
and fees, given to the named plaintiffs in the form of
incentive payments, and awarded to class counsel as
attorney’s fees.
   The District Court granted preliminary certification of
the class and preliminary approval of the settlement. Five
class members, including petitioners Theodore Frank and
Melissa Holyoak, objected to the settlement on several
grounds. They complained that settlements providing
only cy pres relief do not comply with the requirements of
Rule 23(e), that cy pres relief was not justified in this case,
and that conflicts of interest infected the selection of the
cy pres recipients. After a hearing, the District Court
granted final approval of the settlement.
   Frank and Holyoak appealed. After briefing before the
Ninth Circuit was complete, but prior to decision by that
court, we issued our opinion in Spokeo, Inc. v. Robins, 578
U. S. ___ (2016). In Spokeo, we held that “Article III
standing requires a concrete injury even in the context of a
statutory violation.” Id., at ___ (slip op., at 9). We rejected
the premise, relied on in the decision then under review
                  Cite as: 586 U. S. ____ (2019)             5

                           Per Curiam

and in Edwards, that “a plaintiff automatically satisfies
the injury-in-fact requirement whenever a statute grants a
person a statutory right and purports to authorize that
person to sue to vindicate that right.” 578 U. S., at ___
(slip op., at 9); see also id., at ___ (slip op., at 5). Google
notified the Ninth Circuit of our opinion.
   A divided panel of the Ninth Circuit affirmed, without
addressing Spokeo. In re Google Referrer Header Privacy
Litigation, 869 F.3d 737 (2017). We granted certiorari,
584 U. S. ___ (2018), to decide whether a class action
settlement that provides a cy pres award but no direct
relief to class members satisfies the requirement that a
settlement binding class members be “fair, reasonable,
and adequate.” Fed. Rule Civ. Proc. 23(e)(2).
   In briefing on the merits before this Court, the Solicitor
General filed a brief as amicus curiae supporting neither
party. He urged us to vacate and remand the case for the
lower courts to address standing. The Government argued
that there is a substantial open question about whether
any named plaintiff in the class action actually had stand-
ing in the District Court. Because Google withdrew its
standing challenge after we dismissed Edwards as im-
providently granted, neither the District Court nor the
Ninth Circuit ever opined on whether any named plaintiff
sufficiently alleged standing in the operative complaint.
   “We have an obligation to assure ourselves of litigants’
standing under Article III.” DaimlerChrysler Corp. v.
Cuno, 547 U.S. 332, 340 (2006) (quoting Friends of the
Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc.,
528 U.S. 167, 180 (2000); internal quotation marks omit-
ted). That obligation extends to court approval of pro-
posed class action settlements. In ordinary non-class
litigation, parties are free to settle their disputes on their
own terms, and plaintiffs may voluntarily dismiss their
claims without a court order. Fed. Rule Civ. Proc.
41(a)(1)(A). By contrast, in a class action, the “claims,
6                      FRANK v. GAOS

                          Per Curiam

issues, or defenses of a certified class—or a class proposed
to be certified for purposes of settlement—may be settled,
voluntarily dismissed, or compromised only with the
court’s approval.” Fed. Rule Civ. Proc. 23(e). A court is
powerless to approve a proposed class settlement if it lacks
jurisdiction over the dispute, and federal courts lack juris-
diction if no named plaintiff has standing. Simon v. East-
ern Ky. Welfare Rights Organization, 426 U.S. 26, 40,
n. 20 (1976).
   When the District Court ruled on Google’s second mo-
tion to dismiss, it relied on Edwards to hold that Gaos had
standing to assert a claim under the SCA. Our decision in
Spokeo abrogated the ruling in Edwards that the violation
of a statutory right automatically satisfies the injury-in-
fact requirement whenever a statute authorizes a person
to sue to vindicate that right. 578 U. S., at ___ (slip op., at
9); see Edwards, 610 F.3d, at 517–518. Since that time,
no court in this case has analyzed whether any named
plaintiff has alleged SCA violations that are sufficiently
concrete and particularized to support standing. After
oral argument, we ordered supplemental briefing from the
parties and Solicitor General to address that question.
   After reviewing the supplemental briefs, we conclude
that the case should be remanded for the courts below to
address the plaintiffs’ standing in light of Spokeo. The
supplemental briefs filed in response to our order raise a
wide variety of legal and factual issues not addressed in
the merits briefing before us or at oral argument. We “are
a court of review, not of first view.” Cutter v. Wilkinson,
544 U.S. 709, 718, n. 7 (2005). Resolution of the standing
question should take place in the District Court or the
Ninth Circuit in the first instance. We therefore vacate
and remand for further proceedings. Nothing in our opin-
ion should be interpreted as expressing a view on any
particular resolution of the standing question.
                 Cite as: 586 U. S. ____ (2019)                  7

                          Per Curiam

                       *     *    *
  The judgment of the United States Court of Appeals for
the Ninth Circuit is vacated, and the case is remanded for
further proceedings consistent with this opinion.

                                                  It is so ordered.
                  Cite as: 586 U. S. ____ (2019)            1

                     THOMAS, J., dissenting

SUPREME COURT OF THE UNITED STATES
                          _________________

                           No. 17–961
                          _________________

   THEODORE H. FRANK, ET AL., PETITIONERS v.
  PALOMA GAOS, INDIVIDUALLY AND ON BEHALF OF ALL
        OTHERS SIMILARLY SITUATED, ET AL.

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
            APPEALS FOR THE NINTH CIRCUIT
                        [March 20, 2019]

    JUSTICE THOMAS, dissenting.
    Respectfully, I would reach the merits and reverse. As I
have previously explained, a plaintiff seeking to vindicate
a private right need only allege an invasion of that right to
establish standing. Spokeo, Inc. v. Robins, 578 U. S. ___,
___ (2016) (concurring opinion) (slip op., at 6). Here, the
plaintiffs alleged violations of the Stored Communications
Act, which creates a private right: It prohibits certain
electronic service providers from “knowingly divulg[ing]
. . . the contents of a communication” sent by a “ ‘user,’ ”
“subscriber,” or “customer” of the service, except as pro-
vided in the Act. 18 U.S. C. §§2510(13), 2702(a)(1)–(2),
(b); see §2707(a) (providing a cause of action to persons
aggrieved by violations of the Act). They also asserted
violations of private rights under state law. By alleging
the violation of “private dut[ies] owed personally” to them
“ ‘as individuals,’ ” Spokeo, supra, at ___, ___ (opinion of
THOMAS, J.) (slip op., at 7, 2), the plaintiffs established
standing. Whether their allegations state a plausible
claim for relief under the Act or state law is a separate
question on which I express no opinion.
    As to the class-certification and class-settlement orders,
I would reverse. The named plaintiffs here sought to
simultaneously certify and settle a class action under
2                          FRANK v. GAOS

                         THOMAS, J., dissenting

Federal Rules of Civil Procedure 23(b)(3) and (e). Yet the
settlement agreement provided members of the class no
damages and no other form of meaningful relief.* Most of
the settlement fund was devoted to cy pres payments to
nonprofit organizations that are not parties to the litiga-
tion; the rest, to plaintiffs’ lawyers, administrative costs,
and incentive payments for the named plaintiffs. Ante, at
3–4. The District Court and the Court of Appeals ap-
proved this arrangement on the view that the cy pres
payments provided an “indirect” benefit to the class. In re
Google Referrer Header Privacy Litigation, 87 F. Supp. 3d
1122, 1128–1129, 1137 (ND Cal. 2015); In re Google Refer-
rer Header Privacy Litigation, 869 F.3d 737, 741 (CA9
2017).
   Whatever role cy pres may permissibly play in disposing
of unclaimed or undistributable class funds, see Klier v.
Elf Atochem North Am., Inc., 658 F.3d 468, 474–476 (CA5
2011); id., at 480–482 (Jones, C. J., concurring), cy pres
payments are not a form of relief to the absent class mem-
bers and should not be treated as such (including when
calculating attorney’s fees). And the settlement agree-
ment here provided no other form of meaningful relief to
the class. This cy pres-only arrangement failed several
requirements of Rule 23. First, the fact that class counsel
and the named plaintiffs were willing to settle the class
claims without obtaining any relief for the class—while
securing significant benefits for themselves—strongly
suggests that the interests of the class were not adequately
represented. Fed. Rules Civ. Proc. 23(a)(4), (g)(4); see
Amchem Products, Inc. v. Windsor, 521 U.S. 591, 619–620
(1997) (settlement terms can inform adequacy of represen-

——————
   *The settlement required that Google make additional disclosures on
its website for the benefit of “future users.” App. to Pet. for Cert. 50.
But no party argues that these disclosures were valuable enough on
their own to independently support the settlement.
                 Cite as: 586 U. S. ____ (2019)           3

                    THOMAS, J., dissenting

tation). Second, the lack of any benefit for the class ren-
dered the settlement unfair and unreasonable under Rule
23(e)(2). Further, I question whether a class action is
“superior to other available methods for fairly and effi-
ciently adjudicating the controversy” when it serves only
as a vehicle through which to extinguish the absent class
members’ claims without providing them any relief. Fed.
Rule Civ. Proc. 23(b)(3); see Rule 23(b)(3)(A) (courts must
consider “the class members’ interests in individually
controlling the prosecution . . . of separate actions”).
  In short, because the class members here received no
settlement fund, no meaningful injunctive relief, and no
other benefit whatsoever in exchange for the settlement of
their claims, I would hold that the class action should not
have been certified, and the settlement should not have
been approved.