Frank v. Gaos

of all others similarly situated, et al.

certiorari to the united states court of appeals for

the ninth circuit No. 17–961. Argued October 31, 2018—Decided March 20, 2019 Three named plaintiffs (including Paloma Gaos) brought class action claims against Google for alleged violations of the Stored Communications Act, 18 U. S. C. § 2701 et seq. Over the course of litigation below, Google moved to dismiss for lack of standing three times. As relevant here, when the District Court held that Gaos had standing to assert an SCA claim, the District Court rested its conclusion on Edwards v. First American Corp ., 610 F. 3d 514—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 violated the statute. Gaos v. Google, 2012 WL 1094646, *3. After a second amended complaint was filed, Google again moved to dismiss, chal-lenging standing and noting that this Court had agreed to review the decision in Edwards on which the District Court previously relied. This Court eventually dismissed Edwards as improvidently granted, 567 U. S. 756 (per curiam ), and Google then withdrew its argument that the plaintiffs lacked standing to assert SCA claims. On the merits, the parties ultimately 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. 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. After a hearing, the District Court granted final approval of the settlement, and Frank and Holyoak appealed. While the appeal was pending in the Ninth Circuit, but prior to decision by that court, this Court issued Spokeo, Inc. v. Robins, 578 U. S. 330, in which the Court held that “Article III standing requires a concrete injury even in the context of a statutory violation.” Id., at 341. Spokeo rejected the premise, relied on 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 341. A divided panel of the Ninth Circuit affirmed the settlement, without addressing Spokeo. In

re Google Referrer Header Privacy Litigation, 869 F. 3d 737. This Court granted certiorari to review whether cy pres settlements satisfy the requirement that class settlements be “fair, reasonable, and adequate.” Fed. Rule Civ. Proc. 23(e)(2). The Solicitor General filed a brief as amicus curiae urging the Court to vacate and remand the case for the lower courts to address whether any named plaintiff in the class action actually had standing in the District Court. After oral argument, the Court ordered supplemental briefing on the standing question. Held: Because there remain substantial questions about whether any of the named plaintiffs has standing to sue in light of the Court's decision in Spokeo, the judgment of the Ninth Circuit is vacated, and the case remanded. The Court has an obligation to ensure that litigants have standing under Article III. See DaimlerChrysler Corp . v. Cuno , 547 U. S. 332, 340. That obligation extends to court approval of proposed class action settlements. In a class action, the “claims, 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 jurisdiction if no named plaintiff has standing. Simon v. Eastern Ky. Welfare Rights Organization, 426 U. S. 26, 40, n. 20. Here, no court in this case has analyzed whether any named plaintiff has alleged SCA violations in the operative complaint that are sufficiently concrete and particularized to support standing. The supplemental briefs filed after oral argument raise a wide variety of legal and factual issues not addressed in the merits briefing before the Court or at oral argument. This is “a court of review, not of first view.” Cutter v. Wilkinson, 544 U. S. 709, 718, n. 7. Resolution of the standing question should first take place in the District Court or the Ninth Circuit. 869 F. 3d 737, vacated and remanded.

Theodore H . Frank, pro se, argued the cause for petitioners. With him on the briefs were Melissa Holyoak, pro se, and Anna St. John.

Deputy Solicitor General Wall argued the cause for the United States as amicus curiae urging vacatur. With him on the brief were Solicitor General Francisco , Acting Assistant Attorney General Readler , Charles W. Scarborough, and Katherine Twomey Allen.

Andrew J . Pincus argued the cause for respondent Google LLC. On the brief were Donald M. Falk, Edward D . John-

son, Brian D . Netter, and Daniel E. Jones. Jeffrey A. Lam-ken argued the cause for respondent Gaos et al. With him on the briefs were Michael G. Pattillo, Jr., James A. Barta, William J . Cooper , Kassra P . Nassiri , and Michael Aschenbrener.*

Three named plaintiffs brought class action claims against Google for alleged violations of the Stored Communications 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. 330 (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 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

Public Citizen, Inc., et al. by Allison M. Zieve, Scott L. Nelson, and Adina H . Rosenbaum; and for William B. Rubenstein by Mr. Rubenstein, pro se.

Briefs of amici curiae were filed for the American Bar Association by Hilarie Bass, Rex S. Heinke , and Jessica Weisel; for the Chamber of Commerce of the United States of America by Ashley C . Parrish and Justin A. Torres; for Law Professors by Lori B . Andrews; for Legal Aid Organizations by Wilber H . Boies and M. Miller Baker; for the National Consumer Law Center et al. by Stuart Rossman and Michael Landis; for Spectrum Settlement Recovery, LLC, by Howard L . Yellen, Hugh C . D . Alexander , Eric L. Lewis, and James P . Davenport; for Roy A. Katriel by Mr. Katriel, pro se; and for David Lowrey et al. by Antigone G . Peyton.

Paloma Gaos challenged Google's use of referrer headers. She filed a complaint in Federal District Court on behalf of herself and a putative class of people who conducted 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 aggrieved 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 “flailed 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 particular, 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 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 communications, and because Gaos alleged a violation of the SCA that was specific to her (i. e., based on a search she conducted), Gaos alleged a concrete and particularized injury. Gaos v. Google

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 additional 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 flailed 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 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 amenable to individ-

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. 330 (2016). In Spokeo, we held that “Article III standing requires a concrete injury even in the context of a statutory violation.” Id., at 341. We rejected the premise, relied on in the decision then under review 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 341; see also id., at 336–337. 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

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 standing in the District Court. Because Google with-drew its standing challenge after we dismissed Edwards as improvidently 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 omitted). That obligation extends to court approval of proposed 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, 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 jurisdiction if no named plaintiff has standing. Simon v. Eastern Ky. Welfare Rights Organization, 426 U. S. 26, 40, n. 20 (1976).

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 opinion should be interpreted as expressing a view on any particular resolution of the standing question.

* * *

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.

Justice Thomas, dissenting.

Respectfully, I would reach the merits and reverse. As I have previously explained, a plaintiff seeking to vindicate a

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 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 litigation; the rest, to plaintiffs' lawyers, administrative costs, and incentive payments for the named plaintiffs. Ante , at 490–491. The District Court and the Court of Appeals approved this arrangement on the view that the cy pres payments provided an “indirect” benefit to the class. In re Google Referrer Header Privacy

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 members and should not be treated as such (including when calculating attorney's fees). And the settlement agreement here provided no other form of meaningful relief to the class. This cy pres-only arrangement flailed 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 representation). Second, the lack of any benefit for the class rendered 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 efficiently 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.

The next page is purposely numbered 801. The numbers between 495 and 801 were intentionally omitted, in order to make it possible to publish the orders with permanent page numbers, thus making the official citations available upon publication of the preliminary prints of the United States Reports.