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Federal Judge Rejects $125m Google Books Settlement
By Philip Yen – Edited by Chinh Vo

The Authors Guild, et al. v. Google Inc., No. 05 Civ. 8136 (S.D.N.Y. Mar. 22, 2011)
hosted by The Authors Guild

Circuit Judge Denny Chin, sitting for the United States District Court for the Southern District of New York, rejected the $125 million Google Books class action settlement agreement between the Internet giant and groups representing authors and publishers. The court said that the deal went “too far” and held that the settlement was not fair, adequate, and reasonable.

Under Rule 23(e) of the Federal Rules of Civil Procedure, a settlement of a class action requires approval of the court. This will only be given if the court determines that the settlement was “fair, adequate, and reasonable.” Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir. 2000). Although recognizing the many benefits that the Google Book Project could yield, the district court identified a number of countervailing policy considerations that weighed against approving the agreement. In particular, the court was concerned that the proposed settlement would release claims well beyond the scope of the pleadings, overreach into copyright regulation (a realm better left to Congress), give Google a monopoly on certain types of books, and implicate international law. Additionally, the court found that the plaintiffs had not adequately represented the interests of certain class members.

The Copyright Litigation Blog provides an overview of the case. The Electronic Frontier Foundation praises the court’s acknowledgment of privacy concerns and class action analysis, but takes issue with some of the its treatment of copyright law.

This decision marks the latest milestone in the protracted legal dispute between Google and the class of authors and publishers. In 2004, Google entered into agreements with “several major research libraries to digitally copy books and other writings in their collections.” It provided these and other public-domain books on Google Book Search. During this time, however, Google also scanned and provided snippets of copyrighted books without permission, claiming that doing so fell under the fair use exception of the Copyright Act. As a consequence, in 2005, certain authors and publishers brought this class action and the related case against Google. The parties began settlement negotiations in the fall of 2006, but the original proposed settlement was not filed and given preliminary approval until 2008. Notice of the settlement triggered a flood of objections. In response, the parties submitted and the district court preliminarily approved the amended settlement agreement in 2009. This yielded yet another multitude of objections, followed by this rejection of the agreement.

In holding as it did, the Court considered the “the Grinnell factors: (1) the complexity, expense, and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining a class action through trial; (7) the ability of defendants to withstand greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund in light of the attendant risks of litigation.” City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974). Although finding that only two of the Grinnell factors weighed against approval of the settlement—the reaction of the class and defendant’s ability to withstand judgment—the Court found that the numerous and significant objections lodged by members of the class justified rejecting the settlement. The Court did, however, reject objections based on inadequacy of the class notice and privacy.

Although the parties can appeal within 30 days, Scrivener’s Error predicts that an appeal to the Second Circuit would be unlikely to succeed. The 1709 Blog suggests that there are only two workable solutions for a new settlement agreement: either make the settlement “opt-in” rather than “opt-out” or limit the settlement so that it only covers past uses of works in Google Book Search. The New York Times suggests that if adjudication seems unlikely, the parties’ best course of action may be to lobby Congress.

Philip Yen is a 3L at the Harvard Law School.

Posted On Apr - 2 - 2011 Comments Off

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