April 13, 2015

Google Settlement With FTC Deflates Copycat Class Action

Seller Beware: Consumer Protection Insights for Industry

Google last week prevailed in asking a California federal court to essentially end a class action lawsuit that sought the same relief as a Federal Trade Commission (FTC) investigation that Google settled in September of last year. The result should give pause to plaintiff's attorneys who seek to invest their resources in copycat lawsuits against companies that are already the subject of FTC investigations.

Denying any wrongdoing, Google settled FTC allegations that it unlawfully billed parents without their consent for in-app purchases made by their children when using games on devices such as smart phones and tablets. As part of that settlement, Google agreed to refund at least $19 million to affected consumers.

In addition to the FTC investigation, Google was also forced to defend a class action lawsuit based on similar allegations and seeking similar relief. After its settlement with the FTC became final, Google brought an affirmative motion to deny class certification in the class action lawsuit. Google's motion was not based on the notion that the FTC settlement was res judicata. Instead, Google argued that the plaintiffs would be unable to satisfy the superiority and adequacy requirements for class certification under Rule 23 of the Federal Rules of Civil Procedure. The court agreed with Google's reasoning that the proposed class had already been given all the relief it could reasonably expect in the form of an avenue to obtain complete refunds and injunctive relief, and that by allowing the class action to proceed, the court would waste judicial resources and potentially reduce the amount of relief available to the class.

Google's argument could be emulated by other companies facing overlapping enforcement action by both regulatory agencies and class action plaintiff's lawyers. The result in this case should also make plaintiff's lawyers think twice about duplicating the efforts of the FTC.

© Arnold & Porter Kaye Scholer LLP 2015 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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