Google Won’t Face Group E-Mail Privacy Lawsuit: Judge

Google Inc. (GOOG) won a major victory in its fight against claims it illegally scanned private e-mail messages to and from Gmail accounts, defeating a bid to unify lawsuits in a single group case on behalf of hundreds of millions of Internet users.

U.S. District Judge Lucy Koh in San Jose, California, yesterday refused to let the case proceed as a class action, which would have allowed plaintiffs to pool resources and put greater pressure on Google to settle. If individuals pursue their claims against the owner of world’s largest search engine, they’ll need to use their own financial resources to litigate.

E-mail users claimed Google intercepted, read and mined the content of e-mail messages for targeted advertising and to build user profiles. Legal experts including Stanford Law School Professor Deborah Hensler said before yesterday’s ruling that while the plaintiffs faced difficulty joining forces, the case stood to potentially become the largest group lawsuit ever. The amount at stake could have reached into the trillions of dollars if, as the plaintiffs argued, each person was eligible for damages of $100 a day for violations of federal wiretap law.

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Koh’s ruling has implications for e-mail privacy cases assigned to her that were filed last year against Yahoo! Inc. (YHOO) and LinkedIn Corp. (LNKD), which also have hundreds of millions of users. Similarly giant cases have been brought against Facebook Inc. (FB) and Hulu as Web users challenge how companies monetize their data for an online advertising market that generated more than $40 billion in the U.S. last year.

‘Sufficiently Cohesive’

Koh found that the proposed classes of people in the Google case aren’t “sufficiently cohesive,” according to yesterday’s ruling.

The judge wrote in her order that the question of whether the proposed class members consented to the alleged interceptions has been “central to this case since it was filed.” Based on the evidence presented so far, to prove the arguments on each side, “consent must be litigated on an individual, rather than class-wide basis,” Koh said.

Sean Rommel, a lawyer representing plaintiffs in the case, didn’t respond after regular business hours yesterday to phone and e-mail messages seeking comment on the ruling.

“We’re glad the court agreed that we have been upfront about Gmail’s automated processing, which allows us to provide security and spam protection, tailored ads, and other great features like Priority Inbox,” Google said today in a statement.

Koh said in a September ruling, when she rejected Mountain View, California-based Google’s bid to dismiss the case, that the company’s terms of service and privacy policies weren’t explicit enough to constitute consent from Gmail users to let their messages be scanned.

‘Vague,’ ‘Misleading’

Echoing her concerns in yesterday’s ruling, she wrote that the companies’ polices with respect to a particular group of e-mail users at educational institutions were “vague at best, and misleading, at worst.”

“The court found that certain statements in the privacy policies, which stated that Google would collect ‘user communications...to Google’ could actively obscure Google’s interceptions,” she wrote.

The case started with separate lawsuits by users of Gmail as well as people who use other e-mail services from states including Texas, Pennsylvania, Maryland and Florida. Those complaints were consolidated before Koh last year.

‘Creepy Line’

The plaintiffs recalled that in 2010, Google chairman and then-chief executive officer Eric Schmidt had said “Google policy is to get right up to the creepy line and not cross it.” The plaintiffs alleged that Google had crossed that line by unlawfully intercepting their e-mails and profiling users for undisclosed purposes.

At a Feb. 27 hearing on whether the case would proceed as a group lawsuit, Michael Rhodes, a lawyer representing Google, argued the plaintiffs never presented a “model that they have demonstrated will actually work” to include so many plaintiffs.

“And worse, they’ve never shown some statistical sampling of the data set to give you more comfort that we can test to say it will not produce enough false positives,” Rhodes said. Rommel contended in a filing that the the case is “perfectly suited for class treatment” because everyone affected by the e-mail scanning has so much in common, from the “uniform nature” of Google’s extraction of data in e-mails to the company’s “uniform disclosures” about its privacy practices.

‘No Different’

“This is no different than, I would assert, a shareholder case where somebody is saying yes, I bought shares within the class period and here’s my share,” he argued to Koh at the hearing. “You have to compare it to the company records to see the date when they bought it, to see that they are actually a shareholder.”

Hensler said in an interview last month that the plaintiffs’ lawyers faced “a very steep hurdle,” to proceed with a group case, adding that only 10 percent to 20 percent of all cases filed as class-actions are allowed to go forward.

Google also defeated a bid for class-action status in a similar case filed in California state court in San Rafael. In that case, Rommel and other lawyers sought to represent e-mail users within the nation’s most populous state. The judge’s ruling denying class certification was sealed from public view.

The plaintiffs last month filed an amended version of their complaint to try to satisfy the judge’s concerns.

Google faces another privacy case in federal court in San Francisco brought on behalf of everyone in the U.S. whose wireless Internet connections were intercepted by company vehicles gathering information for the Street View mapping service.

The case is In re Google Inc. Gmail Litigation, 13-md-02430, U.S. District Court, Northern District of California (San Jose).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg, Andrew Dunn

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