Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Google Play Store purchasers denied class certification of in-app purchase dispute, (Apr 6, 2015)

By Jody Coultas, J.D.

Google app store users were unable to state class action claims against Google Inc. based on Google’s settlement of substantially-similar claims filed by the FTC, according to the federal district court in San Francisco (Imber-Gluck v. Google Inc., April 3, 2015, Whyte, R.).

Google sold apps that allowed for in-app purchases. It did not require a purchaser to enter a password or use any other method to ensure account holder authorization. This allegedly resulted in children making in-app purchases without parental consent. Even when a password was required, Google allowed the user, even minors, to make in-app purchases for up to 30 minutes without reentering the password.

Prior to the filing of the complaint, Google settled FTC charges that the company violated the FTC Act’s prohibition on unfair commercial practices, and agreed to remit at least $19 million in refunds to consumers subjected to the allegedly unfair billing practices.

Google argued that, because of the FTC settlement, the consumers could not meet the Federal Rule of Civil Procedure 23 superiority and adequacy requirements for certification.

The case did not meet the superiority requirement of Rule 23(b)(3), according to the court. Google argued that a class action was not superior because (1) the relief sought was already available through the FTC settlement, and (2) pursuing a class action would actually result in a reduced recovery due to administrative costs and attorneys’ fees. A class action would require substantial time that would only duplicate the work of the FTC investigation. The duplicative cost to Google of defending against this class action, in addition to the FTC investigation, also weighed against a finding of superiority.

The FTC investigation was based on the same underlying conduct as the instant litigation, and the FTC settlement provided complete refunds to the class members and enjoined Google from “billing an account for any In-App Charge without having obtained Express, Informed Consent to Google’s billing that account for the In-App Charge.” Creating a class action for those class members who opt-out of the FTC refunds in order to pursue the possibility of punitive damages under the California Consumer Legal Protection Act was not superior to other available methods of adjudicating the issue.

The purchasers criticized the e-mail notice Google provided to its customers about the FTC settlement because the settlement required Google to send only one email to class members and consumers had to “submit a refund request to Google.” Although this led the purchasers to conclude that “thousands, if not millions, of consumers” with valid claims were not compensated, they offered no factual support for these arguments. The suggestion that the purchasers notice would include a better email subject line than the FTC email was not sufficient to meet Rule 23(b)(3)’s superiority requirement, according to the court.

The case is No. 5:14-cv-01070-RMW.

Attorneys: Benjamin James Sweet (Carlson Lynch Ltd.) for Ilana Imber-Gluck. John Edward Schmidtlein (Williams and Connolly LLP) for Google Inc.

Companies: Google Inc.

Cases: StateUnfairTradePractices CaliforniaNews