Federal judge denies class action certification in Google action, conflict of interest 'intolerable'

By John Breslin | Aug 28, 2018

SAN FRANCISCO - A federal judge has refused to certify a class action against Google because the lead, and only named plaintiff's business connection with class counsel "creates an intolerable conflict of interest."

But District Judge Edward Davila at the Northern District of California did allow the plaintiff, Arkansas attorney Rick Woods, to add a new representative and make a fresh attempt at certification.

The case, which centers on claims that Google "bilked" advertisers into overpaying for its AdWords platform, specifically by artificially inflating the number of clicks, dates back to early 2011 when Woods first filed his complaint, after retaining the services of two firms, Taylor Law Partners (TLP) of Fayetteville, Ark. and Nix, Patterson & Roach of Austin, Texas.

In a motion asking the court to deny class certification, Google focused on Woods' relationship with the two firms, and a third one that later joined the action.

Based almost entirely on the "serious mismatch"  between Woods's interest and that of others who may be similarly affected, Judge Davile denied class certification.

"The way that this case unfolded (and that Woods became entangled with the lawyers) is somewhat unusual," Davila wrote.

The court papers reveal that Woods, prior to being the representative in the case, was a debt collection and personal injury lawyer.

After signing the agreement to act as the representative in the class action to be led by the two law firms, Woods was hired as a partner by TLP. He signed a new agreement with Nix and a third firm, Kessler Topaz.

The latter agreement including confirmation that Woods' "retention of the founding partner at (TLP) as counsel in any matters pertaining to Google ha[d] been mutually terminated." But there was no date on this agreement, though it appears it was executed in 2013, the district court found.

"More troubling, however, is that the new retainer agreement does not mention TLP’s fees and that Woods does not identify any documentation or other concrete evidence conclusively establishing that TLP relinquished any fee interest in this action," Davila wrote.

"If TLP stands to earn a fee if this case is successful, Woods’s status as equity partner at TLP presents a plain conflict of interests with the class because Woods could receive a portion of that possibly sizable fee."

It also emerged, as detailed in the court's finding, that TLP was co-counsel with either Nix Patterson or Kessler Topaz on at least 16 occasions while the Google action continued. This included seven class actions from which TLP "recovered substantial attorney’s fees and expenses on multiple of these class actions."

The court also had to decide whether to allow Woods to file an amended class action complaint with a new named representative. Google argued against the motion, claiming it would be "highly prejudicial."

But Davila found that Google had failed for some years to challenge Woods' ability to adequately represent the interests of the class. In fact, it only did so in December 2017, after which his lawyers went looking for another representative.

On March 20, 2018, less than four months after receiving notice of Google’s intent to raise the adequacy issue, Woods filed his motion for leave to file the third amended class action complaint, Davila wrote.

"On the facts of this case, four months is a reasonable span of time to find a new class representative, research his claims, and draft a motion to amend as well as an updated complaint," he wrote.

Davila granted Google's motion to deny class certification, but granted Woods' motion for leave to a file a third amended class action complaint.

In his initial complaint, Woods claimed that Google and what are described as "special partners" employ a series of measures "designed with one goal in mind: to artificially inflate the number of paying clicks on Google’s advertisers’ ads."

It continued, "As a result of this unlawful scheme, Google and its Special Partners have methodically pilfered the advertising budgets of Google’s unwary advertisers by charging for invalid click activity.".

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Organizations in this Story

Google, Inc. Kessler Topaz Meltzer & Check, Ll Nix, Patterson & Roach Taylor Law Partners LLP

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