Nachshin v. AOL, LLC

Robert Nachshin and other AOL users (plaintiffs) filed a class-action lawsuit against AOL, LLC (defendant). The lawsuit alleged that AOL had inserted mandatory advertisements at the bottom of its users’ emails in violation of privacy and contract laws. AOL had received approximately $2 million from selling the advertisements. The class action settled with AOL agreeing to allow users to opt out of the advertisements going forward. However, for past damages, the users had not suffered identifiable economic harm. Further, dividing AOL’s unjustly obtained $2 million among 66 million class members would give each member three cents, which was not a practical amount to distribute. Accordingly, instead of providing any damage payments to the class, the parties agreed to distribute $110,000 to cy pres beneficiaries. The beneficiaries were six charities chosen by either the class representatives or the judge: (1) the Legal Aid Foundation of Los Angeles, (2) the Federal Judicial Center Foundation, (3) the Los Angeles and Santa Monica chapters of the Boys and Girls Club of America, (4) New Roads School in Santa Monica, (5) Oklahoma Indian Legal Services, and (6) the Friars Foundation. The district court approved the settlement. An objecting class member appealed, arguing that the selected cy pres beneficiaries were invalid because they did not have any connection to the case issues and were not geographically diverse enough to benefit the interests of a nationwide class.