DoubleClick Pays to Settle Privacy Suits

Compared to the multimillion-dollar settlements tobacco companies have been paying out, DoubleClick settled a privacy lawsuit against it last week for pennies.

Under a proposed settlement announced Friday, the network advertiser will pay $1.8 million to the plaintiffs' attorneys to cover legal fees and expenses, while committing to a number of business practice changes over a two-year period.

The agreement shows how private litigants can affect a company's privacy practices, as well as underscoring the limitations faced by attorneys seeking damages for alleged privacy abuses.

The settlement is "very significant" because of its terms and how it will encourage other attorneys to be on the lookout for privacy abuses, says Evan Hendricks, editor of the Privacy Times newsletter in Washington.

Concerns in Congress

The case will also likely be used to counter arguments in Congress to set limits on private lawsuits in privacy cases. The DoubleClick case "makes hollow the argument in the legislative debate that you can only have privacy legislation without a private right of action," says Hendricks.

There have been fears among some industry groups that privacy litigation could ultimately become a multibillion-dollar industry, not dissimilar from tobacco litigation, if large numbers of people are class action status.

But DoubleClick litigants, private individuals who filed federal and state actions beginning in January 2000 in Texas, California, and New York over DoubleClick's data handling practices, faced problems. The federal cases were dismissed last year by a judge who said the federal statutes cited by the plaintiffs weren't covered by the complaint.

Moreover, the parties weren't certified as a "class" for purposes of the case, limiting the ability to seek individual damage awards.

"It there had been class certification any settlement or resolution of this case would have been far more costly," says Ronald Plesser, an attorney at Piper, Marbury, Rudnick & Wolf in Washington, who represents companies on privacy issues. Moreover, "it would have made it easier for others to bring class action," he says.

The settlement "may encourage some people [to sue] but it doesn't create laws," says Plesser.

Not Satisfied

The Electronic Privacy Information Center, a privacy rights group, is considering opposing the settlement over some of its terms, such as a provision requiring that DoubleClick cookies expire within five years--two years after users typically change computers.

Other provisions in the settlement call for the company to provide a clear, easy-to-read notice on its privacy policy, "enhanced choice" on data usage, as well as consumer education provisions and the promise of consistency in data handling.

The attorney who represented the plaintiffs, Seth R. Lesser at Bernstein, Litowitz Berger & Grossmann in New York, defended the settlement and says the litigation forced DoubleClick to rethink its handling of privacy. The company's view of privacy "is night and day different," and that's what the plaintiffs were pleased about, he says.

Lesser defends the five-year limitation on cookies and says without it, they have an indefinite life.

Jason Catlett, president of Green Brook, New Jersey-based Junkbusters, says "the disappointing thing" about this case "is three years have gone by and the legislature and the federal agencies have failed to take any effective action and the only real censure has been the class action lawyers."