McDonald v. Kiloo ApS

Background

This order addressed three related privacy actions brought by parents concerned about gaming applications used by children. The McDonald action involved Subway Surfers; the Disney action involved Princess Palace Pets and Where’s My Water?; and the Viacom action involved Llama Spit Spit. The complaints alleged that the applications covertly collected behavioral data and used it for targeted advertising without disclosure or consent.

The claims included intrusion upon seclusion and violations of the California constitutional right to privacy in all three actions. The McDonald and Disney actions also included claims under New York General Business Law § 349(a). The Disney action additionally included claims under California’s Unfair Competition Law and Massachusetts General Laws Chapter 214, § 1B.

The plaintiffs sought approval of sixteen proposed class settlements with fifteen defendants. The defendants included developers of the gaming applications and companies that supplied software development kits, or “SDKs,” alleged to have collected personal data through code embedded in the applications.

Conditional Class Certification

The court conditionally certified the proposed classes for settlement purposes only. It found that the requirements of Federal Rule of Civil Procedure 23(a) were met: the classes were sufficiently numerous, had common legal or factual questions, had representative claims typical of the classes, and had representatives and counsel who could adequately protect class members’ interests.

The court also found that Rule 23(b)(2) was satisfied because the alleged data-collection and data-use practices applied generally to the proposed classes. Potential remedies included stopping those practices, imposing safeguards to protect children, and destroying previously collected personal data.

The court appointed the named plaintiffs as class representatives for the specified settlements and appointed Lieff, Cabraser, Heimann & Bernstein, LLP and Carney Bates & Pulliam PLLC as class counsel under Rule 23(g)(1). The settlement classes generally covered parents or legal guardians of children who used the covered gaming applications, with age and state-of-residence requirements that varied by settlement.

Preliminary Settlement Approval

Under Federal Rule of Civil Procedure 23(e), the court had to make a preliminary finding that the settlements were fair, reasonable, and adequate. Because the settlements were proposed before formal class certification, the court applied a more probing review for possible collusion and inadequate protection of class members.

The court found that the settlements followed extensive negotiations over many months, sometimes with neutral mediators. It found no obvious deficiencies, no improper preferential treatment for class representatives or portions of the classes, and that the settlements fell within the range of possible final approval.

The settlements did not provide monetary relief to class members. They also did not release damages or other monetary claims belonging to class members or their children, except for claims of the class representatives and their children. The court noted the plaintiffs’ stated reasons for not pursuing monetary relief in these settlements: further litigation would be time-consuming and risky, and any damages award was uncertain and likely nominal for most class members.

The approved settlement terms included restrictions on behavioral advertising to children under 13, measures to prevent data collection by certain SDKs, changes to Subway Surfers, protections for Disney gaming applications, and limits on the use of persistent identifiers in Llama Spit Spit. The court also noted negotiated caps on attorney fees and expenses and the defendants’ right to contest the amounts requested.

Notice and Further Proceedings

The court approved the proposed notice form and outreach methods, including display advertising, social media notice, paid search, and a case-specific website. It appointed Angeion Group, LLC as settlement administrator and directed the parties to carry out the notice plan and pay its costs as provided in the settlement agreements.

Because the classes were certified under Rule 23(b)(2), class members could not opt out. They could, however, submit written comments or objections according to the procedures in the order. The court set November 20, 2020, as the objection deadline and December 17, 2020, at 10:00 a.m., for the final approval hearing. The deadline for the plaintiffs’ attorney-fee and incentive-award motion was October 8, 2020, and the deadline for the final-approval motion was December 3, 2020.

The court reserved the issues of attorney fees, expenses, and incentive awards for the final approval hearing. Pending that hearing, it stayed other proceedings necessary to administer or enforce the settlements and administratively closed the three related cases while allowing settlement-related filings to continue.

Disposition

Judge James Donato granted preliminary approval of the class action settlements and set the final approval hearing for December 17, 2020. This order did not give final approval to the settlements.