Privacy Class Action Settlement Trends: Industry Practice or Improper Incentives?

Abstract

Privacy class actions are a developing and active area of the law. The last ten years have seen courts, attorneys, and defendants come together to craft creative and detailed settlement agreements to benefit the class and prevent the abuse of consumer data in the future. This article gathered data from 80 data privacy class action settlements from 2010 to 2020. It examines and notes trends in the settlements over the last decade, including evaluating the practice of granting incentive awards to class representatives. Through the analysis of these representative settlements, the article found that the median incentive award given to class representatives was $5,000, with that amount, on average, constituting almost one percent (0.7%) of the total settlement fund. In contrast, the median attorney’s fees were $1.3 million, constituting 35.06% of the total settlement fund. While the efficacy of each type of privacy class action settlement can be debated, the overall finding regarding incentive awards points towards no widespread abuse and that they are generally ubiquitous across all state and federal courts. Courts could benefit, however, from a framework upon which to judge incentive award amounts, rather than a case-specific determination based on attorney and judicial discretion.