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Opinion: Lawyers to Cash in Online Sites' Ad Settlement

Opinion: Lawyers to Cash in Online Sites' Ad Settlement 0001

Maybe it's just a coincidence that the Seattle based law firm of Hagens Berman Sobol Shapiro (HBSS) announced a date for a class-action civil trial in California only days after two of the lead defendants announced a settlement with the Department of Justice (DOJ). The DOJ recently announced that both Google and Yahoo agreed to pay $10.5 million to settle potential federal claims against the companies stemming from their online gambling advertising revenue prior to 2004, when both companies voluntarily banned the ads.

The class-action lawsuit was originally filed in California Superior Court in August 2004, soon after the companies announced their voluntary online gambling advertising ban in light of DOJ scrutiny. In the last couple of years, the case basically lay fallow until the DOJ's December 2007 announcement. On December 26th, HBSS issued a press release announcing a trial date for the California case. "We believe these companies have been profiting from this illegal practice for more than a decade, and we believe the agreement with the government does not go far enough," said Reed Kathrein, lead attorney in the case and partner at Hagens Berman Sobol Shapiro (HBSS). "The settlements are a great victory and a tacit admission by these online advertisers, but there is still more work to do in holding these companies accountable for the harm they have done to Californians, and to keep them and others from continuing these practices."

The lawsuit claims to seek to enjoin the defendants from advertising online gambling in California; something the companies have already voluntarily done. The lawsuit also seeks to have the companies turn over all the revenue that they collected for online gambling ads. The legal complaint cites the goal of the financial forfeiture is to give restitution to legal California gambling establishments and to those that lost money by participating in online gambling. There are a couple of problems with this claim, however. For one thing, the court has already decided that state law prohibits the court from aiding gamblers in recovering money. The other issue is that legal gambling establishments are not defined as members of the class. What is clear, though, is that the law firm of HBSS will get a pretty decent cut of the action if a settlement is reached or damages awarded.

This is not to say that the California class action doesn't have a case against the online sites, but litigating such a case would have been expensive and risky, potentially one reason HBSS didn't pursue the case until now. Once Yahoo and Google showed their willingness to settle with the DOJ, much of the risk associated with such a case dissipated. Even though the online portals admitted no guilt as part of their DOJ settlement, once they settled, everyone knew they were likely to settle again.

If the California class-action civil suit does settle before its scheduled court date of February 11th , look for more state civil suits to follow. In such an event, it's likely that HBSS or another class-action specialist will be there to help them file the necessary paperwork.

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