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28 December 2007

Yahoo! and Google the targets for class action


Last week's $31.5 million settlement on with the US federal authorities over claimed online gambling advertising infringements may have removed Google and Yahoo! from the federal radar, but there is more litigation in store for them according to a Californian law company.

A class-action lawsuit was filed in the California Superior Court in August 2004 alleging that Yahoo! and Google, along with several other popular websites, made hundreds of millions of dollars by allowing advertisements "for illegal online gambling Web sites" to appear on the search engine pages....and the case is set to be argued on February 11.

This will further test the liability of these companies in California, and will ask the courts to further restrict the ability of these Internet giants from similar action in the future, says a statement from the legal partnership Hagens Berman Sobol Shapiro (HBSS).

While the multi-million dollar settlements reached on December 19, 2007 resolve federal criminal charges against Google and Yahoo!, the companies neither contest nor admit they received payments from Internet gambling advertisers, according to published reports.

"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 HHBS. "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.

"Given the amounts the huge profits we believe they made, we believe these relatively small forfeiture penalties will not deter them or others in the future," Kathrein added.

According to Kathrein, he intends to argue for injunctive and declaratory relief at the February trial in hopes to stop Google and Yahoo! from allowing the ads to appear on their sites in the future, and forcing the companies to acknowledge that the practice is illegal.

The complaint also calls for disgorgement of profits the companies earned from online advertisers looking to attract gamblers to their Web sites -- a figure expected to exceed hundreds of millions of dollars. The complaint seeks to have the disgorged profits go to benefit education and rehabilitation efforts aimed at gambling addiction. The court previously decided, however, that state laws prohibit the court from aiding gamblers in recovering money, an issue HBSS plans to appeal after the trial.

Under the Federal aiding and abetting statute, procuring participants for illegal activity, such as online gambling, is unlawful.

HBSS is based in Seattle with offices in Chicago, Cambridge, Los Angeles, Phoenix and San Francisco. Since 1993, it has developed a nationally recognised practice in class-action and complex litigation. Among recent successes, HBSS has negotiated a $300 million settlement in the DRAM memory antitrust litigation; a $340 million recovery on behalf of Enron employees; a $150 million settlement involving charges of illegally inflated charges for the drug Lupron, and served as co-counsel on the Visa/Mastercard litigation which resulted in a $3 billion settlement, the largest anti-trust settlement to date.

HBSS served as counsel in an $850 million Washington Public Power Supply settlement and represented Washington and 12 other states against the tobacco industry that resulted in the largest settlement in history.

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