Arkansas 'click fraud' class action settled

TEXARKANA, Ark. � Miller County Circuit Court Judge Joe Griffin approved the final order for the last defendant's settlement in the Arkansas "click fraud" Class action.

Throughout the course of the class action, the defendants placed over $97 million into various settlement funds, which included over $32 million in class counsel's fees.

The original lawsuit was filed in February 2005 against defendants Yahoo, Overture Services Inc., Time Warner, America Online, Netscape Communications Corp., Ask Jeeves Inc., Go.com, Google, Lycos Inc., Looksmart Ltd. and Findwhat.com in the Miller County Circuit Court of Arkansas.

The lawsuit accused the defendants, who either are Internet search engines or provide Web search capabilities, of overcharging for pay per click advertising (while on a website, clicking on a business' advertisement). The plaintiffs allege the defendants knowingly and fraudulently charged for advertising that was not generated by actual consumer clicks.

The original complaint argued, "This is an industry-wide conspiracy in which all search engines have worked together to develop and/or create a market which allows for over-billing and/or overcharging of businesses and/or entities which purchase online pay per click advertising."

Almost immediately after the filing of this case, defendants Google and Ask Jeeves removed the case to federal court, but U.S. District Judge Harry F. Barnes remanded the case. The defendants petitioned the remand to the Eighth Circuit Court of Appeals but the action was denied and the case again sent back to the Miller County Circuit Court. All of the defendants filed numerous motions to dismiss based on various procedural and substantive grounds.

The court entered a protective order that allowed discovery to proceed. The defendants appealed the protective order to the Arkansas Court of Appeals and the Arkansas Supreme Court, but the court's protective order was approved. The plaintiffs' counsel bombarded the defendants with discovery requests, which for some defendants included over 70 interrogatories, and 70 requests for production of documents

Google was the first defendant to agree to settlement with many objections and 556 people filing to be excluded. Google agreed to pay $60 million for advertising credits and $30 million for requested fees and attorney costs. Shortly after the Google final approval of settlement, defendants Yahoo!, Overture Services, America Online, Time Warner and Netscape Communications obtained an order of dismissal based on a settlement reached in a California federal case (Checkmate Strategic Group, Inc. v. Yahoo!, Inc. No. 2:05-cv-04588).

Defendant Buena Vista Internet Group obtained dismissal without prejudice, as the plaintiffs believed the group was not connected to the click fraud.

Defendant Looksmart Ltd. reached final approval of settlement in late February with a settlement fund of $2.54 million including over $585,000 for attorney fees.

Defendant Ask Jeeves Inc. reached final settlement at the end of March with the creation of an $820,000 settlement fund including attorney fees of over $258,000.

Defendants Lycos Inc. and Miva formerly known as Findwhat.com's final approval for settlement was approved at the end of April with the creation of a $3.96 million settlement fund, including over $1.2 million for attorney fees.

The plaintiffs argue that although their "claims are valid, that their evidence is strong," settlement avoids the "need for protracted and costly litigation." The defendants continue to deny the plaintiffs' allegations.

Class counsel includes Richard A. Adams of the law firm Patton Roberts, PLLC, Matt Keil of the law firm Keil and Goodson, P.A., R. Dean Gresham of Fineberg/Gresham, Jonathon Nockels of the Law Offices of Stephen F. Malouf, P.C., Lionel Z. Glancy of the law firm Glancy Binkow and Goldberg, L.L.P and Peter A. Lagorio of the Law Office of Peter A. Lagorio.

Case No: CV-2005-0052-1