We are finally beginning to see some legal challenge to the scope and definition of the classes in the lawsuits against AI companies.
Google filed a motion to strike allegations related what it argues is a “fail-safe class,” which is improper. Here’s a bit of Google’s argument:
One category of classes that fails the requirements of Rule 23 is the “fail-safe” class. A fail-safe class is one whose membership turns on establishing the liability of the defendant. Ruiz Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1138 n.7 (9th Cir. 2016). By “presuppos[ing] success on the merits,” In re Toll Roads Litig., 2018 WL 4952594, at *6 (C.D. Cal. July 31, 2018), a fail-safe class definition “determines the scope of the class only once it is decided that a class member was actually wronged.” Kamar, 375 F. App’x at 736; see also Messner v. Northshore Univ. Health Sys., 669 F.3d 802, 825 (7th Cir. 2012) (a fail-safe class “is defined so that whether a person qualifies as a member depends on whether the person has a valid claim”).
Such a class “is improper because a class member either wins or, by virtue of losing, is defined out of the class and is therefore not bound by the judgment.” Olean Wholesale, 31 F.4th at 669 n.14 (quoting Messner). That is both “palpably unfair to the defendant” and “unmanageable.” Dixon v. Monterey Fin. Servs. Inc., 2016 WL 3456680, at *4 (N.D. Cal. June 24, 2016) (quoting Kamar). Fail-safe classes are unfair because they allow putative class members to evade the preclusive effect of a final judgment. See Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 538 (6th Cir. 2012) (“[A]llow[ing] putative class members to seek a remedy but not be bound by an adverse judgment” precludes “the final resolution of the claims of all class members that is envisioned in class action litigation.”). They are unmanageable because class membership can be determined only through an evaluation on the merits with respect to each potential member. Pepka v. Kohl’s Dep’t Stores, Inc., 2016 WL 8919460, at *3-4 (C.D. Cal. Dec. 21, 2016) (improper fail-safe class limited to those who received calls without “prior express consent” would “require the Court to engage in an improper merits evaluation to determine who is in the class”). Fail-safe classes also impede the identification of persons to whom class notices should be sent and the preservation of absent class members’ right to opt out before a final merits determination.
Google argues that the plaintiffs have alleged a fail-safe class in their amended complaint:
Two days later, in contravention of the Court’s Order that they first meet and confer with Google over any amendments to their complaint, they took a fundamentally different and previously undisclosed approach, redefining the putative class in their Consolidated Amended Complaint:
All persons or entities who: (1) are domiciled in the United States; (2) own a valid copyright registration for one or more works under the Copyright Act; (3) whose exclusive rights under 17 U.S.C. § 106 in their registered works were infringed upon, under 17 U.S.C. § 501, by Google without license or authorization in order to train Google’s Generative AI Models during the Class Period; and (4) held such copyright registration prior to Google’s unauthorized use.
CAC ¶ 164 (emphasis added). The evident purpose of this new class definition was to try to wave away some of the inherently individualized issues by imagining a class consisting only of persons whose claims would, by definition, succeed. A person would not be a class member unless they owned a valid copyright registration in a work, Google’s use of that work constituted infringement, and Google lacked any license or authorization for that use.Plaintiffs’ latest zigzag in what is now the fifth complaint in this consolidated action is dead on arrival. What they now propose is a classic example of an improper “fail-safe” class: one whose membership can only be determined after each individual’s claim is resolved on the merits. Such a class is “palpably unfair to the defendant” because it defines away anyone who could be bound by a loss, and is inherently “unmanageable”—“for example, to whom should the class notice be sent?” Kamar v. RadioShack Corp., 375 F. App’x 734, 736 (9th Cir. 2010). For these reasons, the Ninth Circuit recently clarified in an en banc decision that “[a] court may not … create a fail safe class.” Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 669 n.14 (9th Cir. 2022) (en banc). Courts in this Circuit routinely strike class allegations related to such purported fail-safe classes, and this Court should do the same.