• by Wendy Davis  @wendyndavis, January 10, 2013

Google's Buzz debacle is still causing legal headaches for the company. Three Gmail users this week filed a new potential class-action lawsuit accusing the company of violating their privacy when it launched the now-defunct Buzz.

Google previously agreed to pay $8.5 million to settle class-action litigation about Buzz, but the three users who sued this week objected to that settlement. They allege in court papers filed with the Eastern District of New York that Google violated the federal Stored Communications Law when it launched Buzz in early 2010.

At launch, Buzz revealed information about the names of users' email contacts, if users activated the service without changing the defaults. The design meant that confidential information could inadvertently become public, including the names of Gmail users' doctors, lawyers or coworkers.

Google revised Buzz shortly after unveiling the service, but was unable to stem widespread criticism by privacy advocates and consumers, a wave of lawsuits by Gmail users, and a Federal Trade Commission enforcement action.

Google settled the FTC charges by agreeing to create a comprehensive privacy program and submit to independent privacy audits for the next 20 years. Google also promised that it will obtain people's express consent before sharing their information more broadly than its privacy policy allowed at the time of collection.

The company resolved the private class-action litigation, agreeing to pay $6 million to various privacy organizations and $2.5 million to attorneys who brought the case. Individual users whose privacy was breached didn't receive anything.

The settlement agreement, approved by U.S. District Court Judge James Ware in San Jose, Calif., provided that users who didn't agree with the resolution could opt out.

Todd Bank, the New York-based lawyer who is representing the three Gmail users who sued this week, says his clients hope "to obtain real relief for as many class members as possible. The original settlement gave no benefit to any class member."

Of the three people who just filed suit, only one -- Albert Rudgayzer -- says he successfully opted out of the Buzz settlement. He is seeking to represent a class of around 500 other Gmail users who opted out.

The other two Gmail users say they were affected by discrepancies between the notices they received and the actual settlement agreement. Lillian Ganci says she would have opted out from the settlement, but that the notice that was sent to her explaining the agreement was misleading. She says the notice indicated that users would have to provide a reason for opting out, when the agreement didn't actually require that users offer reasons.

The third user, Michael Amalfitano, says he unsuccessfully attempted to opt out of the settlement. Bank says Amalfitano followed the instructions in the notice, and sent an opt-out request that was postmarked by the deadline provided. But Bank says the request was turned down -- apparently because it wasn't received by the date set out in the settlement agreement.

Amalfitano and Ganci seek to represent an estimated 20,000 users.