In a major blow to the Authors Guild, a three-judge panel of the Second Circuit has vacated Judge Denny Chin’s 2011 ruling granting the organization class action status in its suit to stop Google’s library scanning project. "On the particular facts of this case, we conclude that class certification was premature in the absence of a determination by the District Court of the merits of Google’s fair use defense," the court wrote in its decision. "Accordingly, we vacate the June 11, 2012, order certifying the class and remand the cause to the District Court, for consideration of the fair use issues."

In his initial ruling, Chin held that the “commonalities” among the works scanned would’ve made “individualized” fair use analyses unnecessarily burdensome and duplicative. While different classes of works may indeed require different treatments in terms of fair use, Chin reasoned that those differences could be accommodated by grouping association members and their respective works into subgroups for the purposes of determining liability. “Because Google treated the copyright holders as a group,” Chin concluded, “the copyright holders should be able to litigate on a group basis.”
But a three-judge panel disagreed with Chin, and explicitly found that the fair use questions must be decided before determining class certification. [W]e believe that the resolution of Google’s fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues,” the court ruled.

The decision stands as a significant blow to the Authors’ Guild’s chances of success in the case. “In particular, it seemingly takes away Judge Chin’s ability to use subclasses to focus the fair use questions, or even to consider the fair use of books other than those which are owned by the individual named plaintiffs,” observed Univerity of Maryland law professor James Grimmelmann, on his blog. “Without a class, all the other books—some perhaps with different or stronger fair use cases—are off the table, and not properly before the court.”

Further hobbling the Authors Guild case, is that the judges seemed to believe that Google has a strong fair use case. The strength of Google’s fair use case was underscored by judge Harold Baer’s ruling last fall in the Authors Guild vs. HathiTrust. The merits of Google’s fair use defense was outside the scope of this appeal, however, the judges did indicate, in an aside, that they believed Google’s fair use defense had merit.
“I believe, the court decided to gently signal what it thought about the fair use question and invite Judge Chin to cut to the chase,” Grimmelmann further observed. “It’s not the most juridically correct resolution of the appeal, but it seems justifiable on pragmatic grounds. Class actions are cumbersome, slow, and expensive: why spin up