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Facebook Offers Nominal Awards to Settle Ad Case

(CN) - Facebook has revised its $20 million offer to settle claims over a feature that allegedly used the names and likenesses of users to promote products without their permission.

Read Courthouse News' Entertainment Law Digest.

Angel Fraley and other users sued Facebook in March 2011 in Santa Clara County Superior Court for unfair competition and violation of California's right of publicity statue. The class, covering nearly 125 million users, alleged the site publicized their "likes" of advertisers without compensation or a way to opt-out.

The lawsuit over Sponsored Stories was removed to the Northern District of California in April 2011.

In an initial proposal, Facebook said that it would make a $10 million payment to Internet privacy organizations, would allow users more control over how their names and likenesses are used, and would pay class counsel fees of up to $10 million.

But U.S. District Judge Richard Seeborg questioned why the agreement provided no cash for Facebook users and denied it without prejudice on Aug. 17.

A revised settlement, filed Friday, would allow users to apply for a cash payment of up to $10 each, to be paid from a $20 million settlement fund. Remaining funds would be awarded cy pres to court-approved nonprofits.

Facebook still says that it will implement "robust new disclosures and innovative controls" to remedy privacy concerns of users, plus it will extend parental-control tools.

Specifically, parents would be able to access minors' advertising controls immediately after the parties confirm their relationship on the site.

Facebook also now has the right in the settlement to oppose requests for attorneys' fees and expenses.

"The revised settlement delivers substantial, immediate relief for the nearly 125 million users in the class," Facebook said in a brief supporting the joint motion. "It provides improved disclosure, new and powerful user controls relating to sponsored content, and potentially millions in direct monetary payments. The revised settlement unquestionably meets the permissive standard for preliminary approval, which should be granted whenever a non-collusive settlement 'falls within the range of possible approval.'"

If the settlement is approved, class members may opt out within 60 days of its announcement.

Garden City Group will act as settlement administrator.

Facebook says the revised settlement is "fair, reasonable and adequate," and added that it is a product of "fully-informed, arm's-length, non-collusive negotiations."

Seeborg is scheduled to hear the motion on Oct. 25 when the parties will jointly move for preliminary approval of the revised settlement and release.

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