Facebook Settlement May Face 9th Circuit Scrutiny

(CN) - Public interest groups appealed a controversial $20 million settlement to claims that Facebook used the names and likenesses of its users to promote products without their permission.

The Children's Advocacy Center and the Center for Public Interest Law, representing adult and child users of Facebook, filed the multiple appeals in the U.S. District Court for the Northern District of California this week. Robert Fellmeth, the center's San Francisco-based attorney, signed the appeals.

He says the 9th Circuit should review U.S. District Judge Richard Seeborg's August decision to give a settlement over so-called "Sponsored Stories" final approval.

Under "Sponsored Stories," Facebook allegedly publicized that users "liked" certain advertisers without compensation or a way to opt out.

The approved settlement requires Facebook to pay $15 - or about $9 million in total - to 615,000 users who filed claims, while giving millions more to lawyers and 14 nonprofit groups.

Seeborg rejected an initial version of the settlement in the long-running case, saying the proposed payments - and lawyer awards - were "plucked out of thin air."

Eventually, however, the judge sided with a revised version of the settlement and said Facebook users' allegations remained "largely untested."

"If 'Sponsored Stories' had undisputedly violated the law and represented the gross invasion of class members' rights as characterized by the complaint, then the adequacy of the settlement would, of course, be viewed through a very different lens," Seebord wrote. "Plaintiffs' allegations and theories, however, remain largely untested, having only survived a motion to dismiss. Substantial barriers to recovery remained, not the least of which would be the requirement to demonstrate that the complained-of conduct caused cognizable harm. Placing those and other factors discussed below in the balance, the proposed settlement warrants final approval."

He added: "This settlement was achieved through negotiations mediated by a renowned retired federal magistrate judge following months of active, adversarial, litigation. The viability of the pleading had been tested through motion practice, and class certification issues were fully briefed. The parties had engaged in substantial discovery. There is no basis to conclude that the negotiations were anything other than a good faith, arms-length attempt by experienced and informed counsel to resolve this matter through compromise."

The lawsuit, filed in 2011, was removed from Santa Clara County Superior Court to the Northern District of California.

In December 2012, following revision of the settlement, Facebook said the deal "delivers substantial, immediate relief."

"The revised settlement delivers substantial, immediate relief for the nearly 125 million users in the class," Facebook said in a brief. "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.'"

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit