SAN FRANCISCO (CN) — After a monthslong saga during which a federal judge threatened to demolish a proposed deal to settle a class action over facial data harvesting, Facebook won preliminary approval of a $650 million settlement Wednesday night only after it agreed to boost the payout by $100 million.
“Facebook has increased the settlement fund by $100 million, which substantially allays the court’s concern about the potential inadequacy of payments to class members in light of [the Illinois Biometric Information Privacy Act]’s statutory penalties,” U.S. District Judge James Donato wrote in an 8-page ruling.
Donato had previously complained a $550 million settlement offer provided only a fraction of the potential $35 billion in damages for which Facebook could be liable.
The 2008 Illinois law carries civil penalties of $1,000 for each negligent violation and $5,000 for each knowing violation. With a class of millions of Illinois Facebook users, damages could have reached tens of billions of dollars.
Lead plaintiff Nimesh Patel sued Facebook in 2015 in one of three consolidated class actions, claiming the social network started mapping users’ faces for its “Photo Tag Suggest” function in 2011. The plaintiffs say Facebook did so without their consent and failed to inform them how long their data would be stored as required by the Illinois law.
During a June 4 hearing, Donato scolded lawyers for Facebook and the plaintiff class for failing to explain why the settlement amount was so low compared to potential damages, why Facebook’s sister companies like Instagram, WhatsApp and Oculus were being released from liability, and how the social network’s data privacy practices will significantly change as a result of the settlement.
Responding to the judge’s concerns, the lawyers filed a revised proposal in July that boosts the total amount to $650 million and no longer releases the tech giant’s affiliated companies from liability for the social network’s alleged transgressions.
The company also pledged to set each Facebook user’s default facial recognition setting to “off” and delete all existing face templates unless it obtains express consent from a user, with exceptions for users who turned facial recognition on or signed up after Sept. 23, 2019, when Facebook changed its data privacy and consent practices. The company will also delete face templates for users who are inactive on Facebook for three years.
Under the revised settlement, class members will receive $200 to $400 each. The class includes all Facebook users in Illinois for whom Facebook created and stored a face template between June 7, 2011, and Aug. 19, 2020, the date the settlement was preliminarily approved.
Lawyers for the plaintiff class agreed to limit their request for attorneys’ fees to 20% of the original $550 million, down from their prior commitment to seek no more than 25%. In total, plaintiffs’ lawyers will request a fee award of no more than 16.9% of the total $650 million settlement, or $110 million.
During a July 23 hearing, co-lead class counsel Paul Geller of Robbins Geller Rudman & Dowd said the prior $550 million offer was already larger than any known data privacy settlement on record, including the $117 million Yahoo data breach settlement, $195 million Home Depot data breach settlement and the Equifax data breach settlement, valued at $380 million mostly in credit monitoring services with only $31 million in cash.
In an email Thursday morning, Geller said Judge Donato was both “demanding and fastidious” in reviewing the proposed deal. By taking the judge’s concerns to heart, the parties were able to achieve an “even better” result for the class, Geller said.
“Achieving a record-breaking settlement is difficult, and it’s even more difficult to go back to a powerful company with sophisticated counsel and wrestle another hundred million on top of that record-breaking settlement, but that’s what we did,” Geller said.
Facebook attorney Michael Rhodes of Cooley LLP declined to comment, and Facebook’s corporate press team did not immediately respond to an email request for comment.
Class members will receive notices of the settlement via email, Facebook jewel alerts and Facebook news feed posts in addition to advertisements in major Chicago newspapers and targeted online ads.
The deadline to file claims or opt out of the settlement is Nov. 23. A final settlement approval hearing is scheduled for Jan. 7, 2021.
Before Facebook agreed to settle the case in January, it had argued users lacked standing to sue because they suffered no “concrete harm,” such as a loss of money, resulting from the alleged violation.
In August 2019, a three-judge Ninth Circuit panel rejected those arguments, finding the loss of control over one’s private information is a real-world injury. The San Francisco-based appeals court later denied Facebook’s request for an en banc rehearing.
This is not the end of Facebook’s legal trouble over the 2008 Illinois privacy law. On Aug. 10, the social media giant was hit with a new class action in San Mateo County Superior Court claiming it illegally harvested the protected biometric facial data of more than 100 million Instagram users without their consent.
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