Ninth Circuit upholds $725M Facebook settlement in Cambridge Analytica case, rejects objectors' appeal

SAN FRANCISCO (CN) — The Ninth Circuit Court of Appeals ruled Thursday afternoon that a federal court did not abuse its discretion in 2023 when it approved a $725 million settlement between Facebook, Inc. — now known as Meta — and a settlement class concerning the Cambridge Analytica scandal, an event in which Facebook misused personal data for political purposes.

Two objectors — Sarah Feldman and Jill Mahaney — appealed the approval of the settlement and the federal court’s order approving attorneys’ fees constituting 25% of the settlement fund, which amounts to about $180 million.

The three-judge panel unanimously agreed that U.S. District Judge Vince Chhabria conducted a thorough, reasonable examination of the settlement before approving it and did not abuse any discretion when doing so.

“Objectors’ arguments against settlement approval do not establish a clear abuse of discretion. Objectors’ contention that the district court was required to conduct its fairness review using a probabilistic approach’ similar to one favored in the Seventh Circuit, is not well taken, as we have previously rejected this approach as contrary to the weight we afford the ‘product of an arms-length, noncollusive, negotiated resolution,’” the panel wrote. “Objectors do not contest the district court’s factual finding that the settlement was the product of such a resolution.”

The panel included U.S. Circuit Judges Danielle Forrest, a Donald Trump appointee, and Gabriel Sanchez, a Joe Biden appointee. The circuit judges were joined by Senior U.S. District Judge David Ezra from Hawaii, a Ronald Reagan appointee.

The appeals panel held that Chhabria did not abuse his discretion in approving the settlement’s allocation plan, which awards allocation points to class members based on the number of months they had an activated Facebook account within the class period and divides the settlement pro rata based on those points.

“The district court was well within its discretion in finding this plan reasonable and equitable among class members after it determined that the record supported a correlation between the length of time users were on Facebook and the potential degree to which third parties could access their information,” the panel wrote.

Lastly, the panel ruled that the 25% attorney fees, while large, were not unreasonable nor an abuse of discretion. The panel noted that Chhabria treated the attorneys’ fees with “heightened skepticism” because of how large the fees were, reviewing the fees against several factors, using a lodestar method cross-check and more to determine that they were reasonable.

“After considering these factors and overruling all objections, the district court was within its discretion in finding both that the 25% fee award was reasonable and that it was properly within the range of class action settlement awards of comparable size and complexity,” the panel wrote.

The settlement will resolve dozens of consolidated lawsuits that resulted from reports in March 2018 that Cambridge Analytica had harvested information from up to 87 million Facebook users. The case expanded to include broader data-sharing practices by Facebook, with claims the company had granted numerous third parties access to users’ Facebook content without their consent and had failed to monitor these third parties’ use of that information adequately.

The plaintiffs — all current and former Facebook users — claimed Cambridge Analytica was one of several to whom Facebook divulged their sensitive information to third parties without consent. Facebook argued users had no legitimate privacy interest because they willingly share their information through social media.

Chhabria shot that argument down, saying the law firmly establishes an individual’s right to privacy when sharing certain information with a limited audience.

Counsel for the class plaintiffs and Facebook did not reply to requests for comment before the deadline. Counsel for the objectors did not reply to requests for comment before the deadline.