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Law & Disorder / Civilization & Discontents

Appeals judges will allow $9.5M Facebook privacy settlement

Six judges dissented, panning the payment to a newly created privacy foundation.

Internet privacy lawsuits, especially of the class-action variety, have been sprouting up everywhere in the past few years. Some of them have been settled for considerable sums, especially when companies are sued over publicly acknowledged privacy screw-ups that they've already taken heat for. One of the most notable was the $9.5 million Facebook settlement over its Beacon program, which broadcast users' activities from other websites—including what they bought on various shopping sites—in their Facebook news feed.

The number of Facebook users affected by that class-action case was huge—the class was determined to be 3.6 million users at the end of the day. In part due to the large class, the judge allowed a so-called cy pres award, which is when a payment is made to a charity related to the issues in the case rather than to the actual class members. The Facebook settlement will go to a newly created Digital Trust Foundation (DTF), which will fund initiatives related to Internet privacy. $2.3 million of the settlement money will go to fees for the plaintiffs' attorneys.

But the case didn't end quietly. Objections were filed by some class members, supported by advocacy group Public Citizen. "[T]he only “relief” for the class would be a privacy foundation established by Facebook—an organization whose founder and CEO, Mark Zuckerberg, believes that people no longer care about personal privacy," wrote the objecting lawyers. The settlement was upheld by a 2-1 vote on appeal, and the objectors asked for a larger appeals panel to re-hear the case.

The votes are in, and a majority of the judges on the US Court of Appeals for the 9th Circuit voted not to re-hear the case. However, six judges who did vote to re-hear the case wrote a vigorous dissent [PDF], published yesterday. They argue that in cy pres settlements, 9th Circuit judges have historically rejected settlements "where the selected charity lacks 'a substantial record of service' in remedying the types of wrongs alleged," or where the charity doesn't do work that will benefit class members. The DTF was created just for this settlement, and Facebook users who were harmed by Beacon have no assurance that its open-ended promise to focus on Internet privacy will benefit them at all. "If fashioning an open-ended, one-sentence mission statement is all it takes to earn cy pres settlement approval in our court, we have completely eviscerated the meaning of our previously controlling case law," wrote dissenting 9th Circuit Judge Milan Smith.

Plaintiffs' lawyer Scott Kamber told Reuters that he viewed the dissent as a criticism of 9th Circuit law on cy pres awards and was happy the money would shortly be made available. Facebook spokesman Andrew Noyes said that DTF "will fund worthy projects that will help protect and improve Internet users' privacy, safety, and security."

The issue of how to deal with cy pres awards, or whether they're appropriate at all, will continue to loom if Internet privacy litigation keeps growing. The Google Buzz settlement was dealt with in a similar way, and the chunk of cash that became available actually caused some conflict between different privacy groups.

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11 Reader Comments

  1. This is worse than a travesty of justice, it is a mockery of justice. This lack of rehearing will further embolden companies like Facebook to do whatever they wish, with any data they get their hands on, knowing that there are, for all practical purposes, no punishments or penalties awaiting them.
    408 posts | registered
  2. Cy pres, coupon settlements, injunctive only settlements, settlements that require extensive paperwork to collect, etc. are all tools in the hands of the class action plaintiffs bar to make global settlement cheap for the companies they target while securing heavy fees (in cash, natch) for themselves.

    Class actions should be opt-in rather than opt-out. If they think these settlements are so great let them convince their clients of that.
    25032 posts | registered
  3. Yay! $10 for free! ^_^
    616 posts | registered
  4. How about settling on the grounds that FB fund a campaign to educate its users as to the great importance of privacy. Oops, no, wait...
    1406 posts | registered
  5. Of course the lawyers are happy. All they honestly cared about was their $2.3M fees. They did not care if the money went to users, charity, drug lords, or if any money beyond their fee was generated.
    684 posts | registered
  6. So, Facebook's "punishment" is having to create a puppet show foundation that they can control and use as a foil against future criticisms?
    Basically Facebook just added another devision to their PR department.
    1644 posts | registered
  7. I'd be much happier if the amount of the award were enough to sting FB pretty badly, and if it went to the EFF.
    1116 posts | registered
  8. A total of seven posts, four hours after the article was published.


    - Oscar Wilde

    In its heyday, any article about Facebook and privacy would yield multiple pages of comments. Now their long, slow slide into irrelevancy is underway. AOL awaits them at the bottom with a flask full of Smirnoff.
    11389 posts | registered
  9. Faramir wrote:

    This. I've been notified of class membership in a half-dozen suits over the past 10 years, and not one of them has been worth the time required to fill it out to collect.
    195 posts | registered
  10. People complaining about not having privacy on Facebook, should maybe get rid of their Facebooks.
    483 posts | registered
  11. The lawyers pocket a couple million, Facebook gets another way they can say "we care about privacy," and a ridiculous invasion of privacy is swept away for a paltry $3 per user. Everybody wins!

    Oh, everybody except the users. But nobody cared about them anyway.

    If this judgment had been to the tune of $50 million or so and the underlying tracking Beacon used was forbidden and its data destroyed (tracking what you purchase on other websites, come on), this might have meant something. But this - FB can write off that $9.5m as development and testing costs for their tracking and privacy invasion tech.
    1972 posts | registered

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