U.S. judge rejects settlement in Facebook Sponsored Stories case
Lawsuit seeks class action status
IDG News Service - A U.S. District Court judge has rejected a proposed settlement in a lawsuit that alleges Facebook violated users' rights by using their names and recommendations of advertisers to be publicized through a Sponsored Stories program.
The lawsuit, which seeks class-action status, was filed in the Northern District of California by five Facebook members on behalf of as many as 100 million users of the social networking site.
The settlement proposal calls for Facebook to change its Statement of Rights and Responsibilities ("SRRs") and to implement certain additional mechanisms to give users greater information about, and control over, how their names and likenesses are employed in connection with sponsored stories, according to court documents.
The proposal also indicates that Facebook has agreed to make a payment of $10 million dollars to certain organizations involved in Internet privacy issues, and provides that the plaintiffs may apply for an award for attorney fees of up to $10 million, without objection by Facebook.
However, Judge Richard Seeborg in a Friday ruling denied a motion for preliminary approval of the proposal.
"In this instance there are sufficient questions regarding the proposed settlement that it would not be appropriate simply to grant the motion and postpone resolution of those issues to final approval," Seeborg wrote.
A key issue concerns the potential size of what might be considered adequate compensation for Facebook users considering that 100 million possible members could be involved in a class action case.
"To arrive at a fair settlement amount in compensation for past damages, the plaintiffs' potential recovery at trial must be estimated, and then appropriate discounts applied for the uncertainties, risks, and costs of litigation," Seeborg wrote. "At the hearing, Facebook argued the $10 million figure represents a fair estimate under just such an analysis. That well may be so, but the present motion does not provide adequate support for the conclusion."
The proposed $10 million fee Facebook would pay to privacy organizations was noted by Seeborg to be a "cy-pre" fee -- in class action suits a fee paid by the defendant when direct payment to all the members of the class is not feasible.
"Can a cy pres-only settlement be justified on the basis that the class size is simply too large for direct monetary relief? Or, Notwithstanding the strong policy favoring settlements, are some class actions simply too big to settle?" Seeborg asked.
Seeborg said that the two sides could amend the proposal and resubmit it.
"We continue to believe the settlement is fair, reasonable, and adequate," Facebook said in a media statement. "We appreciate the court's guidance and look forward to addressing the questions raised in the order."
- Facebook launches redesign with a bit of the old, a bit of the new
- Facebook eyes solar-powered drone company
- Facebook coughs up $19B for WhatsApp's younger users
- Facebook buying WhatsApp for $16 billion
- Facebook's birthday present: A look back at your social life
- At 10, Facebook strives not to be your granny's social network
- Facebook sees apps in its future ... lots of apps
- Facebook hijacks Trending feature from rival Twitter
- Facebook to kill off one kind of ad some users hated
- Facebook uses a seasoned Chef to keep servers simmering
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- The Business of Social Business Social business represents a significant transformational opportunity for organizations. Read this whitepaper to learn more.
- HP HAVEn: See the big picture in Big Data HP HAVEn is the industry's first comprehensive, scalable, open, and secure platform for Big Data. Enterprises are drowning in a sea of data...
- What Datapipe customers need to know about the new PCI DSS 3.0 compliance standard This handy quick reference outlines what PCI DSS 3.0 is, who needs to be compliant and how Alert Logic solutions address the new...
- The 12 PCI DSS 3.0 requirements addressed by Peer 1 Hosting This handy quick reference outlines the 12 PCI DSS 3.0 requirements, who needs to be compliant and how Alert Logic solutions address the...
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,... All Social Media White Papers | Webcasts