A $20 million settlement agreement to
resolve class claims that Facebook Inc. unlawfully displayed users' names and
likenesses through its Sponsored Stories advertising program won preliminary approval
Dec. 3 from the U.S. District Court for the Northern District of California
(Fraley v. Facebook Inc., N.D. Cal., No.
3:11-cv-01726-RS, preliminary approval of settlement 12/3/12).
Judge Richard Seeborg, who denied Aug. 17 an earlier proposed settlement
agreement in the right of publicity case (11 PVLR 1343, 9/3/12), wrote that he
was “satisfied that the revisions to the terms of the settlement are sufficient
to warrant preliminary approval.” At a Nov. 15 hearing regarding the motion for
preliminary approval, Seeborg told counsel that the revisions “certainly
endeavored to address the concerns, serious concerns, on my part” (11 PVLR 1687,
The Sponsored Stories program combined a Facebook member's name and profile
picture with an advertiser's logo and a note stating that the user had “liked”
the company. Plaintiffs in the case argued that merely clicking the “Like”
button on Facebook did not provide consent for their profile photos to be used
for marketing purposes.
In ruling against the earlier settlement, Seeborg faulted the parties for not
adequately justifying the lack of a direct payment to class members. The earlier
agreement would have established a $10 million cy pres fund to assist
organizations such as the Electronic Frontier Foundation and the Consumer
Federation of America. Seeborg also was troubled by a “clear sailing” provision
that meant Facebook would not contest an award of $10 million in attorneys'
Under the revised agreement, Facebook still will provide a $20 million
settlement. However, the settlement now offers a direct payment of $10 per
claimant. If the total sum of claims would exhaust the settlement fund, then a
pro rata share will be used unless the share is less than $5 per claimant, in
which case the court could elect to substitute the cy pres fund.
The new agreement also stripped the “clear sailing” provision.
Full text of the court's opinion is available at http://op.bna.com/pl.nsf/r?Open=kjon-92nudy.
Full text of the amended settlement agreement is available at http://op.bna.com/tpif.nsf/r?Open=mlon-8ywm8s.
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