Revised Settlement Proposes Up to $10 Per Claimant in Facebook Use of Likes in Ads

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Facebook Inc. and class action plaintiffs Oct. 5 filed a revised $20 million settlement agreement with the U.S. District Court for the Northern District of California, arguing it addresses concerns that led the reviewing judge to deny the prior settlement (Fraley v. Facebook Inc., N.D. Cal., No. 3:11-cv-01726-RS, revised settlement filed 10/5/12).

The settlement would end a proposed class action over whether Facebook violated California's right of publicity statute when it launched its Sponsored Stories advertising program in January 2011. The 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. The plaintiffs argued that merely clicking the “Like” button on the website did not provide consent for their profile photos to be used for marketing purposes.

The parties proposed that the court hold a hearing on the revised settlement agreement Oct. 25.

Cy Pres Settlement Nixed.

A mediator overseeing settlement negotiations concluded June 8that the most appropriate resolution of the case was the establishment of a $10 million cy pres fund by Facebook to fund “groups whose charters set out actions and programs relevant to advocacy related to the purposes for which this case was brought.” He argued the massive size of the proposed class meant that even a “very small amount” of $10 to each class member likely would mean a settlement of $1 billion, which he said was too large (11 PVLR 990, 6/25/12).

However, in reviewing the proposed settlement, the court held in August that the parties did not justify the lack of a direct payment to class members, although it did note, “there is no dispute here that it would be impractical to the point of meaninglessness to attempt to distribute the proposed $10 million in monetary relief among the members of a class that may include upwards of 70 million individuals.”

The court also wanted more information on the value of the injunctive relief to help evaluate whether it was appropriate for the settlement to allow class attorneys to request up to $10 million in fees and $300,000 in costs (11 PVLR 1343, 9/3/12).

Attempt to Provide Direct Payments.

The new settlement agreement established a $20 million settlement fund from which those appearing in Sponsored Stories and the plaintiffs' attorneys may make claims.

The joint filing explained that the “clear sailing” provision was removed from the agreement, meaning Facebook could contest the amount of attorneys' fees and costs sought by the plaintiffs' attorneys.

The new settlement attempted to provide monetary compensation of $10 each to affected Facebook users. However, the agreement said that if the total sum of the claims exhausts the settlement fund, the claimants would receive a pro rata share.

If the pro rata share is less than $5, then the court may elect instead to provide the settlement fund to cy pres recipients. The revised settlement agreement named the same organizations as the earlier proposed settlement, including the Electronic Frontier Foundation and the Consumer Federation of America.

The agreement provided that the cy pres option will be used if “it is not economically feasible to make any pro rata payment” to claimants.

Additional Clarity on Injunctive Relief.

The joint filing said the parties provided further detail on the injunctive relief and agreed to greater protections for users under 18.

The revised settlement agreement said Facebook would amend its terms of service to include information on the Sponsored Stories program and engineer a privacy tool that would let users, “upon viewing the interactions and other content that are being displayed in Sponsored Stories, … control which of these interactions and other content are eligible to appear in additional Sponsored Stories.”

Regarding minors, Facebook would remove users under 18 from the program if they reported their parents did not use the social networking website. If, however, parents were on the site, the agreement said they would need to use a parental control tool if they did not want their children in Sponsored Stories.

Full text of the revised settlement agreement is available at