MacArthur Foundation to Decline Facebook Settlement Funds

Thanks, but no thanks.

That was the response of one of 14 organizations selected to receive assigned percentages of the several million dollars remaining in Facebook Inc.'s $20 million Sponsored Stories litigation settlement.

Andy Solomon, vice president for public affairs at the John D. and Catherine T. MacArthur Foundation, told Bloomberg BNA Sept. 20 that the group "did not ask to participate" in the settlement for Fraley v. Facebook Inc., No. 3:11-cv-01726-RS (N.D. Cal. settlement approved Aug. 26, 2013). Fraley involved whether Facebook violated users' right of publicity when it paired their names and profile photos with advertisers' logos and statements that they "liked" the company. Plaintiffs said that clicking the "Like" button did not constitute consent for them to be used in Facebook advertising.

"The Foundation has informed lawyers representing both parties in the settlement that we respectfully decline to accept any settlement funds," Solomon said. "Instead, in this case, we have suggested those funds be redirected to other non-profit organizations engaged in the underlying issues and identified in the settlement as possible recipients."

He said the MacArthur Foundation was a grantmaking institution that does not focus on consumer privacy.

A June 2012 filing by the plaintiffs' attorneys in Fraley named the MacArthur Foundation as one of the organizations to receive payments from a cy pres fund. Many courts have permitted the use of cy pres funds, which distribute class action settlement funds to nonprofit organizations rather than class members as deemed appropriate.

Cy pres awards are not without controversy, and the court in Fraley denied approval August 2012 for the first settlement agreement in the case for not adequately justifying the lack of a direct payment to class members. The cy pres fund in the approved settlement agreement in Fraley is smaller because it now provides $15 to each class member that filed a claim.

The MacArthur Foundation was scheduled to receive 10 percent of the cy pres fund.

Facebook did not immediately respond to a request for comment.

Copyright 2013, The Bureau of National Affairs, Inc.