Judge “Dislikes” Facebook Class Action Settlement

Picture This: You’re chatting with some friends on Facebook when one of your friends posts a link to a book about dogs she just wrote. You click “Like” to support your friend’s interest and write a comment underneath the link. The next time you log on to Facebook though, you notice a new advertisement on the side of the social networking site. A small advertisement about dog food is there with your name and picture beside the product’s logo. Your previous comment is also there, except this time it’s being used to support a company you’ve never even heard of.

This story actually isn’t that far off base. Five Facebook users brought a class-action suit, a lawsuit involving many plaintiffs with a shared grievance against the defendant, against the social networking giant on behalf of 100 million other potential class members. The suit contends that Facebook is violating a California law which prohibits the use of a person’s name, photo or other personal information for the purpose of commerce advertising without the person’s consent.

This kind of lawsuit against Facebook isn’t unusual; Facebook is quickly becoming notorious for all sorts of privacy violations. Facebook’s procedure for handling these kinds of lawsuits is typically to make a settlement, change their privacy agreements and software a little, and then go on like nothing happened. This time, however, the judge blocked the settlement. The settlement was for a total of $20 million; $10 million for various charities, including privacy advocacy groups, and the other half for legal fees.

The disturbing part of this story isn’t the mass violation of privacy; sadly, this is a common occurrence on the internet now. No, the scary part is the question about the legal fees and the role of the plaintiff’s attorneys in the case. First, economists consulted by the plaintiffs estimate the case to be worth $103 million. While one side in a settlement can’t expect to get their exact amount, $20 million is very far from the estimate provided.

Second, the fact that none of the money goes to recovery for any of the plaintiffs is disheartening for a justice system which claims to be for the people. “Cy pres” payments were originally used to make trusts and wills which were impossible (because the money supposed to be given is less than the actual amount the deceased had) legal by adjusting the amount of inheritance given in the will. California courts, however, have used the doctrine to help promote the interests of parties bringing class action lawsuits. This case questions the true intent of the doctrine as the real plaintiffs in this case aren’t even directly benefiting from it.

To add insult to injury, half of the proposed settlement went to the attorneys to cover the costs of the lawsuit. Even if it is assumed that the attorneys were working on a contingency fee, a fee arrangement where the attorneys get a percentage of the money awarded by a judgment, a third of a settlement is the accepted standard. Half of a settlement is excessive, especially when the plaintiffs aren’t going to get a penny.

The most outrageous part though is that Facebook would have gotten off the hook. While $20 million is no small amount, given the company’s history on privacy, the settlement should have included some means to restrain Facebook from committing a practice which violates the public interest. Judge Seeborg was right to block the agreement, but the perplexing part was that the judge had to act at all. Where were the plaintiff’s attorneys when this one-sided agreement was being made? It makes little sense to hire an attorney if the lawyer won’t zealously advocate for the client(s). The privacy of 100 million users, and possibly everyone’s, demands more.