U.S. judge rejects settlement in Facebook Sponsored Stories case

Lawsuit seeks class action status

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."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Marc Ferranti

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?