Final Approval Granted For Facebook’s $20M Settlement Of Class-Action Lawsuit Over Users’ Images In Sponsored Stories

By David Cohen 

U.S. District Court Judge Richard Seeborg granted final approval to Facebook’s $20 million settlement of class-action lawsuit Fraley et al vs. Facebook Monday, which was filed regarding the use of users’ images in sponsored stories, wrapping up proceedings that started in 2011.

Seeborg wrote in his order Monday that “while not incorporating all features that some of the objectors might prefer, [the settlement] has significant value,” according to Reuters, which added that the social network will pay out $20 million and grant users more control over how their content is shared.

Forbes offered more details on the settlement in June, saying that 614,994 Facebook users filled out online forms to become part of the class-action suit, and they will receive $15 apiece, while the original plaintiffs will get a total of $37,500, and attorneys will receive $7.5 million, plus expenses.

Seeborg’s approval closed the books on the class-action lawsuit, and here are some other key moments of Fraley et al vs. Facebook:

December 2011: U.S. District Judge Lucy Koh rejected Facebook’s bid to dismiss the lawsuit, ruling that the social network’s use of its users’ images in targeted advertising and sponsored stories may run afoul of California’s Right of Publicity Statute, which prohibits the non-consensual use of another person’s name, voice, signature, photograph, or likeness for advertising purposes.

May 2012: Facebook settled the suit based on the principle that its sponsored stories turn its users into spokespeople and, as such, they should be compensated. Terms were not revealed at the time.

June 2012: The terms of the settlement were revealed, and Facebook agreed to pay out $10 million to charities.

June 2012: Facebook announced that it would give its users more control over how their personal information is used in sponsored stories.

July 2012: Koh recused herself from the case, without offering a reason.

August 2012: New judge Seeborg expressed “significant concerns” with the settlement, particularly with the members of the class-action suit not receiving any money.

August 2012: Seeborg rejected the settlement, writing:

There are serious concerns with the provision of the settlement agreement permitting plaintiffs to apply for up to $10 million in attorney fees without objection by Facebook. The fact that the parties negotiated that “clear sailing” provision separately from the cy pres payment does not wholly eliminate the concern that class counsel may “have bargained away something of value to the class.”

If, and to the extent, that only a much smaller fee award can ultimately be justified here, then the fact that Facebook has agreed to pay up to $20 million (plus up to $300,000 in costs) to resolve this action may be of some consequence in evaluating the adequacy and fairness of the cy pres amount.

October 2012: Facebook filed an amended settlement, providing for one-time cash payments of $10, or, if more than 1 million Facebook users filed claims, an even split of the $10 million pool between them. If the settlement amount dropped below $5 per user, the administrator could either split the $10 million equally, or distribute all of the money to privacy organizations.

December 2012: Seeborg ruled that Facebook’s proposed settlement met the requirements for preliminary approval.

December 2012: California attorneys Robert Arns and Jonathan Jaffe, who represented the five plaintiffs in the class-action lawsuit, said they were seeking $7.7 million in fees.

January 2013: Facebook users began receiving emails from the social network with the subject line, “Legal Notice of Settlement of Class Action,” explaining how they could submit claims to become part of the class action.

Readers: Was the settlement fair?

Image courtesy of Shutterstock.