966 F. Supp. 2d 939
N.D. Cal.2013Background
- Settlement class ~150 million Facebook users whose names/likenesses were allegedly used in Sponsored Stories.
- Settlement provides small direct cash payments to claimants and cy pres awards to privacy-related organizations.
- Facebook to modify SRRs and implement injunctive measures increasing user information and control over Sponsored Stories.
- Original plan lacked monetary relief; revised plan approved preliminarily and notice sent; objections, including major concerns about minors, were raised.
- Court applies Hanlon factors and analyzes pre-certification settlement under a heightened standard of fairness.
- Monetary relief fixed at $20 million; per-claimant payout $15 if claims filed; remaining funds allocated to cy pres; fees and costs are addressed in separate order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the settlement fair, adequate, and reasonable under Rule 23(e)? | Plaintiffs argue balance favors class relief given injunctive benefits and modest monetary recovery. | Facebook contends relief is fair given uncertainties and litigation risks. | Yes; settlement deemed fair, adequate, and free from collusion under Hanlon factors. |
| Is the monetary relief component fair and adequate given class size and claims rate? | $15 per claimant with $20M fund is a reasonable compromise. | Direct cash payoff to all class members impracticable; cy pres supports distribution of unclaimed funds. | Yes; monetary relief fair and adequate in light of expenses and probable outcomes. |
| Are the injunctive provisions and their value properly designed to benefit the class? | Injunctive relief meaningfully improves disclosure and control for users. | Injunctive remedies less expansive than objectors want but still beneficial. | Yes; provisions provide tangible benefits and improved transparency for users. |
| Is cy pres distribution appropriate and properly linked to the class issues? | Cy pres allowed where individual damages are burdensome to distribute. | Cy pres must align with class’s purpose and privacy issues. | Yes; cy pres recipients focus on consumer privacy, online safety, and minor protection with nexus to the case. |
| Do COPPA and minor-subclass concerns preclude settlement approval? | Parental-consent considerations should be resolved in plaintiffs’ favor. | COPPA preempts state laws; merits not decided in settlement context. | Preemption and uncertainties acknowledged; resolution appropriate within settlement framework. |
Key Cases Cited
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (set of factors for evaluating fairness; settlement approval before certification requires higher scrutiny)
- Officers for Justice v. Civil Service Commission, 688 F.2d 615 (9th Cir. 1982) (settlement not to be turned into trial; focus on overall fairness)
- In re Gen. Motors Corp. Pick-Up Truck Prods. Liab. Litig., 55 F.3d 768 (3d Cir. 1995) (monitor for collusion and abuses with less information before certification)
- Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir. 2011) (cy pres appropriate when distribution of damages is burdensome)
- Six Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) (cy pres and settlement viability considerations)
- Dennis v. Kellogg Co., 697 F.3d 858 (9th Cir. 2012) (cy pres and settlement alignment with class goals; Ninth Circuit context)