Ginger McCall v. Facebook, Inc.
696 F.3d 811
| 9th Cir. | 2012Background
- Facebook Beacon exposed users' purchases to their friends without consent, prompting a privacy class action.
- Settlement terms: Facebook would terminate Beacon and pay $9.5 million, with about $3 million for fees and costs and $6.5 million for a new grant-making entity, DTF.
- DTF board initially included Facebook employee Tim Sparapani and was governed by a three-member board with joint control; DTF would grant funds to online privacy initiatives.
- Court approved settlement before formal class certification; class notices were sent; 108 opted out, 4 objected.
- Objectors attacked the cy pres mechanism (DTF) and the overall settlement amount, arguing conflicts and misalignment with class interests.
- District court retained jurisdiction for implementation of the settlement and awarded attorneys’ fees of about $2.36 million.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court abused discretion approving the settlement | Objectors claim settlement favors counsel and Facebook over absent class members | Facebook and plaintiffs argue the settlement is fair, adequate, and free from collusion | No: settlement approved; Hanlon factors met, cy pres appropriate |
| Whether the cy pres recipient (DTF) complies with cy pres standards | DTF has insufficient performance history and potential conflicts | DTF’s mission aligns with class interests; cy pres nexus valid | No: cy pres structure acceptable, nexus to class interests established |
| Whether VPPA claims were properly considered in assessing the settlement value | VPPA claims could yield substantial damages and affect recovery | VPPA damages uncertain; overall settlement value still substantial | No: district court properly weighed VPPA risk and found $9.5 million substantial |
| Whether notice was adequate given cy pres and board involvement | Notice failed to reveal Facebook’s board role and cy pres governance | Rule 23(e) notice requirement satisfied; no misrepresentation | No: notice adequate under controlling standards |
Key Cases Cited
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir.1998) (set forth Hanlon factors and heightened review pre-certification)
- Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir.2011) (cy pres must account for nature of suit and silent class members)
- Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir.1990) (cy pres must meaningfully benefit the class; avoid无)
- Molski v. Gleich, 318 F.3d 937 (9th Cir.2003) (cy pres caution; later overruled on other grounds)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir.2011) (clear sailing fees raise collusion concerns)
- Staton v. Boeing Co., 327 F.3d 938 (9th Cir.2003) (collusion risks in broad, pre-certification settlements)