Plaintiffs’ lawyers have devised a settlement agreement only a beneficiary could love, this time taking Facebook to task for its “Sponsored Stories” program. We’ve commented on the suit previously here and here. Of course, plaintiffs’ lawyers should be encouraged to devise settlements that the beneficiaries love–when those beneficiaries are actually the plaintiffs they represent. But in a bizarre, perplexing, and yet somehow predictable twist, the plaintiffs’ lawyers have managed to devise a settlement that seemingly enriches everyone except the plaintiffs. Heck, even the trial judge had to recuse herself after it was found that she would receive an indirect benefit from the settlement.
Under Sponsored Stories, Facebook may place your picture alongside an ad that you’ve “liked” or otherwise interacted with on a friend’s page. Sponsored stories apparently generate more than $1 million in daily revenue for Facebook, and just this week during the company’s first earnings call as a public company, Mark Zuckerberg hailed it as a “success.” But in Fraley v. Facebook, the plaintiffs allege that the program publicizes their “likes” of advertisers without compensation, and fails to warn them or give them an opportunity to opt out.
So, under the proposed settlement, who gets what, and who gets not? The lawyers, predictably, pick up a pretty penny for their noble efforts: $10 million dollars in attorneys’ fees alone. Pro-privacy interest groups likewise have somehow earned $10 million in cy pres damages–each organization will receive between $500,000 and $1,000,000.
What is suspect is that many of these “charities,”–who are purportedly being paid because of their pro-privacy advocacy work in the public interest–have opted not to take a stance on the case from which they are financially benefiting. Isn’t this exactly why they are being paid: to have an opinion on important privacy issues affecting the public?
Perhaps the organizations are keeping mum because the settlement just isn’t that great for privacy. While the lawyers and charity organizations pile up the cash, plaintiffs are left with a promise to let members “be capable of taking steps to limit their appearance in those ads.” To what extent remains unclear, and further, Facebook only agreed to maintain these changes for two years.
Some privacy groups not benefitting from the settlement do have an opinion, however. Jeff Chester, the executive director of the Center for Digital Democracy, said Facebook’s promise is the equivalent of “putting some more words in Facebook’s privacy policy that nobody reads.” And at least one group, Consumers Union, rejected the $500,000 they were offered due to their disapproval of the settlement terms.
Lawyers? Check. Consumer groups? Check. Actual consumers, on the other hand? They get what is essentially a vaguely worded promise to not do that again, or at least, not that same thing, for at least two years.
This is a pattern we’ve seen again and again (and again). Bring a frivolous lawyer-driven claim, get past summary judgment, settle.
Lather, rinse, repeat. File, shakedown, repeat.
Fortunately, some judges have demonstrated a willingness to reject settlements that do not adequately serve the plaintiffs and instead enrich plaintiffs’ lawyers. Since Judge Koh recused herself, we’ll have to see if the newly appointed judge will take a serious look at the terms of the settlement.