Fraley v. Facebook

Class Actions — Objections to Proposed Settlements
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Facebook has been using the images of their millions of users, without their knowledge or consent, to sell advertising. Through Facebook’s “Sponsored Stories” program, whenever a user clicks the “Like” button, Facebook may use that interaction to create an advertisement that is then broadcast to that user’s “Friends” on Facebook—turning those users into spokespeople for Facebook advertisers.

In March 2011, Facebook was sued over the “Sponsored Stories” program, in a class action lawsuit alleging that it was unlawful to use people’s names and photos for advertising without their consent. The plaintiff class and Facebook proposed a settlement, which requires court approval. Under the settlement, Facebook proposed to pay an amount equal to $10 per class member (later raised to $15), although each person’s claim is worth $750 under state law. The settlement provides that Facebook will create a mechanism for users to opt out of Sponsored Stories, but the opt-out right is limited in key respects and Facebook has agreed to abide by opt-out preferences for only two years. Although the settlement requires Facebook to implement “parental controls” applicable to limited situations, the settlement allows Facebook to continue to use most of their minor users’ likenesses without their parents’ consent, in violation of state privacy laws in California, Florida, New York, Oklahoma, Tennessee, Virginia, and Wisconsin.

In May 2013, Public Citizen objected to the settlement on behalf of a group of six parents from California, New York, Tennessee, and Virginia who do not want their teenage children’s names and images to be used without parental consent. The objection argued that the court should not approve a settlement that permits the violation of state law. The objectors also argued that the terms of the settlement are unfair because the monetary compensation is minimal, and because the policy changes are inadequate and time-limited.

The district court approved the settlement in August 2013. Public Citizen has appealed to the U.S. Court of Appeals for the Ninth Circuit on behalf of five of the six objecting parents.

Meanwhile, class counsel asked the district court to require each of the objectors to put up a $32,000 bond as a condition of pursuing their appeals. Class counsel argued that if objectors lose the appeal, they would be responsible for “administrative costs” associated with delaying the implementation of the settlement. Public Citizen opposed the bond, arguing that there is no basis in rule or statute for imposing such costs on unsuccessful objector-appellants and that the district court should not permit the use of an appeal bond to deter legitimate objectors from seeking appellate review. On June 30, 2014, the district court agreed with Public Citizen that objectors could not be required to pay administrative costs and therefore denied the motion to impose a bond. The case was argued before the Ninth Circuit in September 2015. In January 2016, the court affirmed the approval of the settlement, ruling that its lawfulness or unlawfulness was not clear and so approval was permissible.