Behind the Facebook Ads Class Settlement Shocker

  |  July 12, 2012   |  Comments

Facebook agreed to pay $123.5M, much of it in organization grants.

Today, U.S. District Court Judge Lucy Koh was expected to rubber-stamp the settlement of a class-action lawsuit against Facebook. Instead, she recused herself from the case - after a year of hearings.

The settlement called for Facebook to pay court costs, attorneys' fees and $10 million to public interest groups. The total amount of the settlement is valued at $123.5 million.

The 15 proposed recipients of the $10 million include the MacArthur Foundation ($1M); Electronic Frontier Foundation ($1M); Campaign for Commercial-Free Childhood ($500,000); Berkeley Center for Law and Technology ($600,000); and Stanford Law School's Center for Internet and Society ($600,000).

Amy Miller of The Recorder reported that Koh is connected to several organizations that are set to receive money. Her husband, Mariano-Florentino Cuellar, is a prof at Stanford, on the list for two awards. Cuellar is co-director of Stanford University's Center for International Security and Cooperation, which received a $2.45 MacArthur grant this year. Koh also sits on Santa Clara University School of Law's High Tech Advisory Board; the university's High Tech Law Institute would also get $600,000.

Miller also reported that the case has been assigned to U.S. District Judge Richard Seeborg, who also presided over a class action suit against Ganz USA, maker of Webkinz Internet-connected toys.

Last year, five Californians sued Facebook, saying that its Sponsored Stories advertising option violated California's "right of publicity" statute giving consumers control over use of their names or photos in advertising. Two of the litigants are minors.

The proposed settlement already had been criticized by some privacy advocacy groups. On Tuesday, the Center for Digital Democracy filed a brief with the court saying the proposed settlement doesn't give consumers meaningful control over Sponsored Stories.

Barry M. Benjamin and Andrew I. Gerber of the law firm Kilpatrick Townsend, noted that currently, the only way to opt out of appearing in Sponsored Stories is to un-like a brand. In an article on JDSupra, they wrote, "Under the terms of the settlement, Facebook agreed to facilitate the procedure for un-liking brands and thereby opting out of promotion, but it has not decoupled liking a brand from use of one's image in actively promoting that brand on the site. Nonetheless, this does reflect a change in policy for Facebook, which previously lacked any opt-out mechanism for its sponsored story advertising."

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ABOUT THE AUTHOR

Susan Kuchinskas

Susan Kuchinskas has covered interactive advertising since its invention. The former staff writer for Adweek, Business 2.0, and M-Business covers technology, business and culture from Berkeley, CA.

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