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Fraley v. Facebook

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  • Report Reveals Rise in Teens' Desire for Online Privacy: A report released by the Intelligence Group, a "youth-focused, research-based consumer insights company," reveals that teens want more online privacy than ever before. According to the report, only 11% of teens currently share "a lot about themselves online" - a 7% decrease from the same age group last year. By contrast, 17% of young adults aged 19- to 24 and 27% of adults aged 25 to 34 currently share "a lot about themselves online." The report also indicates that "about 18% of teens share content on social media at least once a day, including status updates, photos, pins, or articles, compared with 28% of 19- to 24-year-olds and 35% of 25- to 34-year-olds." Recently, EPIC objected to a settlement agreement that would allow Facebook to use images of teens in online advertising. EPIC has also filed comments with the FTC supporting stronger regulations to protect children's data online. For more information, see EPIC: Fraley v. Facebook, EPIC: COPPA and EPIC: FTC. (Apr. 25, 2014)
  • Federal Trade Commission Backs Users in Facebook Privacy Case: The FTC has filed an amicus brief in a case before a federal appeals court concerning Facebook users. If a controversial settlement is approved, Facebook will display the images of users, including young children, in Facebook advertising without consent. Several Facebook users formally objected to the plan, arguing that it would violate state laws. A children's advocacy organization also objected, stating that the "settlement is actually worse than no settlement." The FTC brief explains that state privacy laws do prevent the display of children's images without consent. EPIC also filed an amicus brief in support of the users, explaining that the settlement is unfair and should be rejected. EPIC and a coalition of consumer privacy organizations filed an extensive complaint with the Federal Trade Commission that eventually required Facebook to improve its privacy practices. For more information, see EPIC: In re Facebook and EPIC: Fraley v. Facebook. (Mar. 21, 2014)
  • EPIC Files Amicus Brief in Facebook Consumer Privacy Case, Urges Rejection of Settlement: EPIC has filed a amicus brief urging a federal appeals court to overturn a controversial consumer privacy settlement. If the Fraley v. Facebook settlement is approved, Facebook will display the images of Facebook users, including young children, for commercial endorsement without consent. Facebook users opposed "Sponsored Stories" and several have formally objected to the settlement, including a children's advocacy organization which said that the "settlement is actually worse than no settlement." The MacArthur Foundation also withdrew stating it should not have been designated to receive funds. EPIC's amicus brief in support of the objectors explains that the settlement is unfair to Facebook users and should be rejected. EPIC also notes that Chief Justice Roberts expressed concerns about a similar privacy settlement involving Facebook. EPIC and a coalition of consumer privacy organizations filed an extensive complaint with the Federal Trade Commission that eventually required Facebook to improve its privacy practices. For more information, see EPIC: In re Facebook and EPIC: Fraley v. Facebook. (Feb. 21, 2014)
  • Children's Advocacy Group Withdraws from Facebook Settlement: The Campaign for Commercial-Free Childhood has turned down $290,000 from a controversial consumer privacy settlement concerning Facebook's Sponsored Stories. The children's advocacy group said, "We now believe that this settlement is actually worse than no settlement. It harms vulnerable teenagers and their families under the guise of helping them...we cannot benefit from a settlement which we now realize is harmful to children and will impede future efforts to protect minors' privacy on Facebook." The MacArthur Foundation withdrew from the Fraley settlement last year, suggesting the funds be redirected to "other non-profit organizations engaged in the underlying issues." And in a related case, Chief Justice Roberts suggested that the Supreme Court will need to address "fundamental concerns surrounding the use of such remedies in class action litigation." EPIC has worked closely with consumer privacy organizations and federal courts to improve class action settlements, arguing that settlements in consumer privacy cases should improve consumer privacy and that awards should be allocated to organizations aligned with the interests of class members. For more information, see EPIC: Fraley v. Facebook. (Feb. 20, 2014)
  • Supreme Court Lets Stand Contested Facebook Settlement, But Chief Justice Cautions About Future Cases: The Supreme Court has denied a petition for review in Marek v. Lane, a decision upholding the class action settlement of Facebook’s controversial "Beacon" Program. The settlement provided substantial fees to attorneys, no benefits to class members, and established a funding entity, controlled in part by Facebook "Cy press" ("as near as possible") is a legal doctrine that allows courts to allocate funds to protect the interests of individuals when there is a class action settlement, but concerns have been raised about the misuse of cy pres procedures. Chief Justice Roberts, focusing on the "unusual" allocation of funds in the Facebook matter, suggested that the Supreme Court would eventually need to address "fundamental concerns surrounding the use of such remedies in class action litigation" including "how to assess its fairness as a general matter; whether new entities may be established as part of such relief; if not, how existing entities should be selected; what the respective roles of the judge and parties are in shaping a cy pres remedy; [and] how closely the goals of any enlisted organization must correspond to the interests of the class." EPIC and other consumer privacy organizations have routinely raised similar concerns about abuse of the class action process. For more information, see EPIC: Fraley v. Facebook, EPIC: Lane v. Facebook, and EPIC: In re: Google Buzz. (Nov. 4, 2013)
  • MacArthur Foundation Withdraws From Consumer Cy Pres Settlement: The prestigious MacArthur Foundation has asked to be removed from a controversial consumer privacy settlement. The foundation noted that it was not an appropriate cy pres recipient and asked that the funds be "redirected to other non-profit organizations engaged in the underlying issues." Consumer privacy organizations, including EPIC, have opposed the Fraley settlement stating that it violates a 2011 consent order with the Federal Trade Commission and that the cy pres allocations proposed do not reflect the interests of the class or the purpose of the litigation. A recent survey by Gigaom found that many of the named organizations are funded by Facebook and have no plans to assist class members. Public Citizen has appealed the settlement to the Ninth Circuit. The Federal Trade Commission has opened an investigation and Facebook has suspended implementation of the proposed privacy changes that would result from the settlement. For more information, see EPIC: Fraley v. Facebook. (Sep. 25, 2013)
  • EPIC, Privacy Groups, Urge Court to Reject Proposed Google Settlement: EPIC, joined by several leading privacy and consumer protection organizations, submitted a letter to the Northern District of California regarding a proposed settlement in a class-action lawsuit against Google. The settlement was proposed by class action lawyers on behalf of Google users in a case concerning the unlawful disclosure of search terms by Google to third parties. Under the terms of the proposed settlement, Google would be allowed to continue to disclose user search terms to third parties. The letter explains that the proposed settlement "provides no benefit to Class members" because it does not require Google to change its business practices. "Furthermore," the letter states, "the proposed cy pres allocation is not aligned with the interests of the purported Class members." "Cy press" ("as near as possible") is a legal doctrine that allows courts to allocate funds to protect the interests of individuals when there is a class action settlement. Under Ninth Circuit precedent, cy pres funds must be used to advance the interests of the class members. EPIC previously highlighted the dangers of improper cy pres distributions in settlements. For more information, see EPIC: Fraley v. Facebook, EPIC: Lane v. Facebook, and EPIC: Search Engine Privacy and EPIC: Google Buzz. (Aug. 22, 2013)
  • Court Denies Appeal in Cy Pres Matter Over Objection that Settlement Fails to Provide Relief to Class Members: The Ninth Circuit has refused to hear an appeal in a case involving a class-action lawsuit over Facebook’s Beacon program, which disclosed personal information without user consent. "Cy pres" ("as near as possible") is a legal doctrine that allows courts to allocate funds to protect the interests of individuals when there is a class action settlement. Courts typically provide cy pres awards that reflect the reason for the litigation and are aligned with the interests of class members. In the Facebook case the court chose instead to provide the funds to a new foundation created by Facebook, which was appealed. Six judges dissented from the denial, writing that "the majority in this case creates a significant loophole in our case law that will confuse litigants and judges, while endorsing cy pres settlements that in no way benefit class members." EPIC previously highlighted the dangers of improper cy pres distributions in settlements. For more information, see EPIC: Fraley v. Facebook, EPIC: Lane v. Facebook, and EPIC: In re: Google Buzz. (Feb. 28, 2013)

Background

This case addresses the question of whether Facebook violated the rights of its users by incorporating their names and likenesses in advertisements called “Sponsored Stories.” Sponsored Stories showed a user's name and profile picture to their friends when they liked pages belonging to commercial companies, brands, products, organizations, and other similar pages. The implication was that the user had endorsed the page in question and would recommend it to their friends.

This case was filed as a class action in California superior court and was removed to the United States District Court for the Northern District of California on March 11, 2011. After its motion to dismiss the case was affirmed in part and denied in part, Facebook reached an initial settlement with the proposed class. The settlement allocated $10 million to various non-profit groups, though did not provide any relief to actual class members. EPIC opposed this proposed settlement on the grounds that it did not follow the doctrine of cy press, a doctrine which allows a court to distribute non-distributable portions of a class action settlement fund to the “next best” class of beneficiaries. The proposed settlement did not follow this doctrine because it excluded organizations that represented the silent class members who have sought stronger privacy protections for Facebook users and routinely represented class members before federal and state agencies.

The case was reassigned after the presiding judge recused herself and the initial settlement was rejected in August of 2012. A revised settlement was proposed in which users were given some control over their appearance in sponsored stories by individual advertisers and allows parents of minors to opt their children out of all advertising. Additionally, users were able to file a claim for up to $10 from a settlement fund of $20 million. The proposed settlement was preliminarily approved on December 3, 2012. On January 2, 2013, notices of the proposed settlement were sent out to the 125,000,000 potential class members.

EPIC continues to oppose the proposed settlement and will be supporting Public Citizen's efforts to appeal the settlement by filing an amicus brief in support of that appeal.

EPIC's Interest in Fraley v. Facebook

EPIC is interested in this case for three reasons. First, EPIC and a coalition of consumer privacy organizations are responsible for the 2011 consent order between the Federal Trade Commission and defendant Facebook concerning the protection of consumer privacy that is impacted by this settlement. Second, EPIC has routinely advised courts in consumer privacy class actions to ensure that the settlement is aligned with the purpose of the litigation and that the cy pres allocations advance the interests of class members. Third, in Marek v. Lane, a case that bears a striking similarity to the matter currently before this court, Chief Justice John Roberts expressed concerns that reflect views EPIC and others have routinely expressed about class action settlements in consumer privacy cases.

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United States Court of Appeals for the Ninth Circuit

United States District Court for the Northern District of California

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