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.
United States Court of Appeals for the Ninth Circuit