The $10 million “cy pres” payment in a recent Facebook settlement may not...
The $10 million “cy pres” payment in a recent Facebook settlement may not be “fair, adequate, and reasonable,” a U.S. District Court in San Francisco said last week. The cy pres doctrine is designed to figure out how to distribute…
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class action settlement money not claimed by class members. In a ruling filed Friday, Judge Richard Seeborg questioned the settlement reached earlier this year by a group of Facebook users and the social media website (WID June 25 p7) over a class-action lawsuit that said Facebook was profiting from ads that included users’ likenesses without their knowledge or permission. Specifically, Seeborg took issue with the cy pres payment of $10 million that Facebook will be making “to certain organizations involved with internet privacy issues” and the up to $10 million in attorney fee awards that the plaintiffs may apply for. In addition to questioning whether the large class size is enough to justify a cy pres payment rather than awarding statutory damages to the individuals whose likenesses were used in the ads, Seeborg questioned the adequacy of the cy pres payment itself. “At oral arguments, plaintiffs seemed to suggest that the cy pres payment is relatively unimportant, given the primary purpose of their action from the outset: to compel Facebook to change its practices prospectively,” he wrote. “The cy pres payment is compensation for past alleged wrongdoing,” the ruling said, and should be seen as an added bonus to compelling Facebook to change their practices. He asked that the plaintiffs “show that the cy pres payment represents a reasonable settlement of past damages claims, and that it was not merely plucked from thin air.” Moving forward, Seeborg wrote, “the parties may elect to negotiate for modifications to their agreement, or plaintiffs may present a renewed motion for preliminary approval of the existing agreement, with additional evidentiary and/or legal support directed at ameliorating the listed concerns.” “We continue to believe the settlement is fair, reasonable, and adequate,” a Facebook spokesman said in an email. “We appreciate the court’s guidance and look forward to addressing the questions raised in the order. We are confident we can address the issues raised by the court without substantially revising the settlement.”