Supreme Court passes on evaluating Facebook class action settlement

Facebook had agreed to pay $9.5 million in 2009 over its Beacon service

Challenges to Facebook’s privacy policies aren’t a new phenomenon. In fact, back in late 2009, Facebook agreed to a $9.5 million class action settlement over its “Beacon” service, which publicly broadcasted a member’s online transactions with affiliated businesses.

For some, that $9.5 million price tag wasn’t high enough, so some members of the class action suit appealed to the Supreme Court for harsher penalties. But the Supreme Court disagreed — the court said on Nov. 4 that it would not review the case, and would allow the 2009 settlement to stand.

The objectors argued that the settlement was not fair to those in the class action suit. Under the terms of the settlement, the bulk of the $9.5 million was used to establish the Digital Trust Foundation, which funds projects that promote digital privacy. Another $2.3 million went to attorney’s fees.

With this payout, many members of the class action suit received little benefit from the judgment. In addition, the objectors said the Digital Trust Foundation’s setup should be changed, as the settlement required a Facebook representative to sit on the board of directors.

Facebook, however, argued that Supreme Court intervention was not needed. Because the terms of the settlement was so small, the company said, cash payments to Facebook’s millions of 2009 users would not have been feasible.

According to The Wall Street Journal, the Court sided with Facebook. Along with the announcement of passing on the case, Chief Justice John Roberts issued a four-page statement, saying that the court was right to pass on the case because the specific facts of the case would prevent the court from addressing larger issues about the propriety of the settlement. He also added that in the future, “this court may need to clarify the limits on the use of such remedies.”

 

This case isn’t Facebook’s only recent legal news. For more on the social media giant, check out these stories:

4th Circuit “likes” former employees’ free speech claims

Communicating investor information via social media presents new challenges for companies

Technology: The impact of digital age innovations on the attorney-client privilege

How to effectively and legally tout consumer preferences in your company’s marketing

Assistant Editor

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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