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Ninth Circuit:
Settlement of a Class Action Against Facebook for $90 Million Over Privacy Breaches Stands
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has rejected the challenge to a $90 million settlement of a class action against Facebook based on its tracking of users’ online activities without their consent—the seventh largest settlement ever reached in a class action based on invasions of privacy—holding that the higher amount advocated by the objectors, exceeding $1 trillion, would be constitutionally impermissible.
Under the objectors’ view, Facebook should have had damages against it grounded on the $10,000 per-violation penalty provided for in the Electronic Communications Privacy Act
Wednesday’s decision, in a memorandum opinion, upholds approval by District Court Judge Edward J. Davila of the Northern District of California of the settlement. Under it, $26.1 million is to be paid to class counsel and Facebook must delete “all cookie data” it improperly received or gathered during the period from April 22, 2010 through Sept. 26, 2011.
$1.24 Trillion Figure
The judges—Danielle J. Forrest, Ryan D. Nelson, and Gabriel P. Sanchez—declared:
“With 124 million potentially affected Facebook users in the United States, the district court properly rejected the $1.24 trillion in statutory damages proposed by Objectors as an unreasonable baseline that would violate due process….The district court did not clearly abuse its discretion in accepting class counsel’s estimate that $900 million represented a ‘best-day-in-court’ verdict, and by determining that the $90-million settlement—in conjunction with injunctive relief benefitting the entire class—was fair and reasonable.”
There was no error, the Ninth Circuit said, in the District Court judge’s application of a presumption in favor of the settlement being fair. They set forth:
“The district court merely noted that the ‘absence of a large number of objections to a proposed class action settlement raises a strong presumption that the terms...are favorable to the class members.’ Consideration of the class’s reaction to the proposed settlement is one of the factors the district court should consider in evaluating a settlement proposal.”
Attorney Fees Upheld
Addressing the amount of the attorney fees approved by Davila, the judges said:
“The district court did not abuse its discretion in using the percentage-of-the-fund method in finding the proposed attorneys’ fees of S26.1 million (29% of the settlement fund) reasonable. The court cited class counsel’s creation of new law in the Ninth Circuit and its attainment of substantial monetary and injunctive relief for the class as grounds for the upward departure of four percentage points above the 25-percent benchmark.”
The case is In re Facebook, Inc. Internet Tracking Litigation, 22-16903.
In a separate class action in the Northern District of California, there was a settlement last year under which $725 million will be distributed to Facebook users based on their data being shared with third-parties without their consent.
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