Facebook’s Sponsored Stories Lawsuit Is in Its Penultimate HourBy: Josh Wolford - December 4, 2012
A couple of weeks ago, we told you that Facebook’s long-running Sponsored Stories lawsuit was likely on its way to coming to a close. U.S. District Judge Richard Seeborg, upon reviewing a new settlement proposal from the social network, was less critical and stated that he would issue a ruling “very shortly.”
Today, we have a preliminary ruling on the revised settlement: it’s good to go.
“The court is satisfied that the revisions to the terms of the settlement are sufficient to warrant preliminary approval under the applicable standards,” said U.S. District Judge Richard Seeborg. This isn’t the official end of the case, as Seeborg will consider final approval of the settlement in June of next year. But it does suggest that the case is in its penultimate stages.
The lawsuit stems from a few California residents who claimed that Facebook violated their privacy rights when the company used their likenesses in their Sponsored Stories product without permission or compensation. Facebook’s first proposed settlement offer included a $10 million cy pres payment to charity, with an additional $10 million in leftover legal fees.
Seeborg initially rejected that offer, citing concerns over the size of the cy pres payment as well as the fact that no money was going directly to users.
Facebook revised the settlement, and that’s where we are today. Seeborg has issued preliminary approval of the revised proposal. Under this new settlement, Facebook users can each claim up to $10 in damages. It’s still a $20 million settlement, so that only totals out to 2 million users getting paid. As a stipulation of the revision, if enough users file claims on the damages as to push the amount-per-person below $5, most of the sum could end up going to advocacy groups.
And of course, Facebook will keep their word and make sure information about their Sponsored Stories initiative is displayed more prominently on the site, as well as allow total opt-outs for minors and a “mechanism” for dealing with past activities and how they are featured in Sponsored Stories.