The massive privacy class action litigation against Facebook for its beacon product (similar to the Google Buzz privacy lawsuit) was supposed to be settled for $9.5 million, with about 30% of that amount going to the class action attorneys who took the case on a contingency basis. But now that settlement is under attack because part of the money is supposed to go to charity. Public Citizen, a Washington, D.C.-based consumer-rights organization, filed an objection to the settlement before the United States District Court for the Northern District of California because the settlement funds would be distributed to a charity, not to the plaintiff class. A San Francisco federal judge heard their objections last week but has yet to rule on them.
According to the Wall Street Journal blog,
This type of settlement, in which parties ask judges to award part or all of a settlement to charity, is increasingly common. Judges are generally authorized to approve them when it is difficult to find the class members who stand to recover funds, or in cases where the costs of distributing would exceed each plaintiff's per-capita recovery. As a next-best alternative, judges are authorized to divert settlements to charity.
From 2001 to 2008, charitable donations were made in at least 65 class actions—more than three times the number of charitable grants in the preceding nine years, according to a study last year by the Searle Center on Law, Regulation and Economic Growth at Northwestern University School of Law. Earlier this year, a bill was introduced in the Ohio legislature to encourage judges to make use of these types of arrangements.
Some legal experts, however, argue that judges shouldn't sign off on settlements that extinguish class members' legal claims unless the plaintiffs get something in return. Plaintiffs' lawyers "know they will not be able to compensate the actual victims or at least many of them, so they make [class settlements] look good by paying money to charity," said Martin Redish, a professor at Northwestern University Law School who studies class-action litigation. Judges, critics argue, shouldn't "certify" such cases as class actions at the outset.
Another complaint is that judges often do a poor job of picking worthy charities. Under guiding law, judges are encouraged to fund charities that advocate for causes related to the subject matter of litigation. But too often, some attorneys say, charities are selected that either are off topic or that have ties to the parties, attorneys or presiding judges in a case, raising potential conflicts of interest.
In the Facebook case, the privacy foundation to receive more than two-thirds of the $9.5 million settlement will be established in part by Facebook, which will have a role in drawing up the foundation's bylaws and will have a say in choosing one of its board members, according to an objection filed in court this month by Public Citizen, a Washington, D.C.-based consumer-rights organization. "In essence, Facebook is paying itself money to gain a broad release of its users' legal claims," Public Citizen argued.
Related posts:
One Response to “Facebook privacy class action settlement challenged” Leave a reply ›
I would like to have a claim form