Sarah Mirando  |  September 25, 2012

Category: Legal News

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Facebook settlementA U.S. Appeals Court has upheld a $9.5 million class action lawsuit settlement with Facebook that resolves claims that its now discontinued “Beacon” feature violated privacy laws.

In a 2-1 decision last week, the Court ruled that the 2009 Facebook Beacon class action settlement is fair, with one dissenting judge saying the Beacon settlement unfairly benefited Facebook and Plaintiff attorneys, who walked away with roughly $3 million. Facebook users – as usual – did not receive any monetary benefits from the Facebook settlement. Instead, more than $6 million of the Beacon privacy settlement will go toward establishing a nonprofit group focused on online privacy rights.

Users sued Facebook a little less than a year after it launched the Beacon program in November 2007, which let third-party sites such as Blockbuster, Overstock, Zappos and other sites disclose what users were purchasing from them to their friends and networks. Users alleged in the Facebook Beacon class action lawsuit that the program violated federal wiretap law by illegally spying on users’ communications with the advertiser’s sites.

Facebook denied any wrongdoing, but shut down the Beacon program following the massive wave of criticism.

Class Members of the Facebook Beacon class action lawsuit settlement will not receive any compensation, which dissenting U.S. Circuit Judge Andrew Kleinfeld said, “perverts the class action into a device for depriving victims of remedies for wrongs, while enriching both the wrongdoers and the lawyers purporting to represent the class.”

“Facebook users who had suffered damages from past exposure of their purchases got no money, not a nickel, from the Defendants,” Kleinfeld wrote.

The decision comes just one month after U.S. District Judge Richard Seeborg, who approved the Beacon settlement, rejected a privacy class action settlement concerning Facebook’s “Sponsored Stories” program. Seeborg rejected the $20 million Sponsored Stories settlement over concern the deal “was merely plucked from thin air.” The Sponsored Stories class action settlement would have provided $10 million in cash for advocacy groups, $10 million for attorneys, but nothing to users.

UPDATE: The U.S. Supreme Court on November 4, 2013, refused to review the Ninth Circuit Court of Appeal’s decision to uphold the Facebook Beacon class action settlement. The settlement is now final.

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