Supreme Court Won’t Review Facebook Beacon Class Action Settlement

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The U.S. Supreme Court on Monday refused to touch Facebook Inc.’s $9.5 million class action settlement concerning its defunct “Beacon” feature, saying it wouldn’t consider objections that the cy pres award unfairly compensated Class Members. The Court’s refusal to hear the privacy case means that the settlement is final.

On Friday, Nov. 1, the High Court reviewed objections by four Facebook users who were part of the class action lawsuit and objected to the fact that the settlement did not compensate users directly, but rather set up of a not-for-profit group that addresses online privacy rights.

The class action settlement was designed to resolve allegations that the short-lived Beacon feature tracked users’ online purchases and then posted them on their Facebook pages. Users sued Facebook, alleging that the program violated federal wiretap law by illegally spying on users’ communications. Facebook denied any wrongdoing but quickly shut down the Beacon program following the massive wave of criticism.

The social network agreed to a $9.5 million class action settlement in 2009, which awarded the plaintiffs’ attorneys nearly a quarter of the fund in fees and costs and earmarked the remaining $6.5 million to start a new charitable foundation that would help fund organizations dedicated to educating the public about online privacy. Damages were not awarded to Class Members because distributing the $6.5 million to the hundreds of millions of affected users would have resulted in an award too small per person to bother.

A lower court approved the Facebook Beacon settlement in 2009 and the Ninth Circuit Court of Appeals upheld the decision in September 2012.

In July, Class Member Megan Marek petitioned for a writ of certiorari, asking the Supreme Court to review the cy pres award. Her objection focused on the new privacy foundation established by the fund, including the fact that a senior Facebook employee would serve on its board. She also criticized the overall class action settlement amount as too low.

In an opinion issued Nov. 4, the Supreme Court let stand the 2-1 decision by the Ninth Circuit Court of Appeals and refused to review the case, making the Facebook Beacon settlement final.

Chief Justice John Roberts said in the opinion that although the court declined to hear the case, concerns about the use of cy pres awards remain, and the Court “may need to clarify the limits on the use of such remedies” in a more “suitable” future case.

“Marek’s challenge is focused on the particular features of the specific cy pres settlement at issue. Granting review of this case might not have afforded the Court an opportunity to address more fundamental concerns surrounding the use of such remedies in class action litigation,” Roberts said in his opinion. “The Court has not previously addressed any of these issues.”

The Facebook Beacon case (Lane v. Facebook) was the first of its kind to expose the complex tracking mechanisms used by Internet companies and became the standard for case analysis used by many law firms litigating online privacy cases. It brought U.S. Congressional review and a change to the federal Video Privacy Protection Act (VPPA). Today’s ruling will affect cases regarding Internet privacy and social media for years to come.

Plaintiffs in the Facebook Beacon Privacy Class Action Lawsuit were represented by Joseph H. Malley of the Law Offices of Joseph H. Malley, Scott Kamber of Kamber Law, LLC and David C. Parisi of Parisi & Havens LLP.