$9.5M deal in Facebook class action ‘adequate’

A $9.5 million settlement of a consumer class action against Facebook was sufficiently adequate to be approved, even if it represented only a fraction of what some class members claimed they could recover in individual lawsuits, the 9th Circuit has ruled in affirming judgment.

The plaintiffs’ class action alleged that Facebook’s “Beacon” marketing program — launched in 2007 — violated Facebook members’ privacy rights by gathering and publicly disseminating information about their online activities without permission.

The parties settled the case in 2009. Under the terms of the settlement, Facebook agreed to permanently terminate the Beacon program and pay $9.5 million. Of the $9.5 million pay-out, approximately $3 million would be used to pay attorney fees, administrative costs and incentive payments to the class representatives. The remaining $6.5 million was used to set up a new charity organization dedicated to promoting online privacy.

Objectors argued that the $9.5 million settlement was too low in light of the more than 3.5 million class members. In particular, the objectors alleged that many class members had viable claims under the Video Privacy Protection Act (VPPA), which authorizes liquidated damages in the amount of $2,500.