A US court has given its preliminary approval to a revised class settlement in a lawsuit brought against Facebook by users who claimed that their names and likeness were used without their prior consent in “Sponsored Stories” advertisements shown to their online friends on the social networking website.
The new proposed settlement covers nearly 125 million users, which could see each member getting a few cents on a pro-rata basis if all file claims.
The settlement relates to a class action lawsuit filed in 2011 by Angel Fraley and others in which they alleged that Sponsored Stories constitute “a new form of advertising which drafted millions of (Facebook members) as unpaid and unknowing spokepersons for various products,” for which they were entitled to compensation under California law.
The court is however likely to have to consider at a ‘fairness hearing’ in June next year opposition to the settlement from organizations that among other things claim that the settlement does not provide a mechanism for taking parental approval before information from minors is used by Facebook.
The court decides at a fairness hearing whether a class settlement is agreed upon as reasonable and fair.
A previous settlement was turned down in August by the U.S. District Court for the Northern District of California, San Francisco division with the Judge Richard Seeborg ruling that there were sufficient questions regarding the proposed settlement, including whether US$10 million was fair, adequate, and reasonable.
The settlement aimed to pay $10 million to activist organizations and charities as direct payment to all members of the class was not feasible. Another about $10 million was earmarked for attorneys’ fees and expenses.
Facebook agreed in the revised settlement to pay users in the U.S. who appeared in Sponsored Stories up to $10 each to be paid from a $20 million settlement fund.
The Judge will decide on a final approval for the settlement at a fairness hearing in June.
