CAI files Amicus Memorandum Opposing the Proposed Settlement Agreement in Fraley, et al. v. Facebook

On the eve of a proposed settlement agreement last week in the case of Fraley, et al. v. Facebook, CAI filed an amicus memorandum objecting to the terms and asking the court to deny the settlement.

The case centers around Facebook’s use of “Sponsored Stories” — ads in which the site features a user’s likeness in association with a product, service or Facebook page. Although this usage is outlined in the site’s terms of service, users do not give active permission to be used, and therefore these “Sponsored Stories” violate California statutes prohibiting that practice, the plaintiffs argue.

On the same day CAI filed its memorandum, the judge in the case, U.S. District Court Judge Lucy Koh, recused herself from the case; following her recusal, the hearing at which the court will decide whether or not to approve the settlement was postponed to Aug. 2, 2012.

One of CAI’s objections to the settlement is that it “provides inadequate injunctive relief to the class members, and especially to the sub-class of minors.”  Further, CAI believes that the settlement allows Facebook to continue to violate the California Family Code, which prevents minors from entering into a binding contract, and CAI objects to the proposed language in the settlement in which Facebook acknowledges it will still continue to use these “Sponsored Stories” ads without users permission. The only way for users to opt-out, according to the way the settlement is worded, is to wait until Facebook has used a user’s likeness or name in at least one “Sponsored Story.”

Many analysts have attributed Judge Koh’s decision to recuse herself to the fact that she has ties to many of the charities that are earmarked to receive a slice of the settlement.  In all, 15 charities chosen by Facebook are scheduled to share $10 million of the $20 million settlement.  Koh has ties to at least two of them.

Although there is currently much debate as to the how and why these charities were chosen to receive the cy  pres awards, CAI also objects to the settlement on the grounds that the other $10 million in the settlement is going to the legal team representing the plaintiff class.  In CAI’s view, this is an outrageous amount, considering that in other recent class actions that were litigated over several years and which involved a tremendous amount of discovery, prevailing attorneys received far less in fees.

As CAI stated in its amicus filing, “the stipulated attorneys’ fees are excessive, especially in light of the fact that the class receives no monetary compensation and the minors of the sub-class (and their parents) would continue to have their rights violated.”

You can read a PDF of CAI’s Amicus Memorandum objecting to the settlement in Fraley, et al v. Facebook.

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