Ninth Circuit Upholds $9.5 Million Facebook Privacy Settlement

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The United States Court of Appeals for the Ninth Circuit upheld the $9.5 million settlement of a class action lawsuit. The lawsuit that included, among other things, claims for violating the Computer Fraud and Abuse Act, was based on assertions by Facebook users that, through its Beacon Program, Facebook violated their privacy by sharing on their profiles information reflecting other activities they had taken on the Internet. One example of this was, if a user had rented a movie through Blockbuster.com, that information would be transmitted to Facebook and broadcast on the person’s Facebook page.

Once users began complaining to Facebook, it released a privacy control that permitted users to opt-out of the Beacon Program and, eventually, discontinued the Beacon Program all together. Nineteen plaintiffs sued Facebook in a class action lawsuit styled Lane v. Facebook, Inc., Blockbuster, Inc., et al., No. 10-16380, 2012 WL 4125857 (9th Cir. Sept. 20, 2012).

The basis for their claims was “the general allegation that Beacon participants had violated Facebook members’ privacy rights by gathering and publicly disseminating information about their online activities without their permission.” There were several specific causes of action alleged violations of:

  • the Electronic Communications Privacy Act, 18 U.S.C. § 2510 (1986);
  • the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (1986);
  • the Video Privacy Protection Act, 18 U.S.C. § 2710 (1988);
  • California’s Consumer Legal Remedies Act, Cal. Civ.Code § 1750; and
  • California’s Computer Crime Law, Cal. Pen.Code § 502

Ultimately, Facebook and several of the plaintiffs reached a settlement for $9.5 million, among other things, but some members of the class opted out of the settlement and some objected. The district court approved the settlement and, in this opinion, the Ninth Circuit affirmed finding the settlement agreement was “fair, reasonable, and adequate.”

2 thoughts on “Ninth Circuit Upholds $9.5 Million Facebook Privacy Settlement

  1. I wonder why some people opted out. Was there a non-disclosure statement that people felt gagged them from further complaint? Or just plain greed?
    First this, then Facebook’s stock drops by 50%. I guess Mark Zuckerberg lost that Midas touch, eh?

  2. Shawn
    Thank you for this post. I wonder if the new advertising strategy Facebook is pursuing with Datalogix to match online with offline data will not also end up in court.

    ===> https://www.xing.com/net/smmetrics/trends-and-historical-facts-505431/facebook-first-exclusive-results-from-facebook-privacy-audit-ireland-eu-39225245/42181554/#42181554

    I find it amazing how in an organization such as Facebook, the left hand is not always knowing what the right hand is doing. Hence, the company is trying to statisfy European regulations (see Ireland) but then comes up with things that will surely end up in court again.

    What you think, Shawn? Thanks for sharing.

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