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$9.5 Million Facebook Settlement Will Set Up Online Privacy FoundationFacebook users angered about Beacon, a service that broadcasts users' transactions with partner Web sites, have settled their class action suit claiming Beacon disclosed personal information for advertising purposes without their consent. As part of the deal, Facebook has agreed to terminate Beacon. In addition, Facebook pledged to pay $9.5 million to set up a foundation devoted to studying online privacy, according to court records.
The American Lawyer2009-09-23 12:00:00 AM
We're not going to lie, we've seen some pretty bad movies in our day. It's the risk you take when you want to indulge in the occasional mindless flick in which things blow up and heroes do cool stuff. But sharing our poor taste with our friends on Facebook, that's not a risk we're willing to take. So we weren't thrilled when that information automatically found its way on our Facebook page via the site's Beacon program.
It turns out a lot of people got angrier than we did about Beacon, a service that broadcasts users' transactions with partner Web sites (like move ticket vendor Fandango.com). And they got angry enough to hire the plaintiffs attorneys at the New York-based boutique KamberEdelson to file a class action suit claiming Beacon disclosed personal information for advertising purposes without their consent, according to court records and the Associated Press.
Facebook and the plaintiffs settled this week, and as part of the deal, Facebook has agreed to terminate Beacon. In addition, Facebook pledged to pay $9.5 million to set up a foundation devoted to studying online privacy, according to court records. The other defendants in the case -- sites that partnered with Facebook in the Beacon program -- will not pay anything, court records show.
Facebook long ago minimized Beacon's presence after readers expressed their displeasure with it. Over Beacon's two-year life span, Facebook gradually adjusted the program so that users could opt out, according to the AP.
Facebook turned to Cooley Godward Kronish and partner Michael Rhodes, chair of the firm's litigation department, to represent the company in the case. Interestingly, Rhodes and Scott Kamber, managing member of KamberEdelson, have been on opposite sides of a Facebook class action before. In that case, plaintiffs claimed another Facebook program was sending unwanted text messages to their mobile phone numbers, apparently because those numbers previously belonged to Facebook users who were the intended recipients of the texts. Facebook scrapped that program as part of a 2007 settlement, according to the San Francisco Chronicle.
The two sides in the Beacon case came up with the idea for a foundation after months of negotiations, including two voluntary sessions with a mediator in California, Rhodes says. "This unique settlement is a testament to Facebook's fundamental commitment to offering its community state-of-the-art privacy and personal information controls," Rhodes says.
Kamber was not immediately available for comment.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.