In a long-awaited conclusion to Facebook's "Sponsored Stories" class action saga, a federal judge gave final approval to a $20 million settlement Monday but took an axe to the $7.5 million in fees requested by plaintiffs attorneys.
The settlement approved by U.S. District Judge Richard Seeborg provides for each Facebook user who submitted a valid claim to receive $15, with remaining funds disbursed to 14 organizations focused on consumer protection, privacy and other issues raised in the suit. Facebook Inc. is also required to improve its disclosure practices, giving users more control over when and how their names and photos will be used. The company must also create special controls for minors.
"We are pleased that the settlement has received final approval," a Facebook spokeswoman said in a statement. Fraley v. Facebook, 11- 1726, was filed in March 2011 on behalf of some 150 million social network users whose names and likenesses were used to promote products and services through Facebook's "Sponsored Stories" advertising feature.
Seeborg granted the plaintiffs' motion for attorney fees, costs and incentive awards, but reduced some amounts. The class had moved to recoup $7.5 million in attorney fees, which marked 37.5 percent of the settlement fund. Though above the typical 25 percent benchmark, plaintiffs lawyers argued their fees should reflect the value of injunctive relief secured for the class.
Seeborg rejected that approach, finding "nothing to suggest … that any class member will see a single dollar more in his or her pocket as a result of any of the injunctive provisions."
Instead, he awarded plaintiffs lawyers 25 percent of the settlement fund after the deduction of administration expenses, incentive awards and costs. Those payments are expected to total roughly $1.1 million, making the fee award approximately $4.7 million.
The three named plaintiffs had sought incentive awards of $12,500 apiece, for a total of $37,500. Instead, they'll receive $1,500 each.
Last December, Seeborg gave preliminary approval to a settlement that would have distributed $10 per claimant. The final action marks a sweeter deal for them — in part because so few came forward.
In his order granting final approval, Seeborg wrote that he weighed an even greater payout to claimants. However, he determined that increasing the payment further would unfairly penalize class members who didn't bother submitting claims for what they believed to be negligible compensation.
The judge had previously rejected a $20 million proposal that divvied up the settlement for charitable donations and attorney fees but gave no monetary benefit to class members.
Robert Arns, the San Francisco plaintiffs attorney who is lead counsel for the class, did not respond to a request for comment. Cooley partner Michael Rhodes, who represented Facebook, deferred comment to the company's press team.