With a "judicial cert petition" already in hand from the U.S. Court of Appeals for the Ninth Circuit, an objecting class member formally challenged a Facebook privacy settlement at the U.S. Supreme Court on Monday, saying the $9.5 million settlement provided zero benefit to the class.
"Bringing suit within the Ninth Circuit's footprint now guarantees that minor things like compensating class members for their injuries, holding defendants liable to the extent the law allows, and preventing defendants from injuring class members in the exact same manner will not stand in the way of reaching a quick settlement to the mutual benefit of defendants and class counsel," states the petition filed by Baker & Hostetler's David Rivkin Jr., along with Theodore Frank of the Center for Class Action Fairness and two other law firms.
The case also could give the high court a chance to examine the law of cy pres awards, in which damages are directed to charitable organizations that do work to benefit class members or others similarly situated. Public interest law firms are sometimes the beneficiaries of such awards.
Marek v. Lane stems from Facebook's short-lived Beacon feature that broadcast details of users' online purchases from third-party retailers like Zappos.com and Overstock.com. Lead plaintiff Sean Lane alleged that he bought a ring as a Christmas gift for his wife, but Facebook ruined the surprise by broadcasting news of the purchase to his 700 Facebook friends. Facebook allowed users to opt out of the program, but doing so was difficult.
Because the potential class of 3.6 million members was so large, plaintiffs lawyers led by Scott Kamber of KamberLaw in New York and Facebook proposed a cy pres settlement where Facebook would contribute $6.5 million to create a foundation that educates users about online privacy. The foundation's board of directors includes a Facebook executive.
U.S. District Judge Richard Seeborg approved the settlement, which also included about $2.3 million in legal fees.
The settlement was controversial in the Ninth Circuit. A 2-1 panel upheld it, with Judge Procter Hug Jr. writing that it bore "a substantial nexus to the interests of the class members."
Judge Andrew Kleinfeld dissented, and five other judges signed Judge Milan Smith Jr.'s dissent from denial of en banc review. Such orders are known around the courthouse as "judicial cert petitions."
On Monday, Rivkin and his co-counsel filed the real thing at the Supreme Court, saying the settlement doesn't provide a nickel to injured class members, including some — like purchasers of videos from Blockbuster — who arguably are entitled to $2,500 in statutory damages. Instead, damages go to a newly created entity with no track record of service. "For good reason, every other court of appeals to consider class action settlements containing similarly problematic cy pres awards has rejected them," the petition states.
The petition contends that the Ninth Circuit's decision conflicts with opinions from the Second, Third, Fifth, Seventh and Eighth circuits.
The formal question presented is "whether, or in what circumstances, a cy pres remedy that provides no direct relief to class members comports with the requirement of Rule 23(e)(2) that a settlement that binds class members must be 'fair, reasonable, and adequate.'"
The petition asks the court to establish "a nationwide standard for the use of cy pres awards in class action settlements."