Facebook’s $10M Settlement Benefits Lawyers And Watchdogs

By Tech Wire Asia | 20 June, 2012

Technically, Facebook would’ve owed you money if you: (a) signed up for Sponsored Stories; (b) “Liked” a product and your “endorsement” got shared with your friends; (c) knew about and joined the class-action suit against FB for using your name and face without compensation. You need all three to get any hopes of receiving a single dollar, because the brunt of the $10 million (S$13M) settlement Facebook is paying out will go to the plaintiffs’ lawyers and the organizations (charitable or otherwise) chosen by the lawyers and the judge.

Facebook's cy-pres $10 million settlement will go to lawyers and advocacy groups

Facebook's $10 million cy-pres settlement will go to lawyers and advocacy groups.

Jeff John Roberts wrote about the trend in “cy-pres settlements” (pronounced sigh-pray or see-pray) and pointed out how erring companies, law firms and advocacy groups dance around each other, finding fault (advocacy groups), suing (lawyers) and paying out (erring companies) in cycles. With named respondents used as the faces for the suit and getting crumbs for their troubles.

Facebook’s settlement of $10 million did not make the five plaintiffs rich. Most of it will go to the lawyers and the charity (or advocacy groups) chosen by the lawyers and the judge. Cy-pres settlements are just slaps on the hand for erring companies, and a good source of revenues for law firms and privacy watchdogs. Charitable institutions, advocacy groups and organizations often apply for shares of the settlement money, and the lawyers and judge will select and award according to the relevance of said organizations to the suit “as near as possible” (cy pres comme possible).

In Google’s 2008 settlement of the “Buzz fiasco,” Dan Popeo wrote that the lawyers got $2.13 million, and Judge James Ware awarded $6.1 million to cy-pres beneficiaries — 12 groups which the lawyers from both sides and the judge picked out themselves. Interestingly, one of the awardees (got $500,000) was the Markkula Center for Applied Ethics at Santa Clara University, where Judge Ware was listed as a lecturer (at the Santa Clara law school).

Ted Franks wrote how cy-pres settlements are being abused by class-action lawyers and judges, and how they propagate a vicious cycle by naming their alma maters or law schools concentrating on class-action cases. Franks makes a case against class-action cy-pres settlements because they are ineffective in punishing erring companies and rewarding the plaintiffs.

Such settlements benefit defendants in the short run by permitting them to pay off class action attorneys cheaply, but hurt defendants in the long run by creating a mechanism by which class action attorneys can profitably bring weak cases.

But Americans being such a litigious bunch, some will grab at any opportunity for a fast buck through lawsuits — even if it means a couple of thousand dollars from a multi-million class-action suit.

The flipside to it all is: You are what you post on social networks. if you like sharing everything about yourself, you shouldn’t complain about invasion of privacy. You’re practically begging for invasion when you tweet about the size, shape and aroma of your morning droppings or share every movement you make with a Facebook GPS location tag. As Russell Peters’ shopowner character says: “Be a man! Do the right thing!” Stop whining about Facebook invading your privacy and start working on your privacy settings — or “somebody’s gonna get a-hurt real bad.”