A recent Law 360 story, “9th Circ. Upholds Facebook Ad Deal, Attys’ Fees” reports that the Ninth Circuit has affirmed a California district judge’s approval of a $20 million settlement reached between Facebook and a nationwide class that claimed the company used members’ photos in ads without permission, saying the deal’s monetary awards and attorneys’ fees were reasonable and no conflicts existed.
Despite a challenge from several objectors that U.S. District Judge Richard Seeborg abused his discretion in August 2013 by approving a deal that offered $15 per class member, unfairly lowered attorneys’ fees, authorized continued violations and created a conflict between a minor subclass, a three-judge appellate panel majority found none of these claims to be true, according to the Jan. 6 decision.
A $15 monetary award was reasonable in light of the minimal, if any, harm suffered by the class, the circuit court held, noting also that a $750 statutory penalty award per class member could implicate due process concerns. It took no issue with Judge Seeborg's authorization for some funds to be given to cy pres recipients either, saying as long as a connection between the case's issue and the organization receiving the funds was shown, little more was needed.
“The district court did not err in finding that an appropriate nexus existed here,” the circuit panel wrote. “As the district court found, '[t]he recipient organizations focus on consumer protection, research, education regarding online privacy, the safe use of social media, and the protection of minors — the very issues raised in plaintiffs’ complaint.’”
Nor does the settlement clearly authorize the continued violation of the law, the panel said. A district court should avoid reaching the merits of a dispute when approving a settlement, and only errs when the agreement sanctions “clearly illegal” conduct, which was not the case here, the order read.
The underlying suit was launched by Facebook users who sued on behalf of all people in the U.S. who had their names, photographs, likenesses or identities unwittingly used in ads, claiming they and others had no knowledge that by “liking” a company page, their names or likenesses would be used to promote that company to other users.
After rejecting an initial proposed pact in August 2012, Judge Seeborg stamped final approval on a $20 million deal in August 2013, which required Facebook to revise its policies for using members’ pictures in ads. But he cut a proposed $7.5 million attorneys’ fees award by roughly $2.5 million, saying 25 percent of the settlement fund was more appropriate.
The Ninth Circuit took no issue with that decision in its Jan. 6 affirmation, saying 25 percent of the settlement fund was the exact benchmark it had previously established.
One fee objector, Sam Kazman, had claimed that he contributed to the district court’s decision to award a lower attorneys' fees amount and thus deserved an incentive award, a request the panel shook off last week.
The district court was concerned over the excessiveness of the initial higher fee amount long before Kazman spoke up, the panel said, and there is not any significant authority for the idea that objectors are entitled to incentive awards.
In a dissent opinion, Circuit Judge Carlos Bea disagreed with not granting Kazman an award, noting that the district court admitted he was the only one to suggest calculating counsel fees on the net rather than gross settlement amount —reducing the award by nearly $300,000.
“Nonetheless, the district court concluded that Kazman did not make a material contribution to the class,” Judge Bea wrote. “I disagree; saving the class $300,000 on attorneys’ fees — or approximately $0.50 per claiming class member — is clearly a material benefit.”
Judge Bea also took the alternate opinion that the district court should not have applied cy pres to the settlement, saying the distribution of funds to organizations as well as the class should only be done if class member aren’t easily identified or funds are left over after distribution.
The district court did not make either finding, Judge Bea said, as member were easily identified and no money has been distributed yet.