On November 4, 2013, the U.S. Supreme Court declined to review the settlement of a class action over Facebook’s Beacon program. Justice Roberts noted that despite growing reliance on cy pres awards as remedies in class actions, the current case was “too narrowly focused” on the particular aspects of this specific cy pres award for the Court to address the fundamental issues. He further stated that the court had there may be a “need to clarify the limits of the use of such remedies” in a future suitable case. (Megan Maerk v. Sean Lane, et al., No. 13-136, U.S. Sup.)
The suit, led by plaintiff Sean Lane, was originally filed in the Northern District of California in August of 2008. It was alleged that the Beacon program would gather information about what Facebook users did on the websites of certain advertisers. When the Facebook user would make a purchase or provide product feedback, Beacon would send information back to Facebook. Facebook would then generate a posting on the user’s profile to report that activity. Users were automatically opted into the Beacon program until widespread criticism forced Facebook to change it to a program that a user had to choose to participate in.
Plaintiffs in the lawsuit alleged that Facebook improperly shared their activities with advertisers without permission in order to enhance its revenue. This conduct allegedly violated the Electronic Communications Privacy Act, the Video Privacy Act, and the Computer Fraud and Abuse Act in addition to California law.
A settlement in the amount of $9.5 million was reached by plaintiffs and Facebook. Of the settlement payment, $3 million was to be used to pay attorney fees, administrative costs, and incentive payments for the class representatives. The remaining money was to fund a new charity called the Digital trust Foundation dedicated to public education about online privacy. As part of the settlement Facebook agreed to end the Beacon program. There were numerous objectors to the settlement, arguing that the cy pres funds should be given to existing online-privacy organizations and that the overall settlement amount was too low. Despite this final approval was granted in March 2012. The settlement was upheld on appeal by the Ninth Circuit in a split decision in February 2013.