Judge Expresses Concern Over Facebook Sponsored Stories Settlement

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UPDATE 3: On Jan. 6, 2016, the 9th U.S. Circuit Court of Appeals upheld the lower court’s approval of the Facebook Sponsored Stories class action settlement.

UPDATE 2: A federal judge granted final approval to a new Facebook Sponsored Stories class action settlement on August 26, 2013.

UPDATE 1: Judge rejects Facebook Sponsored Stories class action settlement.

The new judge overseeing the Facebook Sponsored Stories class action lawsuit settlement declined to approve it on Thursday, which will pay $10 million to various pro-privacy advocacy organizations, and $10 million to lawyers who sued the company on behalf of users. The class action settlement deal also requires Facebook to give users more control over whether they appear in Sponsored Stores, but does not provide them any monetary compensation.

U.S. District Court Judge Richard Seeborg expressed “significant concerns” over the class action lawsuit settlement, reached in June 2012 under Judge Lucy Koh, who recused herself from the case in July. Judge Seeborg said he was confused over the $10 million payout to charities, which he said did not make sense in light of the fact that Facebook said the settlement deal might cost them $100 million in future advertising revenues.

“Why shouldn’t the cy pres be $100 million?” Judge Seeborg asked attorneys on both sides.

“I’m not suggesting there is anything wrong with $10 million,” he said. “My question is: Why is it $10 million?”

Seeborg suggested he might order the parties to provide more information on how it reached that amount before he makes a final decision on whether or not to approve the class action lawsuit settlement. He also said he wants to know more about why Class Members are not receiving any of the money.

“I’m not going to approve it today. I’m going to have to give it a little bit of thought,” he said.

Seeborg is not expected to make a final decision on the Facebook Sponsored Stories Class Action Settlement for several months. You can read more about the case here.