Despite Objections, Facebook Message-Scanning Settlement Approved

OAKLAND In spite of stiff objections from a class action watchdog group, a federal judge approved a settlement Facebook reached in a case accusing the social media giant of inappropriately scanning users' private messages for URL links.

Lawyers at the Competitive Enterprise Institute's Center for Class Action Fairness labeled the no-cash deal "cynical" in court papers filed earlier this year. At a hearing before U.S. District Chief Judge Phyllis Hamilton Wednesday, CCAF's William Chamberlain said the settlement offered little more to consumers than a 22-word statement set to be posted on a seldom-viewed Facebook help page. Chamberlain also objected to the more than $3.8 million in fees and costs the plaintiffs' legal team requested for its work.

"These disclosures are meaningless, they are valueless to the class," Chamberlain said.

But Hamilton, who has overseen the case since 2013, disagreed.

"I have to say, having presided over this case for three years three-plus years having listened to many of the arguments, having an understanding of how complicated the technology is, I think this is a good result for the class and I think that counsel earned the fees," she said.

The underlying class action lawsuits were filed by lawyers at Lieff Cabraser Heimann & Bernstein and Carney Bates & Pulliam after The Wall Street Journal reported in October 2012 that the social media site registered "Likes" on third-party sites when users included links in their private Facebook messages. Plaintiffs claimed Facebook's interception and scanning of the messages violated the Federal Wiretap Act and California's Invasion of Privacy Act.

Hamilton previously certified a class in May 2016 allowing plaintiffs to pursue injunctive relief in the lawsuit but declined to certify a damages class, finding that users suffered "little, if any, harm" as a result of Facebook's scanning practices.

At Wednesday's hearing, Hank Bates of Carney Bates said Facebook addressed the essence of plaintiffs' privacy claims by making changes to their disclosures during the course of the case. "We got cessation of practices and we got changes in the disclosures," Bates said. The deal, he said, "accomplishes the goal of the case. We're very proud of the settlement."

Facebook's outside counsel, Christopher Chorba of Gibson, Dunn & Crutcher, added that under changes made to the company's data policy while the case was pending, the company now has consent of what "we were accused of doing." However, he added the parties "fundamentally" disagree "about what was occurring."

"From the very beginning, plaintiffs counsel have said this case is about transparency and that's what we have," Chorba said.

At the end of the hearing, Hamilton said she will sign off on the settlement, but will issue a supplemental order addressing the issues CCAF raised in case they appeal the settlement.

Said Hamilton, "This case went much further than almost any other class action I've settled over the past 17 years."

Ross Todd is bureau chief of The Recorder in San Francisco. He writes about litigation in the Bay Area and around California. Contact Ross at rtodd@alm.com. On Twitter: @Ross_Todd.

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