• by Wendy Davis  @wendyndavis, April 11, 2012

A group of consumers who unsuccessfully sued Facebook for using their names and photos in ads won't have to pay the social networking service's legal bills, a federal judge has ruled.

In the ruling, issued this week, U.S. District Court Judge Richard Seeborg rejected Facebook's attempt to recoup $700,000 in attorneys' fees for winning a lawsuit about whether it violated California's publicity law. That law says that people have the right to control the commercial use of their names and images and provides for damages of $750 per violation.

Seeborg wrote that even though he dismissed the potential class-action lawsuit, he hadn't decided whether Facebook violated the California law. Instead, he tossed the case because the consumers couldn't show that they had the right to bring a case in federal court. Therefore, he said, Facebook didn't prevail in a way that would entitle it to recover its legal bills.

"While it may have achieved its 'objective' of a dismissal, the decision in effect was only that plaintiffs had sued in a forum that could not decide their claims, not that the claims failed for a substantive reason," he wrote.

The lawsuit -- filed by Robyn Cohen, Shannon Stoller, Christopher Marshall, Bryan Siglock and Debra Lewin -- alleged that Facebook's Friend Finder tool unlawfully used their names and photos in ads without their consent.

Friend Finder searches people's email contacts, finds the ones on Facebook, and then suggests them as friends. The consumers alleged that Facebook wrongly promoted the tool by displaying their names and photos in ads to their friends. Facebook's ads for the feature said that Friend Finder had helped the members find other friends, and suggested that people "give it a try."

Seeborg dismissed the case last October on the theory that Cohen and the other users didn't show they were injured by the ads for Friend Finder. Absent a tangible harm, the users did not have "standing" to proceed in federal court, the judge ruled. Seeborg never reached the substantive question of whether the tool violates California's misappropriation law.

After Seeborg threw out the lawsuit, Facebook filed papers seeking reimbursement of $706,950 for its attorneys' work on the case. Facebook says the amount is "reasonable," given that the lawsuit sought more than $100 million in damages. Facebook says that attorneys from its outside law firm Cooley, as well as contract attorneys, worked for almost 1,500 hours on the case.

In most situations, winners in litigation aren't reimbursed for their legal fees. But the California misappropriation statute at the center of the lawsuit says that the prevailing party is entitled to recover attorneys' fees.

The users who brought suit about Friend Finder ads countered that Facebook didn't actually "prevail" on the misappropriation claim, arguing that Seeborg dismissed the case before deciding whether the feature violated California's law.

Seeborg agreed with that reasoning. "Although California courts recognize a broad range of case outcomes as supporting fee awards to prevailing parties where there is an applicable fee-shifting statute, Facebook has not shown that the result here falls within those types of dispositions," he ruled.