Facebook Resolves One Sponsored-Stories Lawsuit

by Wendy Davis, May 22, 2012, 6:38 PM

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Facebook has tentatively settled a class-action lawsuit alleging that its sponsored stories program misappropriates users' names and images, the company said in court papers filed this week. But the social networking service is still facing a separate potential lawsuit about whether the same program violates California's misappropriation law.

Facebook notified U.S. District Court Judge Lucy Koh that it had come to an agreement in principle with a group of consumers who sued over sponsored stories, which publicizes users' "likes" to their friends. The company is expected to file a motion by mid-June for preliminary approval of the settlement.

Details about the terms of the settlement weren't available on Tuesday. Facebook declined to comment on the resolution.

The social networking service previously argued that the lawsuit should be dismissed for several reasons, including that users consented to the sponsored stories program when they signed up for the site. Facebook also argued that its members had not been harmed economically by the program. Koh rejected both of those theories in an order issued last year.

The case that was settled was brought by a group of consumers, including Angel Fraley, Paul Wang and Susan Mainzer; Fraley and Wang later asked to withdraw from the case, but their names are still included in the case's title.

A separate but related lawsuit alleging Facebook violates California law by including minors in the sponsored stories program is still pending before Koh. That lawsuit alleges that Facebook is breaking a California law banning companies from using minors' names or images in ads without their parents' permission. Court records in that case show that Facebook and the teens who are suing are slated to notify Koh by Wednesday whether they have reached a settlement.

Facebook on Monday filed a motion to dismiss that case. Among other arguments, Facebook says that the federal Children's Online Privacy Protection Act forecloses the teens' lawsuit. The complaint "is inconsistent with, and preempted by, the COPPA regulatory scheme," Facebook argues. "In adopting the COPPA framework, Congress considered and rejected a parental consent requirement for minors aged thirteen and older, deferring in large part to teenagers’ First Amendment rights to access and communicate over the Internet."

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