Facebook Asks Court To Approve 'Sponsored Stories' Settlement


Facebook says in new court papers that its proposed settlement of a lawsuit about the sponsored stories ad program will benefit users by giving them "significant transparency," as well as more control over how information is shown in the ads.

"If the settlement is approved, all users for the first time will have the ability to view the subset of actions and other content they have shared that have been rebroadcast as sponsored stories, and to prevent further rebroadcasting if they so desire," Facebook argues in a new motion seeking preliminary approval of the settlement. "Parents, moreover, will have the means to prevent their children from appearing in sponsored stories altogether."



The deal calls for Facebook to pay $10 million to various law schools and privacy organizations, and an additional $10 million to lawyers who sued the company on behalf of users. The agreement also requires Facebook to give users more control over whether they appear in sponsored stories -- ads that publicize users’ “likes” to their friends.

If accepted by U.S. District Court Judge Lucy Koh in San Jose, Calif., the deal would resolve allegations that Facebook violated a California law prohibiting companies from using consumers' names or images in endorsements without their consent. The state law also provides that companies need parents' permission before using minors' images or names in ads.

The tentative deal came about in a lawsuit that was brought by a group of consumers, including Angel Fraley, Paul Wang and Susan Mainzer. But not all consumers approve of the negotiated settlement.

Late last month, a group that had brought a separate case against Facebook for allegedly violating the California law filed papers opposing the settlement. It says the deal "offers no relief to the class, while providing substantial awards to counsel and carte blanche to Facebook to continue its unlawful conduct."

The opponents raise several specific objections to the settlement, including that the attorneys in the Fraley matter will receive $10 million, while users don't receive any money.

Facebook's motion, filed earlier this week, seems aimed at addressing some of those criticisms. The social networking service contends that the settlement is a good deal, arguing that it would prevail entirely should the matter proceed to trial. "Plaintiffs are unlikely to obtain any award in the event of continued litigation," Facebook says in its motion.

Facebook says it would win for several reasons, including that the consumers consented to the use of their names and images in sponsored stories. The company says its statement of rights and responsibilities "expressly states that 'your name and profile picture may be associated with commercial, sponsored, or related content (such as a brand you like).”

The company also says that it would prevail because the consumers weren't economically injured by the program. "Discovery has confirmed that none of the named Plaintiffs can point to any instance in which a sponsored story diminished the value of their names or likenesses or in any way deprived them of an economic opportunity that they otherwise could have obtained on their own."

Facebook adds that users also will have trouble proving economic damages because they were compensated for publicizing their "likes" in sponsored ads. "Indeed, users receive a range of tangible and intangible benefits for sharing their affiliations on Facebook, encompassing coupons, discounts, support or fundraising for a political or charitable cause, or increased esteem or cache within their peer groups," Facebook argues.

Koh will hold a hearing about the proposed settlement on July 12.




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