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Fraley v. Facebook, Inc.

United States District Court, N.D. California

August 26, 2013

ANGEL FRALEY, et al., Plaintiffs,
v.
FACEBOOK, INC., Defendant

For Angel Fraley, Paul Wang, James H Duval, a minor, bye and through JAMES DUVAL, as Guardian ad Litem, William Tait, a minor, by and through RUSSEL TAIT, as Guardian ad Litem, Susan Mainzer, individually and on behalf of all others similarly situated, Plaintiffs: Jonathan Ellsworth Davis, Robert Stephen Arns, Steven Richard Weinmann, The Arns Law Firm, San Francisco, CA; Jonathan Matthew Jaffe, Jonathan Jaffe Law, Berkeley, CA.

For Lucy Funes, Plaintiff: William Richard Restis, Finkelstien & Krinsk LLP, San Diego, CA.

Instagram, LLC, Plaintiff, Pro se.

For C.M.D., Intervenor Plaintiff: Aaron Michael Zigler, Korein Tillery - St. Louis, Generally Admitted, St. Louis, MO; Antony Stuart, Stuart Law Firm, Los Angeles, CA.

For T.A.B., H.E.W., B.A.W., A.D.Y., R.P.Y., Intervenor Plaintiffs: Aaron Michael Zigler, Korein Tillery - St. Louis, Generally Admitted, St. Louis, MO.

For Facebook, Inc., Defendant: Matthew Dean Brown, LEAD ATTORNEY, Michael Graham Rhodes, Cooley LLP, San Francisco, CA; Jeffrey Gutkin, Cooley Godward Kronish LLP, San Francisco, CA; Jennifer Ann Hall, S. Ashlie Beringer, Gibson Dunn & Crutcher LLP, Palo Alto, CA.

For E.K.D., Respondent: Aaron Michael Zigler, LEAD ATTORNEY, Korein Tillery - St. Louis, Generally Admitted, St. Louis, MO.

Jeffrey Allen Pennington, Movant, Pro se, Dry Branch, GA.

For J. N. D., Miscellaneous: Mark John Tamblyn, Wexler Wallace LLP, Sacramento, CA.

OPINION

Page 940

ORDER GRANTING MOTION FOR FINAL APPROVAL OF SETTLEMENT AGREEMENT

RICHARD SEEBORG, UNITED STATES DISTRICT JUDGE.

I. INTRODUCTION

The proposed settlement class in this action consists of some 150 million members of defendant Facebook, Inc.'s eponymous social network website, whose names and/or likenesses allegedly were misappropriated to promote products and services through Facebook's so-called " Sponsored Stories" program. The parties now seek final approval of a settlement that will result in small cash payments to the relatively low percentage of class members who filed claims, and cy pres payments of several millions of dollars to certain organizations involved in internet privacy issues. The settlement also requires Facebook to make changes to the Statement of Rights and Responsibilities (" SRRs" ) it contends governs use of its site, and to implement additional mechanisms giving users greater information about, and control over, how their names and likenesses are employed in connection with Sponsored Stories.

The original settlement agreement proposed by the parties did not win preliminary

Page 941

approval. The parties responded with a new proposal, earning such approval and triggering notice to potential class members. A number of objectors contend that the updated settlement proposal should not receive final approval for a variety of reasons. Among the objections most vigorously advanced is an argument that the settlement does not appropriately handle issues related to minors.

The record leaves no doubt that this settlement was the product of arms-length negotiations and compromise. Although the monetary relief to each class member is relatively small and the percentage of class members who submitted claims is limited, the settlement as a whole provides fair, reasonable, and adequate relief to the class, in light of all the circumstances, including the low probability that a substantially better result would be obtained through continued litigation. The injunctive relief, while not incorporating all features that some of the objectors might prefer, has significant value and provides benefits that likely could not be obtained outside the context of a negotiated settlement, even if plaintiffs were to prevail on the merits.

If " Sponsored Stories" had undisputedly violated the law and represented the gross invasion of class members' rights as characterized by the complaint, then the adequacy of the settlement would, of course, be viewed through a very different lens. Plaintiffs' allegations and theories, however, remain largely untested, having only survived a motion to dismiss. Substantial barriers to recovery remained, not the least of which would be the requirement to demonstrate that the complained-of conduct caused cognizable harm. Placing those and other factors discussed below in the balance, the proposed settlement warrants final approval.

II. STANDARD OF REVIEW

A district court's approval of a class-action settlement must be accompanied by a finding that the settlement is " fair, reasonable, and adequate." Fed.R.Civ.P. 23(e). The fairness of a settlement must be evaluated as a whole, rather than by assessing its individual components. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Crucially, the question whether a settlement is fundamentally fair within the meaning of Rule 23(e) is not the same as asking the reviewing court if perfection has been achieved. See id. at 1027. Although Rule 23 imposes strict procedural requirements on the approval of a class settlement, a district court's only role in reviewing the substance of that settlement is to ensure that it is " fair, adequate, and free from collusion." See id.

A number of factors guide in making that determination, including:

the strength of the plaintiffs' case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a ...

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