Plaintiffs in Facebook settlement get nothing , but their lawyers get $2.3M

A Facebook

A Facebook

Adam Liptak at the New York Times alerts us to a possible Supreme Court review of the settlement in Lane v. Facebook, a class-action suit alleging that Facebook violated users’ privacy with the Beacon feature. The Beacon feature, now discontinued, automatically posted video rentals and purchases to users’ feeds in a feature that could never have angered them in any foreseeable way. That’s not important now. What’s important is that plaintiffs’ lawyers in Lane v. Facebook negotiated a settlement in which members of the class got nothing, Facebook had to give $6.5 million to a new charitable foundation it would partly control, and plaintiffs’ lawyers got $2.3 million. Measured outrage after the jump.

In a class-action suit, the members of the class forfeit their right to sue individually in exchange for the ability to bring suit as a group. It’s a good way for the public to hold large corporations accountable for broad abuses; individuals lack the resources to sue Facebook or Seld-M-Break brand baby carriers, but a class can demand a settlement large enough to attract high-profile lawyers to their case.

The lawyer almost always gets more than any individual plaintiff. Sometimes he gets more than all the plaintiffs combined. But the settlement in Lane v. Facebook is unusual, in that members of the class got zero while their attorneys got an enormous fee. Meanwhile, Facebook got off comparatively light; as Ted Frank of the Center for Class Action Fairness observed, making the website pay money to a foundation it controls is like punishing Microsoft by making them give money to the Bill and Melinda Gates Foundation.

In exchange for this draconian punishment, Facebook gets indemnity from further lawsuits related to Beacon. Now seems like a good time for the somewhat fatuous observation that this settlement was negotiated between Facebook and plaintiffs’ attorneys. The two parties present at the negotiation got something (indemnity, $2.3 million,) and the party that sent a representative to negotiate on its behalf got zilch.

How is this not collusion? I ask all sensible persons. Perhaps more productively: how is this not a violation of plaintiffs’ attorneys’ professional ethics? I ask my lawyer friends, because I don’t really know anything about that stuff. It seems, though, that the outcome of this legal proceeding has been to enrich the litigators and immunize the wealthier side from the poorer side’s recourse.

If you demanded that I pick one problem with American civil law, I would A) sue you for engrossment or something and B) cite the discrepancy in access to quality representation depending on money. Facebook has billions of possibly imaginary but still negotiable dollars, and they seem to have some pretty good lawyers. A class action suit is supposed to allow the poor schmucks who auto-announced their rentals of Barely Legal 6 to get good lawyers, too, but it appears that in this case the lawyers were simply bought off.

And what is any one member of the class going to do about it—sue the millionaire lawyer he couldn’t afford to retain? The settlement in Lane v. Facebook is perhaps most disturbing because it replicates the conditions class actions are supposed to fix. I see no reason why the Supreme Court wouldn’t reject it, which is why they don’t let me sit on the Supreme Court.


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  1. The one detail you’re missing is that in a class-action law suit, a judge must approve any settlement to prevent collusion between the plaintiff’s lawyers and the defendant. That leads me to assume we are dealing with one of two possibilities.

    The first option, which my cynical side assumes is that case, is that the judge is corrupt, or maybe not corrupt, but extremely pro corporation.

    The second, and I hope accurate, version is that the damages were minimal enough that each individual plaintiff would reap an extremely small amount of money and the lawyers and judges all agreed that allowing the plaintiffs to each earn like $2.34 did a lot less good than giving a charity $6,500,000.00.

    I know nothing about this case, and I’m not bothering to look into it, but if the damages are what I remember people complaining about at the time (“My girlfriend found out I bought tickets to a movie and I wanted to surprise her!”) then that sounds about right. Monitizing the distress caused by the publicity of innocuous information is difficult and unlikely to be yield a high value.

  2. That’s not what monitize means. That last sentence should read, “[e]valuating that value of the distress …”

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