Judge Rejects Facebook "Sponsored Stories" Settlement Offer As Stock Price Plummets
August 20, 2012 10:15 AM
comment(s) - last by
Facebook has definitely seen better days
Facebook has been fighting a lawsuit over its "Sponsored Stories" advertising feature. The company
previously offered to settle the suit for $10 million
, which would be given to charity. However, U.S. District Judge Richard Seeborg has listed concerns with the proposed settlement and issued a request for more information on why the agreement doesn't award money to social network members.
Judge Seeborg stated that Facebook and attorneys for the plaintiffs could modify the proposed settlement to address his concerns.
"We continue to believe the settlement is fair, reasonable, and adequate," a Facebook spokesman said in a statement. "We appreciate the court's guidance and look forward to addressing the questions raised in the order."
was originally filed by five different Facebook members who claim that the Sponsored Stories feature violated California law by publicizing the "likes" of users without paying the user or giving them away to opt out. The case covers 100 million potential class members.
Part of the Facebook proposed settlement included ways for users to have more control over how their information is used. In addition to the $2 million to be paid to charity, Facebook also agreed to pay $10 million for legal fees.
While Facebook reconsiders its settlement offer, the company stock is plummeting after its IPO brought such high hopes for investors. The company stock recently fell to half its IPO price. As of this morning, Facebook stock is
trading below $18 per share
, half the IPO market value in May.
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RE: Cause of the problem
8/20/2012 12:15:57 PM
In your typical class action, the lawyers get paid a few millions, the lead plaintiff (or plaintiffs) get around $50k, and then everyone else gets a near-worthless amount, and usually not even in monetary form.
For example, most class actions against cellular phone carriers result in the participants being awarded a certain amount of free airtime, instead of a check in the mail. The lead plaintiff still gets a handsome sum, and the lawyers make out like bandits of course.
We don't have a Justice system; we have a Legal system. And yes it does seem to exist purely for its own sake these days, sadly enough.
RE: Cause of the problem
8/20/2012 1:42:21 PM
Here is the original judgement:
If Facebook took this case all the way and lost they could be on the hook for up to $750/person defined in the class action, which equates to a possible maximum liability of $75B. That's why they settled; risk mitigation.
The charity was not defined but had to be some type of mutually agreed upon advocacy group whose business related to the charges being brought.
"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
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