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California: Court announces motion for preliminary approval of $725M settlement with Facebook for class action

The United States District Court for the Northern District of California published, on 22 December 2022, the plaintiff's notice and motion to certify a settlement class and grant preliminary settlement approval in Case 3:18-md-02843-VC, as filed on the same date, regarding Facebook, Inc.'s privacy user profile litigation. In particular, the notice proposes a settlement of $725 million to be paid by Facebook, constituting the largest amount recovered by users in any US data privacy class action.

In particular, the class action pertains to Facebook allegedly allowing third parties to access data about users through their friends, an activity which the notice highlights has since ceased.

In addition, the notice outlined that in Sepetember 2019, following two rounds of extensive briefing and lengthy hearings, the Court issued an order granting in part and denying in part Facebook’s motion to dismiss the complaint. The Court idenified four categories of issues presented by the plaintiffs, namely:

  • The apps' access to the friends of those Facebook users who had installed the apps ('friend sharing');
  • Facebook's continued friend sharing with 'whitelisted apps,' even after it had announced it would end friend sharing;
  • Facebook's practice of sharing sensitive information with business partners without having disclosed the practice to users or their friends; and
  • Facebook's failure to restrict or monitor third parties use of Facebook users' sensitive information, in spite of its stated policies.

Further to the above, an extensive discovery process was initiated which resulted in the parties informing the Court that they had reached a settlement in principle on 26 August 2022. However, the parties were not able to reach agreement on the unresolved issues, as well as others that arose as the parties sought to finalise the settlement agreement. As a result, on 13 October 2022, the parties met with Judge Corely on multiple occassions to discuss such issues which allowed them to reach a settlement agreement.

Notably, the notice states that Facebook has meaningfully enhanced its ability to restrict and monitor how third parties acquire and use Facebook users' information to protect that data from potential misuse and has developed more robust tools to tell users what information Facebook collects and shares about them.

Furthermore, the notice states that included among the improvements Facebook has enacted since the onset of this litigation are:

  • The initiation of periodic reassessments of app developers' and partners' access to and use of a broad range of Facebook user data;
  • The initiation of risk-based assessments to determine whether to apply an increased level of monitoring than the periodic processes;
  • The 2019 deprecation of 'quiz apps' that provide minimal utility to users relative to the risks involved with their access to user data, namely ThisIsYourDigitalLife, which acquired from Facebook user information that was sold to Cambridge Analytica; and
  • The substantial increase in resources dedicated to monitoring third-party app developers and enforcing Facebook policies.

Moreover, the notice outlines that Facebook has made significant changes to the information available through the Download Your Information ('DYI') tool, and its disclosures and controls regarding third party advertising and Facebook's collection of users' off-Platform activity.

The notice outlines that the net settlement fund would be used to compensate settlement class members for the harms they suffered as a result of Facebook's alleged wrongdoing, with an estimated class size in the range of 250 million to 280 million.

Specifically, the issues to be decided on the motion are:

  • whether the proposed settlement on the terms and conditions set forth in the Stipulation warrants preliminary approval;
  • whether to certify this Action as a class action for purposes of settlement;
  • whether the court should approve the form and substance of the proposed summary notice, class notice, in-app notice, and claim form, as well as the settlement administration protocol and notice plan, summary notice;
  • whether the court should set deadlines for class members to exercise their rights in connection with the proposed settlement; and
  • whether the court should schedule a settlement hearing to determine whether the settlement, plan of allocation, and forthcoming applications for attorneys' fees and expenses should be finally approved.

Further to the above, OneTrust DataGuidance spoke with Jacob Canter​​, Associate at Crowell & Moring LLP, who noted that ''Given that the court has not approved the settlement, I wouldn't call this an official settlement. But it is an official attempt to settle. I honestly do not know whether Judge Chhabria will accept the settlement, he scrutinises these extremely closely.''

The hearing date is scheduled for 2 March 2023, before the Honorable Vince Chhabria. In order to approve the class settlement, a court must determine that the settlement is fair, reasonable, and adequate, among other things.

You can read the settlement here.