Ninth Circuit Approves Facebook Settlement, But Who Benefits?

Three years ago, a class action alleging a violation of privacy rights by Facebook was settled prior to class certification. The settlement provided for no compensation to class members, no injunction against similar conduct by Facebook in the future, and a substantial expansion of the class beyond the definition proposed in the complaint. The plaintiffs' attorneys received approximately $3 million in fees.

Yet a federal district court in San Francisco approved the settlement, and a divided Ninth Circuit panel recently affirmed. The case illustrates both the deference awarded a district court's evaluation of a class action settlement and the limited scrutiny to be given cy pres remedies—i.e., settlements in which the plaintiffs received an "indirect" benefit when the award is distributed to beneficiaries other than those actually wronged.