California Judge throws out Facebook’s $550 million settlement in $35 billion lawsuit

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A California federal judge threw out Facebook’s proposed $550 million biometric privacy settlement in $35 billion class-action lawsuit

Facebook is in a soup! Literally!  A California federal judge literally threw out Facebook’s proposal to settle the potential $35 billion lawsuit for just $550 million. The California judge dismissed Facebook’s settlement offer saying he won’t grant preliminary approval as Facebook’s proposal gives users just 1.25% of what they could be entitled to under the Illinois biometric privacy laws.

The class-action lawsuit against Facebook was filed by lead plaintiff Nimesh Patel in 2015 in one of three consolidated class actions. The lawsuit claims that Facebook used biometrics to map users’ faces for its “Photo Tag Suggest” function in 2011. The lawsuit claims Facebook did so without their consent and failed to inform them how long their data would be stored as required by the Illinois Biometric Information Privacy Act (BIPA) of 2008.

As per the laws currently in place in Illinois Facebook would have to pay penalties of $1,000 for each negligent violation and $5,000 for each knowing violation. Since the Facebook lawsuit affects nearly seven million Illinois Facebook users, Facebook would have to pay out nearly $35 billion to $47 billion to settle the issue. Instead Facebook had offered a settlement of $550 million which was very meager according to California District Judge, James Donato.

Under the settlement proposal submitted jointly by Facebook and plaintiffs, each class member would receive $150 to $300 each, depending on how claims are submitted. Lawyers for the plaintiff class are requesting up to 25% of the settlement fund, or $137.5 million, and $981,000 in litigation expenses.

“The Illinois Legislature said this is meant to be an expensive violation,” Judge Donato said during a preliminary settlement approval hearing held via video Thursday.  Judge Donato demanded to know from Facebook and the plaintiff class why the higher damages amount of $5,000 per violation was taken off the table and only the maximum figure $300 for each violation was considered.

Judge Donato referred to the last year’s FTC vs Facebook lawsuit in which Facebook paid a $5 billion fine to the Federal Trade Commission (FTC) to settle claims that it violated a 2012 FTC order by allegedly deceiving users about their ability to control private information. Donato said that settlement could provide adequate evidence to support a push for higher damages.

“It looks to me that what Facebook did to violate the BIPA may also have been a violation of that prior FTC consent decree, in which case you have a pretty good argument that this is an intentional or reckless violation of BIPA that would warrant $5,000,” Donato said.

Plaintiff’s attorney tried to convince Judge Donato that the $5,000-per-violation benchmark was unrealistic. He added that Facebook was of the opinion that the uploaded photographs were exempt from the Illinois law. “Maximum recovery is potentially $47 billion,” Balabanian said. “In our view, it is almost a certainty that the court would cut that damage award down.”

Judge Donato swept aside the attorney’s argument saying that $550 million is still an extreme discount. The class will only receive about 1.25% of the maximum $47 billion payouts. “They’re taking what is essentially a 98.75% discount off what the IL said should be the damages,” Judge Donato stated.

Judge Donato also wanted to know from Facebook how its engineers will handle class members’ facial geometry data after the settlement is final. “I want a clear explanation about how it worked before and how it will work going forward,” the judge ruled.

Judge Donato ordered lawyers on both sides to address his concerns within the next few weeks. He also warned them that the settlement is far from a done deal, and a jury trial is still on the table.

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