By Dan Levine
SAN FRANCISCO, Feb 26 (Reuters) - A $9.5 million settlement
over Facebook's defunct "Beacon" advertising service which gives
no money to class members will stand, despite objections from
six judges on the 9th U.S. Circuit Court of Appeals.
A group of Facebook users sued the social networking service
in 2008, complaining that the site broadcast their private
purchases without their consent. The company eventually settled,
agreeing to pay a total of $9.5 million, with $2.3 million of
that for attorneys' fees.
The remaining money was intended to fund a new charity
focusing on digital privacy, in accordance with cy pres legal
doctrine. A Northern California federal judge approved the deal,
and last year a three-judge 9th Circuit panel affirmed 2-1, with
senior 9th Circuit Judge Andrew Kleinfeld dissenting.
In an order published on Tuesday, the 9th Circuit said it
would not reconsider the ruling before a larger 11-judge panel.
However, six judges signed a dissent to the denial of en banc
The Digital Trust Foundation created by the settlement has
no record of service, and cannot remedy the issues identified by
the lawsuit, 9th Circuit Judge Milan Smith wrote.
"The DTF can teach Facebook users how to create strong
passwords, tinker with their privacy settings, and generally be
more cautious online, but it can't teach users how to protect
themselves from Facebook's deliberate misconduct," Smith wrote.
"Unless of course the DTF teaches Facebook users not to use
Facebook. That seems unlikely."
Facebook spokesman Andrew Noyes said the company is pleased
with the court's decision to let the settlement stand, adding
that the DTF "will fund worthy projects that will help protect
and improve Internet users' privacy, safety and security."
Plaintiff attorney Scott Kamber said he viewed the dissent
as a criticism of cy pres law in the 9th Circuit, and that he
was pleased the money would soon be available to advance
The 9th Circuit has 28 active judges and a majority is
necessary to rehear a case en banc.
The case is Lane v. Facebook Inc, 9th U.S. Circuit Court of
Appeals, No. 10-16380.
For the plaintiffs: Scott Kamber, Kamber Law.
For Facebook: Michael Rhodes, Cooley.
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