By Nate Raymond
Oct 8 (Reuters) - Facebook Inc has proposed a revised $20
million settlement in a class action lawsuit accusing it of
violating the rights of users through its "Sponsored Stories"
advertising feature after a U.S. judge rejected an earlier
accord.
The new settlement agreement, filed Saturday in U.S.
District Court in San Francisco, drops provisions setting aside
up to $10 million for plaintiffs lawyers' fees and allows users
to apply for a cash payment of up to $10 each.
U.S. District Judge Richard Seeborg rejected an initial
settlement proposal on Aug. 17 after questioning why the
agreement provided no cash for Facebook users.
The initial agreement provided no money to class members and
instead set aside $10 million to be given to charities involved
in Internet privacy issues.
The new agreement, which is also subject to Seeborg's
approval, allows for some of the funds to go to charity, but
only if there is any left after users' claims, attorneys fees
and other expenses are met.
But given the size of the class, the charities might still
get some cash. The agreement provides that, if it is not
economically feasible to pay all the users a cut, the court may
designate the entire fund as going to the charities.
The proposed settlement covers nearly 125 million people,
court documents show. The $20 million equates to less than 2
cents per class member.
"We believe the revised settlement is fair, reasonable, and
adequate and responds to the issues raised previously by the
court," Andrew Noyes, a Facebook spokesman, said on Monday.
Richard Arnes, a lawyer for the plaintiffs, did not
immediately respond to a request for comment.
Filed in 2011, the lawsuit alleged that the social
networking site's "Sponsored Stories" feature violated
California law by publicizing users' "likes" of advertisers
without any compensation or a way to opt-out.
As part of both settlement proposals, Facebook also agreed
to give users more control over how their names and likenesses
are used.
Facebook's revised agreement also provides new terms on
targeting children.
Facebook said it agreed to encourage new users to designate
who else on the site is a member of their family. Parents will
be able to directly have their children opt-out of the Sponsored
Stories feature once their relationship to the child is
confirmed.
Facebook also now has a right to object to plaintiffs
lawyers' fee applications, unlike the earlier settlement
agreement. It was unclear how much the plaintiffs lawyers would
seek with the new settlement.
Facebook shares closed at $20.40 on Monday, down about 2.4
percent.
The case is Fraley v. Facebook Inc., U.S. District Court for
the Northern District of California, No. 11-1726.
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