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a Facebook logo, file 2013, REUTERS Robert Galbraith

9th Circuit OKs Facebook settlement, despite judges' grumbling

2/26/2013 COMMENTS (0)

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 review.

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 Internet privacy.

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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