A divided federal appeals court is approving a $9.5 million settlement to a class-action lawsuit challenging Facebook’s program that monitored and published what users of the social networking site were buying or renting from Blockbuster, Overstock and other locations.
The case concerned allegations Facebook’s now-defunct “Beacon” program breached federal wiretap and video-rental privacy laws. Terms of the settlement, in which Facebook denied any wrongdoing, require the site to finance what the deal calls a “Digital Trust Fund” that would issue more than $6 million in so-called cy pres grants to organizations to study online privacy.
The settlement, in which a lower court judge signed off on in 2010, was challenged by some of the 3.6 million class members, who argued that the deal was underfunded, and that Facebook should not get a seat on the trust fund’s board (.pdf) to help decide where the money would go.
A dissenting judge on the three-judge panel agreed, but could not shore up a majority Thursday.
“I respectfully dissent. This settlement perverts the class action into a device for depriving victims of remedies for wrongs, while enriching both the wrongdoers and the lawyers purporting to represent the class,” Judge Andrew Kleinfeld wrote in a blistering dissent.
But the majority on the 9th U.S. Circuit Court of Appeals didn’t see it that way.