We previously discussed the settlement in Fraley v. Facebook, and my skepticism of it. It seems to be worse than originally thought, and there have been some interesting developments:
- The lawyers will be collecting $10 million for generating $10 million in cy pres. They seek to rationalize this by claiming over $100 million in "benefits" from injunctive relief—but of course, they represent a class seeking compensation for past injury, so prospective injunctive relief doesn't solve that issue. Even assuming that the nine-digit figure had any bearing on reality, when it doesn't: it's based on purported cost to Facebook, but cost to Facebook is not "benefit" to the class, any more than it would be if Facebook set $100 million ablaze in a bonfire.
- I was much amused to see which plaintiffs' firm intervened to complain about the size of the settlement: the one and only Korein Tillery, who doesn't have such a great track record of treating its putative class clients fairly in the course of their Madison County dealings. The court should require the attorneys to put their money where their mouth is, and use an auction mechanism to see which class counsel will promise the best deal for the class for the least amount of attorneys' fees. Some disclosure about previous results in class-action settlements would be of interest, too. Korein cited to Bluetooth, which makes my heart proud.
- Daniel Fisher reports that the cy pres recipients are suspiciously tied to Facebook. I'm quoted: "If Facebook is already giving money to these charities, then this isn't a '$10 million settlement,' it's just a change in accounting entries." Moreover, "It's surprising that, in a settlement involving Facebook users, i.e., people who are actively on the Internet, that objecting and opting out are only possible by jumping through hoops involving paper and the Post Office."
- It turns out that Judge Koh has a series of affiliations (some more strained than others) with some of the proposed cy pres recipients; this is perhaps why she recused herself. (I previously argued that similar ties required recusal, but, if this is why Koh recused, it is the first time I've seen a judge do so. The chief judge of the same district was happy to reallocate cy pres money to his favorite charity.) This suggests a possible problem with cy pres: not just the conflict of interest with a judge, but the fact that parties can effectively judge-shop by selecting cy pres recipients that would force recusal. Judges can prevent this by issuing a standing order forbidding proposing cy pres settlements that provide money to charities affiliated with the judge. But now Judge Koh will not be deciding whether the settlement is fair, and it's far from clear her replacement will be as conscientious of the class's interests.