We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
Facebook, Inc. was sued in a class action last year over one of
its advertising practices called "Sponsored Stories,"
which typically consist of a Facebook Friend's name, profile
picture, and an assertion that the person (your Facebook Friend)
"likes" an advertiser, coupled with the advertiser's
logo, featured on your Facebook page or News Feed. The idea is that
the target of the advertisement (i.e., you) will be more influenced
by the company's advertisement because someone in your network
(i.e., your Friend) "likes" that company. The disconnect
is that "liking" a page on Facebook does not necessarily
mean the user likes that company in the normal sense of the word.
For example, one could "like" a page in order to get some
promotional benefit from the company or learn more information
about the company or its product.
The named plaintiffs, two of which are minors, alleged
"Sponsored Stories" violated California's Right of
Publicity Statute, Civil Code § 3344; California's Unfair
Competition Law, Business & Professions Code §
17200, et seq. ("UCL"); and the common law doctrine
of unjust enrichment. Generally, the plaintiffs alleged the way
Sponsored Stories worked unlawfully misappropriated their names,
photographs, likeness and identities for use in paid advertisements
without their consent. Facebook moved to dismiss their claims,
arguing lack of Article III standing, immunity under § 230 of
the federal Communications Decency Act ("CDA"), and
failure to state a claim upon which relief can be granted. Late
last year, the California Northern District Court denied the motion
except with respect to the unjust enrichment claim.
Notably, the District Court rejected Facebook's argument
that the plaintiffs lacked Article III standing, drawing a
distinction between the plaintiffs' allegations and other
recent District Court privacy cases coming to the opposite
conclusion under similar facts (Low v. LinkedIn, iPhone App
Litig., and LaCourt v. Specific Media, In re
Doubleclick, Cohen v. Facebook), on the grounds that the
plaintiffs' allegations were sufficiently particular with
regard with what information Facebook used, how it used it, to whom
their information was published, how they were economically injured
by the use of their information to advertise to others (versus
using one's information to advertise to oneself), and how their
information inherently had some commercial value (because a
Sponsored Story ad was viewed by Facebook as more valuable, and
therefore more expensive, than a generic ad).
The case did not proceed beyond the plaintiffs' allegations
to class certification or summary judgment because, before the
hearing on class certification was held, the parties reached a
settlement in or around May, 2012. The plaintiffs filed a motion
for preliminary approval of the proposed class settlement, which
calls for changes to Facebook's website and terms of use and
additional control functions over one's appearance in a
Sponsored Story. The settlement includes other terms applicable to
minors, such as a requirement that minors represent that they have
received parental consent before they can be featured in a
Sponsored Story. Facebook also agreed to bear the costs for class
notice and settlement administration, in addition to paying $10
million incy pres relief to the class and almost $40,000 to
three class representatives. The proposed class is nationwide, and
there is also a proposed subclass consisting of minors.
A motion to intervene and oppose the motion for preliminary
approval was filed in June, 2012 on behalf of the minor class
members, whose interests are also represented in another related
class action against Facebook and would be covered by the proposed
release in the Fraley settlement. The minors are
objecting for several reasons, including for example (1) the
proposed settlement would not address the fundamental issue that
minors lack the capacity to provide consent, and simply asking them
to confirm they have parental consent is insufficient, and (2) that
the Fraleyaction is limited to Sponsored Stories, whereas
their related action, C.M.D. v. Facebook, challenges the use
of children in advertising more generally. The intervention has the
potential to blow up the proposed settlement and force the parties
to start settlement discussions over again or proceed to class
certification.
Both motions (for preliminary approval and intervention) are set
to be heard on August 2, 2012.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Last week, by virtue of a 63-30 procedural vote, the Senate moved forward with a bill called the Marketplace Fairness Act, with a final Senate vote set for May 6, according to The Wall Street Journal.
Corporate tweeters or bloggers – employees who post promotional and often entertaining commentary on behalf of their employers’ businesses – add much of their own personal brand – their voice, their opinions, their snarky remarks – to the information they are disseminating on the company’s behalf.
No blog can really take itself seriously unless it's written about Lindsay Lohan. Plus our Marketing Department claims she'll do wonders for our search rankings.
In a First Report and Order, Further Notice of Proposed Rulemaking and Notice of Inquiry released at the end of March in a proceeding begun in 2003, the Federal Communications Commission continued its comprehensive review of its rules, policies and procedures governing radiofrequency radiation and limits on exposure to human beings.
