Settlements and Verdicts Involving Facebook

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Facebook yet again finds itself involved in another lawsuit. The social-networking service is being sued by people claiming that showing ads that network friends can “like,” violates a California law regarding commercial endorsements. Goodness, being big sure does generate a lot of lawsuits. Facebook’s bid to dismiss the lawsuit was rejected this week, and it was ruled that the plaintiffs may pursue claims that the company’s sponsored ads violate state law and are fraudulent.

The court found that “plaintiffs have articulated a coherent theory of how they were economically injured by the misappropriation of their names, photographs, and likeness.” According to the plaintiffs, a sponsored story is a paid ad consisting of another friend’s name and profile picture and claiming the person likes the advertiser, and they further feel that it’s unauthorized use of their names and likenesses and they feel they deserve compensation. Raise your hand if you think this sounds ridiculous.

Facebook’s argument is that this case should be dismissed by the court before it is dismissed by a jury because Facebook is immune under the law’s “newsworthiness” exemption, which doesn’t require consent, and that the plaintiffs are public figures to their friends, and expressions of consumer opinion are generally newsworthy. What are they complaining about? As Facebook’s Chief Executive Officer puts it, “Nothing influences people more than a recommendation of a friend” and a “trusted referral is the Holy Grail of advertising.” The “liked” ads are doing nothing but benefit the plaintiffs, but yet they are asking for more money for the unauthorized use of their names. Plaintiffs’ lawyers have an undeserved reputation for a willingness to sue their parents for a buck. This article lends credence to it.

Settlements and Verdicts involving Facebook

YEAR/STATE

FACTS / INJURY SUMMARY

RESULT

2020 – California

Several Facebook content moderators developed PTSD from exposure to disturbing images and videos. They alleged that Facebook failed to protect its employees from workplace trauma. The content moderators claimed it failed to follow industry safety standards it had helped draft itself. Facebook denied the allegations but agreed to settle for $52,000,000. It also agreed to provide training to help content moderators cope with viewing graphic content and implement resiliency measures.

$52,000,000 – Settlement

2020 – California

Illinois plaintiffs alleged that Facebook’s photo-tagging feature infringed upon their privacy. They claimed it violated Illinois law prohibiting businesses from collecting biometric data without obtaining consent first. Facebook denied any wrongdoing. They tried to settle for $550,000,000. However, a California federal judge rejected the settlement, arguing it was not high enough. The judge eventually approved a $650,000,000 settlement five months later.

$650,000,000 – Settlement

2019 – California

Several video advertisers filed a class-action lawsuit against Facebook. They alleged that it used a metric that fraudulently inflated the average video view time. The advertisers claimed this allowed Facebook to receive more money than they should have. Facebook denied any wrongdoing. However, they agreed to a $40,000,000 settlement.

$40,000,000 – Settlement

2018 – Texas

Video game developer ZeniMax Media alleged that the founder of Oculus, which Facebook purchased, used its copyrighted computer code to develop the Oculus Rift virtual reality headset. It sought financial compensation for unfair competition, copyright infringement, and breach of contract. A Texas federal jury initially awarded $500,000,000, which a Dallas district court judge reduced to $250,000,000. ZeniMax eventually appealed the verdict. It ultimately settled with Facebook for an undisclosed amount.

$500,000,000 – Verdict

2018 – California

BladeRoom, a UK-based module manufacturer, alleged that Emerson Electric Company, a Missouri-based manufacturer, used its intellectual property to build a server farm in Sweden for Facebook. It initially met with Emerson and Facebook to pitch its ideas under non-disclosure agreements. BladeRoom claimed Emerson and Facebook intended to steal these ideas during these meetings. It also claimed that Facebook shared them with other tech companies. BladeRoom filed suit in California federal court, alleging unjust enrichment, unfair business practices, and misappropriation of trade secrets. Facebook agreed to a confidential settlement, but Emerson chose not to settle. A jury found that Emerson misappropriated BladeRoom’s trade secrets. They awarded a $30,000,000 verdict.

$30,000,000 – Verdict

2017 – California

Two men alleged that Facebook scanned the content of their private messages, including URLs, for targeted advertising purposes without their permission. They claimed Facebook treated URLs in their messages as a “like” for the corresponding URL’s Facebook page. The men argued that this violated both federal and California privacy laws. Facebook eventually confirmed to the men that they were no longer using private message data to increase page likes. This case settled for $3,900,000.

$3,900,000 – Settlement

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