When Lawyers Cut Their Clients Out of the Deal - NYTimes.com
The class members would get nothing. The plaintiffs’ lawyers would get about $2.3 million. Facebook would make a roughly $6.5 million payment — to a new foundation it would partly control.
The appeals court upheld the settlement last year by a 2-to-1 vote, with the majority saying it was “fair, adequate and free from collusion.” Last month, critics of the settlement asked the Supreme Court to hear the case.
The Facebook settlement certainly explores new frontiers in class-action creativity. For starters, consider the plaintiffs.
“They do not get one cent,” Judge Andrew J. Kleinfeld wrote in dissent. “They do not even get an injunction against Facebook doing exactly the same thing to them again.”
In exchange for nothing, the plaintiffs gave up their right to sue Facebook and its partners in a program called Beacon, which automatically, and alarmingly, displayed their purchases and video rentals. The program has been shuttered, but its legal legacy lives on.
“This settlement perverts the class action into a device for depriving victims of remedies for wrongs,” Judge Kleinfeld wrote, “while enriching both the wrongdoers and the lawyers purporting to represent the class.”
The Supreme Court will soon decide whether to hear the case, Marek v. Lane, No. 13-136. The justices have been quite active in restricting other aspects of class actions, and they may decide it is time to consider settlements that critics say leave plaintiffs worse off than when they started.