United States District Court for the Northern District of California

5:08-cv-03845, No. 133 Decided March 17, 2010

Facts

Lane v. Facebook was a class action case where Lane, represented the aggrieved plaintiff class over the use of Facebook’s Beacons Sites. The issue with this site was that it highlighted an online security and privacy issue given that users who would use the Beacon sites would be used in adverts without their consent. Sean Lane, the plaintiff representative, bought a ring at Overstock.com, via Facebook in 2007. The Rings purpose was intended to be as a surprise to his wife who was equally a Facebook user. Unknown to Lane his action, which was the purchase of a diamond ring was broadcast to a significant number of persons within his Facebook network. Among those persons who viewed the advert was his wife. While the Beacon feature was opt out, there was no way users could permanently turn off the service.

Procedural History

The United States District Court for the Northern District of California decided the case in 2010 where the plaintiff’s wishes were fulfilled albeit in half. While the plaintiff wanted Facebook to compensate all its users, such an action was impossible since by then Facebook had attained 500 million users, and an attempt to settle all their claims would result in the annihilation of the firm. Therefore, on the court’s orders, Facebook was ordered by the courts to close its Beacon program, while at the same time institute a program worth 9.5 million dollars to help train users on internet privacy and security (Lane et al. v. Facebook, Inc., et al., 2008).

Issue

The main issue was as to whether the defendant was answerable for breach of privacy claims, and whether the plaintiffs would be allowed any form of monetary settlement for the damage caused by such action. Firstly, the plaintiffs argued that the defendant had violated the Electronic Communications Act, given that user information passed between the plaintiff and the Beacon websites via Facebook, had been intercepted and the information which by all means was supposed to remain private and confidential had Fbeen used for an unlawful purpose. Further this claim, the plaintiffs argued that the disclosed private information, now in the public domain, had been used by Facebook and its affiliates to enhance profitability. As such under the ECPA, the plaintiffs and the entire class would be entitled to statutory damage at least 100 dollars a day, from the day of violation and additional profits and legal fees. Secondly, the plaintiff alleged that Facebook alongside its beacon affiliates, violated the California Consumer legal acts since no terms stated that private information would be publicly shared after using beacon information. The Plaintiff then argued that the defendant violated the California computer crime Act, through the action of collecting sensitive information.

Rules

Several rules applied to this class action, where the Electronic Communications and Privacy Act prevents the government and other private entities from accessing private information without the consent of the victim, unless under special circumstances, or as described by a court of law. The second law in question was the Video Privacy Protection Act, which was enacted to stop wrongful disclosure of videotapes rental or sale records. If found guilty a party responsible for the making of videotapes and disclosing the information outside the actual purposes would be liable 2550 dollars in actual damages.  Thirdly, the California Consumer Legal Remedies Act is a Californian law that outlaws several business methods of competition and unfair or deceptive acts or practices that are carried out by an individual or enterprise leading to the sale or lease of a product, to any consumer (Lane et al. v. Facebook, Inc., et al., 2008).

Application/Analysis

This case proved was a classic example of a cy pres remedy, often identified as the fluid remedy case. In such a case class members are destined to receive an indirect benefit from the court’s settlements should the verdict go their way. At the time of filing the case, the court established that Facebook users were relatively fewer than the time of deciding. However, both dates were represented by users in the tune of hundreds of millions who by all chances would prove challenging to compensate. While the court found a mistake on Facebook’s part under the end electronic Communications Privacy Act and the California Consumer Legal Remedies Act, it would be practically impossible to offer the plaintiff and the class statutory damages that by that time had amounted to 25, 000 dollars per user. Calculating this by the millions of users registered under Facebook, therefore, would provide a figure that by default, would throw Facebook out of business if the compensation is awarded to all individuals. Additionally, it would be problematic if the court ordered Facebook to make similar payments given a large number of persons spread out across several countries across the globe at that time.

Such a case, therefore, demands that complainants receive an indirect benefit instead of a direct monetary payment (Redish, Julian, & Zyontz, 2009). Thus, Facebook would institute a program that would help prevent such occurrences as those presented by the plaintiff to the court. As such, Facebook would donate funds to a third party, which oversee the creation of a program that would help streamline user knowledge on the functionality and features of a company program. For This purpose, Facebook established a program worth 9.5 million dollars, while the representative plaintiff Sean Lane received 15000 dollars, while Sean Martin and Sheikh received 7,500. The remaining plaintiffs registered in the case received 1000 each.

Conclusion

The Courts Found Facebook et al. in a violation of the Electronic Communications Privacy Act, and the California Consumer Legal Remedies Act

References

Lane et al. v. Facebook, Inc., et al. (2008). 5:08-cv-03845, No. 133

Redish, M. H., Julian, P., & Zyontz, S. (2009). Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis. Florida Law Review, Forthcoming, 2(1), 20-84.