By Gerald L. Maatman, Jr., Thomas E. Ahlering and Alex. W. Karasik

Seyfarth Synopsis: Plaintiffs’ lawyers reached a landmark $550 million settlement in January 2020 in a lawsuit against Facebook by consumers in a class action brought under the Illinois Biometric Information Privacy Act (the “BIPA”) in the U.S. District Court for the Northern District of California. On May 8, 2020, the plaintiffs filed an unopposed motion for preliminary settlement approval of the class action settlement.  See In Re Facebook Biometric Information Privacy Litigation, No. 3:15-CV-3747 (N.D. Cal. May 8, 2020).

The motion provides a first look into the details of the settlement’s structure, as the matter pends before the Court to decide whether the settlement is fair and reasonable. The motion – and the genesis of the case and the settlement – are essential reading for all corporate counsel.

Case Background

As we previously blogged about here, the plaintiffs alleged that Facebook violated the BIPA when it unlawfully collected and stored biometric data of Facebook users without prior notice or consent. The claims concerned Facebook’s “Tag Suggestions” function, which identifies other Facebook users by scanning uploaded photographs. Plaintiffs alleged that Facebook created and stored digital representations of users’ faces based on the geometric relationship of facial features unique to each individual.

Facebook moved to dismiss, asserting that the plaintiffs lacked standing to bring the suit under Article III because the collection of biometric information without notice or consent did not result in any harm to the plaintiffs.  The District Court denied Facebook’s motion to dismiss and certified a class of Facebook users located in Illinois for whom Facebook created and stored a face template after June 7, 2011.  Following Facebook’s appeal, the Ninth Circuit affirmed the denial of the motion to dismiss and affirmed the grant of plaintiffs’ motion for class certification.  On January 22, 2020, the U.S. Supreme Court denied certiorari.

On January 29, 2020, the parties announced a settlement whereby Facebook agreed to pay $550 million to eligible class members (and fees for the plaintiffs’ attorneys), but offered no additional details about the settlement.

Motion For Preliminary Approval Of Class Action Settlement

On May 8, 2020, the plaintiffs filed an unopposed motion for preliminary approval of the class action settlement.  As expected, the motion contained a $550 million benefit to the class, which was notably non-revisionary.  Id. at 10.  The motion indicates that, “the parties have reached a settlement that is the largest consumer class action settlement ever in a privacy case.”  Id.  It further advocates that “the Settlement is historic. It dwarfs every previous settlement in a BIPA class action, but it also stands out on a per-class-member basis. The Settlement provides cash relief that far outstrips what class members typically receive in privacy settlements, even in cases in which substantial statutory damages are involved.”  Id.  In their pleading, Plaintiffs’ counsel estimates that class members who submit claims will receive between $150 and $300 each, which they argue compares favorably to per-class member recoveries in similar BIPA actions.  Id. at 26.

Other notable financial terms include an attorneys’ fee award of 25% of the settlement fund, and costs and expenses totaling approximately $981,000.  Id. at 18.  Additionally, the named plaintiffs intend to seek an incentive award of no more than $7,500 each, in recognition of the time, effort, and expense they incurred pursuing claims that benefited the entire class.  Finally, any settlement checks not cashed within 90 days will either be redistributed to claiming class members, or if the amount is nominal, donated to a Court-approved cy pres recipient.

In terms of non-monetary relief, the motion indicates that Facebook will turn its Face Recognition feature “off” for all class members and will delete existing face templates for class members unless they provide express consent to turn Face Recognition “on” within 180 days of the settlement’s effective date.  Id. at 16.  Further, the settlement notes that Facebook will be precluded not only by statute, but also by a separately enforceable agreement, from collecting or storing the class members’ biometric data through facial recognition technology or any other means in Illinois, unless it has specific class member consent.  Id. at 27.  In support of these provisions, the plaintiffs noted that these, “[t]hese non-monetary components of relief, in combination with recent additional changes to Facebook’s facial recognition practices, provide a structural framework of compliance and protection of the privacy rights of Class Members and the residents of Illinois.”  Id.  The motion concludes with the parties asking the Court to grant preliminary approval of the settlement.

Implications For Employers

This filing provides the first glimpse into the details of how this complex privacy class action settlement is structured.  Of course, the Court will need to grant preliminary approval and final settlement approval before effectuating the settlement.  Nonetheless, given the magnitude of this litigation and its impact on privacy rights and class action litigation, employers and business should continue to monitor this case as it progresses toward the settlement approval process.  Future privacy class action settlements will undoubtedly be shaped by this precedent-setting result.