Week 2 : Article 1

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NEW YORK: A US appeals court refused to disturb Facebook Inc's US$9.5mil (RM28.5mil) class-action settlement over allegations that the social networking company's defunct "Beacon" service violated its members' privacy rights.

The 2-1 ruling on Thursday came from the 9th US Circuit Court of Appeals, with the one dissenting judge saying the settlement unfairly benefited Facebook and plaintiff attorneys.

In 2007 Facebook launched Beacon, which allowed users to broadcast their Internet activity to friends. If a user rented a movie from Blockbuster, for instance, Facebook would broadcast that transaction to the person's entire network, according to the ruling.

However, Facebook didn't require anyone's affirmative consent to participate in the programme, and users soon complained about their private information being transmitted without permission. In the face of complaints and negative publicity, Facebook eventually discontinued the service.

A group of 19 plaintiffs filed a proposed class action in federal court against Facebook and other businesses who participated in Beacon. Facebook soon agreed to settle the case for US$9.5mil (RM28.5mil).

Roughly US$3mil (RM9mil) of that was set aside for attorney's fees, with the rest going to establish a charitable group focused on online privacy rights.

A subset of plaintiffs objected to the settlement, but in its ruling on Thursday the 9th Circuit said the US$9.5mil was not too low.

"A US$9.5mil class recovery would be substantial under most circumstances," the court wrote, "and we see nothing about this particular settlement that undermines the district court's conclusion that it was substantial in this case."

Facebook deputy general counsel Colin Stretch said the company was pleased the 9th Circuit found the settlement fair. Plaintiffs' attorney Scott Kamber said he looked forward to the formation of the privacy rights group.

In dissent, 9th Circuit Judge Andrew Kleinfeld said the settlement "perverts the class action into a device for depriving victims of remedies," while enriching the company and plaintiff lawyers.

"Facebook users who had suffered damages from past exposure of their purchases got no money, not a nickel, from the defendants," Kleinfeld wrote. - Reuters

UPHELD: The Facebook logo is seen at the Nasdaq Marketsite in New York in this May 18, 2012 file photo. A US appeals court refused to disturb a US$9.5mil class-action settlement over the company's defunct 'Beacon' service. - Reuters Lead who : A US appeals court what : refused to disturb Facebook Inc's US$9.5mil (RM28.5mil) class-action settlement over allegations why : social networking company's defunct "Beacon" service violated its members' privacy rights.

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