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Legal Update

Judge Skeptical Of Proposed Settlement In Facebook 'Sponsored Stories' Suit

A Federal District Judge apparently shares at least some of Consumer Watchdog's concerns about a proposed settlement in the Facebook 'Sponsored Stories' class action suit.

Consumer Watchdog Staff Attorney Laura Antonini filed a letter Thursday with Judge Richard Seeborg saying that the proposed deal in Fraley v. Facebook “ is not fair, adequate or reasonable and provides no direct or indirect benefit to class members.”

Our letter offered these objections:

 -- The proposed settlement provides no monetary relief to class members.
 -- The injunctive relief is inadequate.
 -- The cy pres distributions raise serious problems.
 -- Class counsel is requesting $10 million in attorney’s fees, amounting to 100 percent of the value of ostensible relief to the class (the cy pres fund).

At a hearing Thursday Judge Seeborg told attorneys in the case that he has "significant concerns" about the settlement, according to Reuters.

Facebook attorneys and attorneys for the plaintiffs claimed the settlement represents roughly $123 million in cash value although the social networking company would pay out only $20 million in cash.  

"That doesn't make any sense to me," Seeborg said, according to Reuters.

$10 million is slated to go to the plaintiff's attorneys as legal fees. Another $10 million would go to nonprofits as cy pres awards.  Judge Seeborg questioned why class members would not receive any money.

"I want to know more about why that is so," he said.

A decision is not expected for several months, but for now at least, the judge is asking all the right questions.