US SUPREME COURT DENIES FACEBOOK USERS
CY PRES SETTLEMENT CHALLENGE OPPORTUNITY
OPENS DOOR FOR FUTURE CHALLENGES
WASHINGTON, D.C. – The US Supreme Court (SCOTUS) has declined to hear arguments in Marek v. Lane, (No. 13-136) a case challenging the fairness, reasonableness and adequacy of a $6.5 million cy pres settlement where the only concession Facebook made to settle the claims of millions of users was to establish a new foundation to educate the public about “user control” over Internet privacy.
However, in a separate statement, Chief Justice Roberts acknowledged the need for the Court to address the increasing use of cy pres settlements. He wrote, “…review of this case might not have afforded the Court an opportunity to address more fundamental concerns surrounding the use of such remedies in class action litigation, including when, if ever, such relief should be considered….In a suitable case this Court may need to clarify the limits on the use of such remedies.”
“We’re hopeful the Court in a future case will address abuse of the cy presdoctrine which has become an increasingly serious problem that cheats consumers of fair settlements in class action cases,” said Ted Frank, founder of the Center for Class Action Fairness and one of the lawyers challenging the Facebook settlement.
Cy pres awards in class action settlements provide awards be given to charities or foundations instead of individual consumers. According to legal scholars these awards “create the potential for conflicts of interest by ensuring that class counsel are able to reap exorbitant fees regardless of whether the absent class members are adequately compensated.”