FTC and California AG Weigh In on Appeal of Facebook Sponsored Stories Settlement

Published On March 31, 2014 | By Jeff Landis | FTC & State AG, General, Litigation
TwitterLinkedInFacebookRedditCopy LinkEmailPrint

Both the Federal Trade Commission (“FTC”) and California Attorney General Kamala Harris recently submitted amicus briefs in the appeal of Facebook’s settlement with 150 million of its members relating to Facebook’s use of member photos in its “Sponsored Stories” program, which uses members’ photos for promotional purposes. The plaintiffs alleged that this program violated state laws requiring parental consent for the promotional use of photos of minors. The settlement, which U.S. District Judge Richard Seeborg approved in August 2013, required Facebook to pay $20 million to class members who filed claims and non-profit organizations working on Internet privacy issues. It also required Facebook to amend its statement of user rights and responsibilities.

Both the FTC and California Attorney General Harris took issue with certain language in Judge Seeborg’s order granting final approval of the settlement (the “Order”). Specifically, in analyzing the challenges the plaintiffs in the action might face going forward (and thus the fairness of the proposed settlement), Judge Seeborg noted that the Children’s Online Privacy Protection Act (“COPPA”) presented a “potential preemption hurdle” and “may well preempt” plaintiffs’ claims that Facebook should have required parental consent before using photos of anyone below the age of 18 in its Sponsored Stories. This is despite the fact that COPPA itself defines a child as an individual under the age of 13. Judge Seeborg reasoned that because COPPA expressly preempts state requirements that are inconsistent with treatment of activities or actions under COPPA, “it could bar any efforts by plaintiffs to use state law to impose a parental consent requirement over the age of 13.”

The FTC and California Attorney General Harris expressed strong disagreement with the idea that COPPA could preempt state privacy statutes for minors over the age of 13. The FTC’s brief, for example, called the notion that COPPA preempted state law protections for the online activities of minors over 13 who, by definition fell outside of COPPA’s scope, “patently wrong.” California Attorney General Harris’s brief likewise called it “inconceivable that Congress would have, through silence in COPPA’s statutory text, intended to preempt either existing and longstanding state protections or States’ ability to legislate further in the area in a manner that is not consistent with federal law.”

In the end, this all may be much ado about nothing. Because Judge Seeborg raised COPPA preemption as one of several potential challenges to plaintiffs’ case for purposes of evaluating the fairness of the settlement, the 9th Circuit need not decide the issue in order to affirm (or reverse) approval of the settlement. Indeed, Attorney General Harris suggested that “it might be wiser [for the 9th circuit] not to address such a sensitive issue in the context of review of a settlement, which by definition does not involve judicial resolution of the underlying merits.” And neither the FTC nor Attorney General Harris took a substantive position on the merits of the settlement.

 Feature photo by Dan Taylor from Flickr

About The Author

Jeff’s practice focuses on representing clients in litigation and government investigations, with a particular focus on defending companies in complex class action lawsuits. He also assists clients in responding to formal investigations and informal inquiries conducted by the FTC, DOJ and states’ Attorney General Offices. Jeff has extensive experience in all aspects of civil litigation, including serving as trial counsel for both plaintiffs and defendants in matters pending before judges, juries, and arbitration panels.