Unsettling Settlement

I blogged some time ago about a settlement between an unspecified group of plaintiffs and Facebook regarding Facebook’s approach to what it calls “sponsored stories” which tell us that such and such friends “like” a certain company’s page. I raised some questions about the way in which this settlement works to create new rules, social and/or legal.  Is the influence which the plaintiffs (rather than any number of similarly situated individuals or groups) acquire over the formation of these rules by virtue of being the first to sue and settle with Facebook legitimate? Even apart from legitimacy, is it a good thing from a policy standpoint? For example, how do we know that this particular group is motivated by the public interest and, assuming that it is, capable of evaluating it correctly and of being an effective negotiator?

As the New York Times reports today, the judge who had to approve the settlement for it to go into effect also has questions, and will not give his approval until the parties come up with some answers.

As part of the proposed deal, Facebook agreed to better inform users about sponsored stories, to limit their use and to allow people under 18 to opt out of the function. The company also agreed to pay $10 million to a dozen research and advocacy groups that work on digital privacy rights, and $10 million to cover legal fees for the plaintiffs. But the settlement did not inhibit Facebook from continuing to serve up sponsored stories.

On Friday, Judge Richard G. Seeborg of United States District Court in San Francisco rejected the draft order and asked both sides to justify how they had negotiated the dollar amounts. “There are sufficient questions regarding the proposed settlement,” he wrote.

Judge Seeborg said he wanted clarification on whether there could be relief for the millions of Facebook users whose names and photographs had already been used.

From this report, it looks like Judge Seeborg is worried, as I was, about the legitimacy of the settlement as a rule-making procedure, as a “mode of social ordering,” to use Lon Fuller’s language. How do we know, he asks, that the agreement the parties reached makes sense? Is it fair to those who did not take part in the settlement negotiations but will end living by those rules with which the parties have come up as a result of an nontransparent process? Are we sure the settlement does not just benefit the parties, their pet charities, and the plaintiffs’ lawyers?

Those are sensible questions. The trouble is, as I wrote in my first post on this topic, that even if we conclude that the settlement is not an appropriate mode of social ordering, the alternatives aren’t great either. Legislation is slow and thus ill-suited to regulating an area in which change is constant and very fast. (A post by Stewart Baker at the Volokh Conspiracy, describing a proposed law that would have killed Gmail in its infancy by requiring the consent of both sender and receiver of an email for the email service to be able to scan its contents to serve up ads, shows just how ill-suited it can be. Social expectations of privacy have moved faster than the legislative process; Gmail now has close to half a billion users; and the proposed law is no more than a somewhat embarrassing memory.) And adjudication comes with serious problems of its own, which I described in the original post.

As then, I still don’t see any good way out of this conundrum.

3 thoughts on “Unsettling Settlement

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