Facebook Wins Dismissal of $15 Billion Users’ Privacy Suit

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Privacy setting shortcuts are displayed on an Apple iPhone.

Photographer: Chris Ratcliffe/Bloomberg
  • Federal judge allows Facebook users to refile claims
  • Users argue they never agreed to tracking after logging off

Facebook Inc. won dismissal of a $15 billion lawsuit accusing the company of secretly tracking the Internet activity of its users after they log off.

U.S. District Judge Edward J. Davila in San Jose, California, on Friday agreed with Facebook’s argument that case should be dismissed because subscribers didn’t specify how they were harmed. The judge, who took more than three years to issue his ruling after hearing arguments in the case, said the users could refile most of their claims in a revised lawsuit.

Facebook users alleged in a 2012 complaint that while they may have agreed to the company’s installation of “cookie” files on their computers to track and transmit their Web browsing, they didn’t consent to such monitoring after logging out of the social network. The lawsuit consolidated similar complaints filed on behalf of U.S. residents who subscribed to Facebook from May 2010 to September 2011 in 10 states, including California, Texas and Alabama.

Facebook, the world’s most popular social-networking service, has been scrutinized by regulators in the U.S. and Europe over how it uses subscribers’ private information. The company has also been hit with multiple privacy lawsuits, from a complaint that it scans users’ private e-mail messages for targeted advertising to a claim that its use of facial-recognition technology has “amassed the world’s largest privately held database of consumer biometric data.”

In the San Jose case, the plaintiffs accused Facebook of violating the U.S. Wiretap Act by monitoring their online activity while they weren’t logged on. They also accused Facebook of improperly profiting from their information.

‘Realistic’ Harm

The judge said the users failed to “adequately connect” the value of the data collected by Facebook “to a realistic economic harm or loss.” Specifically, the plaintiffs failed to show “they personally lost the opportunity to sell their information or that the value of their information was somehow diminished after it was collected by Facebook,” Davila said.

Davila gave the plaintiffs until Nov. 30 to revise their claims, including invasion of privacy and alleged violations of the Wiretap Act. That law provides for damages of as much as $100 a violation per day for each Facebook user, according to the complaint. Based on an estimate of 150 million affected users, the plaintiffs calculated potential damages of $15 billion.

“We are pleased with the court’s ruling,” Vanessa Chan, a spokeswoman for Menlo Park, California-based Facebook, said in an e-mail.

Three lawyers for the plaintiffs didn’t immediately respond to phone and e-mail messages after regular business hours Friday seeking comment on the ruling.

Matthew Brown, a lawyer who represented Facebook at a 2012 hearing before Davila, told the judge that the users’ complaint suffers from an “utter lack of allegations of any injury to these particular named plaintiffs.”

Brown argued that the plaintiffs failed to identify what websites they visited, what kind of data or information was collected or whether Facebook used it or disclosed it to anyone else.

The case is In re Facebook Internet Tracking Litigation, 5:12-md-02314, U.S. District Court, Northern District of California (San Jose).