Litigation is our business.  Class action lawsuits are a type of litigation.  At the Yau Law Firm, we’ve advised people about forming a class, helped them opt in or opt out of a class, and communicated with attorneys involved in the class action suit on behalf of our clients.

Class actions play an important role in our legal system.  Where a large number of individuals who, on their own, would not have the resources to bring their own lawsuit, a class action allows them to team up with many people who have similar claims against the same party.

A class is officially formed when a court certifies it.  Once the class has been certified, eligible members of the class may opt out.  Often, lawyers representing the class will contact members to gather contact information from them.  This information is used to correspond with eligible members who are still interested in remaining as part of the class, and to distribute settlement funds, if there are any.

I, along with many others, recently received an Email that said:

Angel Fraley v. Facebook, Inc.

You are receiving this e-mail because you may have been featured in a “Sponsored Story” on Facebook prior to December 3, 2012.

My natural inclination was that this notice was a hoax or spam, particularly since it’s asking me to check out a website, and provide my contact information.  Snopes.com gave the story a green bullet (meaning that the story is true), but not a lot of detail about why they determined the story is true.  While some of these class action notices are fraudulent, not all of them are.  I decided to do a little preliminary research to satisfy my curiosity.  I can see why Snopes didn’t have a lot of details–there are some complex facts to check out.  Here’s what I discovered:

• There is, in fact, a pending lawsuit entitled Fraley, et. al. v. Facebook, Inc. and Does 1-100.  It was filed in the U.S. District Court for the Northern District of California, San Jose Division.  The Case Number is 11-CV-01726-LHK.  (On a side note, in the case name, “Does” isn’t read as “does;” it’s the plural of “Doe,” as in “John Doe.”  It means that there are 100 John Doe defendants who have yet to be named.)
• The lawsuit is based on Facebook’s Sponsored Stories feature.  It’s alleged that Facebook members’ “likes” of certain advertisers was published without paying these members, or giving them a way to opt out.  Publication of these members’ “likes” is an alleged violation of California law.
• Facebook has set aside a settlement fund of $20 million, as of December 2012.
• The attorney for the class, Robert Stephen Arns, does appear to be licensed to practice law in California.  His firm, The Arns Law Firm, does seem to exist, and their involvement in the Facebook lawsuit looks legit.

Members of a class can have unfathomable power and leverage in a lawsuit.  Even Fortune 500 companies can be brought to their knees if they are up against a class.  To protect companies from being harassed into settling, Congress passed two statutes to prevent abuse of class action lawsuits in securities issues.  These are the Private Securities Litigation Reform Act of 1995, and the Securities Litigation Uniform Standards Act (SLUSA), passed in 1998.

I’ll be following this class action lawsuit to see what develops.  If you want to know more about what’s going on in Fraley v. Facebook, don’t hesitate to contact me.

Filed under: Civil Litigation by Yau Jo-Anne Monday, January 14th, 2013