Judge Rejects Attempts by Texas Plaintiffs to Intervene in Beacon Class Action–Harris v. Facebook

[Post by Venkat]

I mentioned last week that a group of plaintiffs sought to intervene in the class action filed against Facebook in the Northern District of California. The Texas plaintiffs who sought to intervene were part of a class action filed against Blockbuster (Harris v. Blockbuster – this lawsuit was filed before the the Northern District of California class action). The Texas plaintiffs argued that the two lawsuits were “related,” and that the parties to the California lawsuit should have filed a “notice of related action,” so the California court could have evaluated whether the lawsuits should be consolidated.

In orders issued today, Magistrate Judge Seeborg denied the request to intervene brought by the Texas plaintiffs and conditionally approved the class certification and settlement ironed out by the parties to the Northern District of California lawsuit. Judge Seeborg noted that although the lawsuits were “related,” the Texas plaintiffs were aware of the California class action in September 2008. Thus, their request to intervene was untimely.

Quick thoughts on the ruling:

1. The court notes that to the extent the Texas plaintiffs have substantive objections to the settlement, these objections can be raised at a later date.

2. With the caveat that I’m not familiar with the nuances of class action procedure, I would guess it will become tougher to object to a settlement further down the road. As a practical matter, conditional approval will set in motion the process of notifying potential class members and providing them the opportunity to opt-out. A low number of opt-outs may be viewed as an indication that there’s not really enough of a separate class that objects to the terms of the settlement conditionally approved by Magistrate Judge Seeborg to warrant a second class action. (On a related note, I wonder if the Texas plaintiffs will mount some sort of campaign to try to demonstrate that a substantial number of potential plaintiffs object and the settlement should not be given final approval. I’m guessing they won’t set up a Facebook group as part of this campaign, but you never know!)

3. It’s sort of awkward for a group of putative plaintiffs who filed their lawsuit first to have their claims extinguished by a later filed class action. Blockbuster was named in the second filed action (in California) and to the settlement in the California lawsuit is approved, my instinct is that this may effectively kill the class claims asserted in the Texas lawsuit against Blockbuster. (There was some activity in the Texas lawsuit about whether the claims are subject to arbitration. The court in Texas found that Blockbuster’s terms of service were “illusory,” and rejected Blockbuster’s request to arbitrate. Blockbuster has appealed this ruling.)

4. The terms of the settlement in the California lawsuit do not provide for payment of compensation to non-named class members. (See the notice approved by the court here: [pdf].) On the other hand, the Texas lawsuit alleged violations of the Video Privacy Protection Act, which provides for statutory damages.

5. The notice of settlement will be published through newspapers, and of course, “through Facebook updates.”

It will be interesting to see how this plays out.