LinkedIn has agreed to pay $13 million and make changes to its website to settle a class action suit alleging the networking site harvested the e-mail addresses of user contacts and then sent e-mails inviting them to join the site.
According to the plaintiffs, LinkedIn used its “Add Connections” feature to collect e-mail addresses by accessing users’ external contact database. The site then sent invitations to the user’s friends to join the site that included the user’s name and, where applicable, picture. If a recipient did not respond, LinkedIn sent additional reminder messages.
Filed in 2013, the claims in the suit have been narrowed to violations of California common law and statutory rights of publicity and the state’s Unfair Competition Law.
After extensive discovery, mediation, and arm’s-length negotiations, the parties agreed to settlement terms in March 2015, and the plaintiff has now filed a motion requesting that the court grant preliminary approval.
Pursuant to the proposed agreement, LinkedIn will establish a settlement fund of $13 million, which will be used to pay for settlement administration and notice expenses, fee awards of $1,500 to the named plaintiffs, class counsel fees of up to 25 percent of the fund, and compensation to class members.
The class, which includes an estimated 20.8 million LinkedIn users, consists of all current and former LinkedIn members who used Add Connections to import information from external e-mail accounts and sent e-mails to nonmembers in which the member’s name, photograph, likeness, and/or identity was displayed between September 17, 2011, and October 31, 2014. They will be entitled to a pro rata payment from the $13 million fund upon submission of a valid claim form.
If the fund has insufficient funds to cover pro rata payments of at least $10 to each authorized claimant, LinkedIn agreed to chip in an additional $750,000. If the contingent payment remains insufficient to make an economically feasible distribution of funds to claimants, the money will be distributed to three cy pres recipients: Access Now, the Electronic Privacy Information Center, and the Network for Teaching Entrepreneurship.
In addition to the proposed monetary relief, LinkedIn agreed to make “significant changes” to its operations in the United States. Specifically, the company will improve the disclosures on its website by informing users on the Add Connections import screen that the site will “import your address book to suggest connections,” and by stating on the permission screen that if an e-mail recipient doesn’t respond, he or she will receive up to two reminder messages. Members will have the ability to view and delete contacts and even withdraw invitations that were inadvertently sent so they may better manage their contact information.
These functionality changes “will enable consumers to make an informed decision about use of the Add Connections service in the future,” the plaintiffs argued in their motion in support of preliminary approval of the deal, and provide “well-tailored” improvements to the site that “will benefit and protect millions” of class members going forward.
As for the monetary consideration, plaintiff argued the cash fund is “substantial” in light of the risks of litigation, particularly, that a jury would find no liability or award no damages.
To read the plaintiff’s motion for preliminary approval of the settlement in Perkins v. LinkedIn, click here.
Why it matters: If the court grants approval of the proposed settlement, LinkedIn will join the list of other social networking sites that have reached multimillion dollar settlements over alleged violations of user privacy, including Facebook’s $20 million payout over its “Sponsored Stories” ad feature, Google’s $8.5 million deal in a suit involving its Buzz social networking feature, and a $9 million Netflix settlement arising from alleged violations of the Video Privacy Protection Act.