U.S. judges to decide venue for Facebook lawsuits

U.S. judges to decide venue for Facebook lawsuits Wed, Sep 19 14:03 PM EDT 1 of 2 By Tom Hals and Basil Katz (Reuters) - Before Facebook Inc investors can pursue their court fight over the social network's problematic stock market debut, a panel of federal judges must decide whether to put the cases under one roof and, if so, where. The Judicial Panel on Multidistrict Litigation is due to hear arguments in Manhattan federal court on Thursday over how several dozen investor and shareholder lawsuits can proceed. The cases are widely expected to go to a judge in New York, although some investors whose cases are in California want the litigation to remain in San Francisco, near Facebook's home turf, for easy access to witnesses and documents. A few cases were also filed in federal courts in Florida and the District of Columbia, and in California state court. Investors sued Facebook after its May 18 initial public offering, which was marred by technical glitches at the NASDAQ exchange and accusations that the company selectively disclosed unflattering information about its business prospects to privileged investors. The lawsuits, which are seeking unspecified damages, could cost Facebook millions of dollars to defend, as it strives to put the disastrous IPO behind it. Facebook's stock tumbled as much as 50 percent after its debut at $38 per share. It was trading at $22.63 in early afternoon on Wednesday. In at least 33 lawsuits seeking class action status, investors have asked courts to hold the company and its underwriters responsible for causing their losses. Facebook has said that it did not violate any rules and that NASDAQ was to blame for trading glitches on the day of the offering. Representatives for Facebook declined to comment. An attorney for NASDAQ OMX Group Inc, which is also facing a number of lawsuits, did not respond to a request for comment about Thursday's hearing. AVOIDING DUPLICATION Grouping cases together keeps similar lawsuits from proceeding at the same time in different courts. Otherwise "It's a burden and waste on the judicial system," said Stanford University law professor Joseph Grundfest. "Why have 50 judges decide the same thing 50 times?" Facebook will argue on Thursday before a panel of 11 judges that U.S. District Judge Robert Sweet in Manhattan should try the cases. The panel, which meets periodically to decide where wide-ranging litigation should be consolidated, is expected to issue a decision within weeks. New York is "the center of gravity" of the case because witnesses, evidence relating to the IPO, and the underwriter banks are all in that city, Facebook said in court filings. Sweet was randomly assigned the first complaint filed against Facebook in New York, and all other similar cases filed in Manhattan federal court have since been added to his docket. Since many of the plaintiffs agree with Facebook and also argue against splintering the cases across different courts, lawyers observing the case expect the panel to hand the case to Sweet. Many of the bigger investors, including pension funds such as the North Carolina Retirement Systems, have already begun petitioning Sweet to name them lead plaintiff so they can direct the litigation. A handful of plaintiffs have said that San Francisco would be a better venue for some of the litigation and that the judge there, Maxine Chesney, is a better pick because she has handled complex cases like this. Following selection of the lead plaintiffs and lead law firms, the defendants are likely to ask the judge to dismiss the claims against them. If the lawsuits proceed, plaintiffs will be able to demand documents and access to witnesses to help them build their cases. Surviving a motion to dismiss also greatly increases the likelihood of a settlement. Besides the class actions, about a half dozen so-called derivative lawsuits seek to hold Facebook's board and chief executive officer, Mark Zuckerberg, responsible for damage they claim was done to the company. In a derivative lawsuit, the shareholder sues on behalf of the company, which receives any judgment or settlement. Also, at least 13 lawsuits seek to pin the blame for investor losses on NASDAQ, claiming it was negligent in failing to execute trades in the face of record-breaking volume during the IPO. Lawyers have said they expect those cases, which also seek class action status, to go to Sweet, but they might proceed on a separate track from the Facebook lawsuits. The case is In Re: Facebook Inc, IPO Securities and Derivative Litigation, U.S. Judicial Panel on Multidistrict Litigation, No. 12-md-2389. (Reporting by Tom Hals in Wilmington, Delaware, and Basil Katz in New York; Editing by Lisa Von Ahn) ================= Facebook pitches new $20 million "Sponsored Stories" settlement Mon, Oct 08 16:47 PM EDT By Nate Raymond (Reuters) - Facebook Inc has proposed a revised $20 million settlement in a class action lawsuit accusing it of violating the rights of users through its "Sponsored Stories" advertising feature after a U.S. judge rejected an earlier accord. The new settlement agreement, filed Saturday in U.S. District Court in San Francisco, drops provisions setting aside up to $10 million for plaintiffs lawyers' fees and allows users to apply for a cash payment of up to $10 each. U.S. District Judge Richard Seeborg rejected an initial settlement proposal on August 17 after questioning why the agreement provided no cash for Facebook users. The initial agreement provided no money to class members and instead set aside $10 million to be given to charities involved in Internet privacy issues. The new agreement, which is also subject to Seeborg's approval, allows for some of the funds to go to charity, but only if there is any left after users' claims, attorneys fees and other expenses are met. But given the size of the class, the charities might still get some cash. The agreement provides that, if it is not economically feasible to pay all the users a cut, the court may designate the entire fund as going to the charities. The proposed settlement covers nearly 125 million people, court documents show. The $20 million equates to less than 2 cents per class member. "We believe the revised settlement is fair, reasonable, and adequate and responds to the issues raised previously by the court," Andrew Noyes, a Facebook spokesman, said on Monday. Richard Arnes, a lawyer for the plaintiffs, did not immediately respond to a request for comment. Filed in 2011, the lawsuit alleged that the social networking site's "Sponsored Stories" feature violated California law by publicizing users' "likes" of advertisers without any compensation or a way to opt-out. As part of both settlement proposals, Facebook also agreed to give users more control over how their names and likenesses are used. Facebook's revised agreement also provides new terms on targeting children. Facebook said it agreed to encourage new users to designate who else on the site is a member of their family. Parents will be able to directly have their children opt-out of the Sponsored Stories feature once their relationship to the child is confirmed. Facebook also now has a right to object to plaintiffs lawyers' fee applications, unlike the earlier settlement agreement. It was unclear how much the plaintiffs lawyers would seek with the new settlement. Facebook shares closed at $20.40 on Monday, down about 2.4 percent. The case is Fraley v. Facebook Inc., U.S. District Court for the Northern District of California, No. 11-1726. (Reporting By Nate Raymond in New York. Editing by Andre Grenon) ==================