Internet privacy lawsuits, especially of the class-action variety, have been sprouting up everywhere in the past few years. Some of them have been settled for considerable sums, especially when companies are sued over publicly acknowledged privacy screw-ups that they've already taken heat for. One of the most notable was the $9.5 million Facebook settlement over its Beacon program, which broadcast users' activities from other websites—including what they bought on various shopping sites—in their Facebook news feed.

The number of Facebook users affected by that class-action case was huge—the class was determined to be 3.6 million users at the end of the day. In part due to the large class, the judge allowed a so-called cy pres award, which is when a payment is made to a charity related to the issues in the case rather than to the actual class members. The Facebook settlement will go to a newly created Digital Trust Foundation (DTF), which will fund initiatives related to Internet privacy. $2.3 million of the settlement money will go to fees for the plaintiffs' attorneys.

But the case didn't end quietly. Objections were filed by some class members, supported by advocacy group Public Citizen. "[T]he only “relief” for the class would be a privacy foundation established by Facebook—an organization whose founder and CEO, Mark Zuckerberg, believes that people no longer care about personal privacy," wrote the objecting lawyers. The settlement was upheld by a 2-1 vote on appeal, and the objectors asked for a larger appeals panel to re-hear the case.

The votes are in, and a majority of the judges on the US Court of Appeals for the 9th Circuit voted not to re-hear the case. However, six judges who did vote to re-hear the case wrote a vigorous dissent [PDF], published yesterday. They argue that in cy pres settlements, 9th Circuit judges have historically rejected settlements "where the selected charity lacks 'a substantial record of service' in remedying the types of wrongs alleged," or where the charity doesn't do work that will benefit class members. The DTF was created just for this settlement, and Facebook users who were harmed by Beacon have no assurance that its open-ended promise to focus on Internet privacy will benefit them at all. "If fashioning an open-ended, one-sentence mission statement is all it takes to earn cy pres settlement approval in our court, we have completely eviscerated the meaning of our previously controlling case law," wrote dissenting 9th Circuit Judge Milan Smith.

Plaintiffs' lawyer Scott Kamber told Reuters that he viewed the dissent as a criticism of 9th Circuit law on cy pres awards and was happy the money would shortly be made available. Facebook spokesman Andrew Noyes said that DTF "will fund worthy projects that will help protect and improve Internet users' privacy, safety, and security."

The issue of how to deal with cy pres awards, or whether they're appropriate at all, will continue to loom if Internet privacy litigation keeps growing. The Google Buzz settlement was dealt with in a similar way, and the chunk of cash that became available actually caused some conflict between different privacy groups.