A U.S. judge in Chicago has approved a unique nationwide class-action settlement that will resolve privacy claims against facial recognition company Clearview AI without any immediate and specific monetary payout for victims.
Coleman called the deal a "novel" resolution under the stringent Illinois biometric privacy law. Rather than establish a settlement fund, consumers will potentially hold a 23% stake in the startup company.
If Clearview goes public through an IPO or is liquidated through a merger or sale, the fund would be based on a percentage of the company's value. Clearview's current value could be as high as $225 million, which would yield a $51.75 million settlement fund, the judge wrote.
Coleman said a 23% equity stake was not “an empty, speculative gesture,” even if the eventual fund amount “could shrink or grow depending on the performance of the company.”
Alternatively, a court-appointed settlement official up until September 2027 could require Clearview to make a cash payment equal to 17% of its revenue since the settlement approval date.
An attorney for Clearview, James Thompson, called the court's approval "the best outcome for all parties involved."
A lawyer for the plaintiffs, Michael Kanovitz, on Friday said the settlement is a "fantastic value" for thousands of people whose privacy rights were violated.
Twenty-two U.S. states and the District of Columbia in a court filing balked at the settlement structure and its award of 39.1% — tens of millions of dollars — to the plaintiffs’ lawyers. The states said the percentage was “exorbitant.”
Coleman said judges in the courts making up the 7th Circuit — Illinois, Indiana and Wisconsin — “routinely” have issued awards of 30% or higher for legal fees that are cut from a settlement’s fund.
The judge also found, based on the nature of the claims and number of class members, that “the complexity, length, and expense of future litigation in this case would be enormous.”
The case is Clearview AI, Inc., Consumer Privacy Litigation, U.S. District Court for the Northern District of Illinois, Case no. 1:21-cv-00135
For the plaintiffs: Jon Loevy, Michael Kanovitz and Thomas Hanson of Loevy & Loevy
For Clearview: James Thompson and Daniel Lynch of Lynch Thompson
Read more:
US states balk at unusual Clearview AI privacy settlement
Clearview AI strikes 'unique' deal to end privacy class action
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