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Clearview settles BIPA lawsuit, plaintiffs take 23% of company

Biometric data privacy class action threatens bankruptcy
Clearview settles BIPA lawsuit, plaintiffs take 23% of company

Settlements in biometric data privacy class action suits have taken several forms over the past several years, but a new agreement by Clearview AI takes the novel approach of giving plaintiffs a stake in the company in lieu of cash.

Now a class of plaintiffs who appear in Clearview’s database of images scraped from public-facing websites is set to receive 23 percent of the company, according to a court document hosted by Reuters. Based on a valuation of $225 million, the settlement would be worth about $52 million. Lawyers could collect up to 39.1 percent of that total, or roughly $20 million.

The unusual arrangement appears to be spurred by the financial straits of Clearview after defending itself in court, with the specter of a possible bankruptcy raised in the court filing.

“Clearview and the Class members were trapped together on a sinking ship: the potential liability was massive, there was no money for a substantial settlement, and the costs of litigation itself would bankrupt Clearview before the case ever got to trial, leaving nothing for the Class members,” plaintiffs say in their unopposed motion for an approval of the settlement.

Jon Loevy of plaintiffs’ representatives Loevy & Loevy told Reuters that the company “did not have anywhere near the cash to pay fair compensation to the class, so we needed to find a creative solution.”

The settlement agreement also gives plaintiffs the opportunity to claim 17 percent of Clearview’s revenues from the next two years. Another possible outcome is the class could sell its stake.

If approved by Judge Sharon Johnson Coleman of the Northern District of Illinois, notices would be posted to all of the online platforms plaintiffs’ images were scraped from, including Facebook, X (Twitter), Instagram and others.

A 2022 settlement between Clearview and the ACLU resulted in Clearview limiting its facial recognition business to official law enforcement and public sector contracts, and the establishment of new rules and an opt-out mechanism for its biometric database. The company’s legal representative told Biometric Update at the time that the deal represented “a huge win for Clearview AI.”

Clearview has continued to make progress in the law enforcement and government market, being added to a federal procurement marketplace in March and winning a contract in Dallas, America’s fourth-largest metropolitan area, just weeks ago.

Jim Thompson, Partner at Lynch Thompson LLP, tells Biometric Update in an emailed statement, “Clearview AI is pleased to have reached an agreement in this class action settlement.”

The settlement agreement received preliminary approval from Judge Sharon Johnson Coleman on Friday, June 21, 2024. 

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