Clearview AI BIPA Settlement Would Turn Claimants Into Shareholders

Clearview AI has agreed to a unique class action settlement over allegations that it violated the privacy rights of millions of Americans.

The settlement, filed in a Chicago federal court, does not specify a monetary payout, but instead involves a theoretical stake in the company’s future value for claimants, potentially worth at least $50 million, including up to $20 million in attorney fees.

The case stems from a 2020 New York Times article detailing Clearview’s scraping of billions of facial images from the web for use by law enforcement and private companies, without consent. Clearview has denied any misconduct.

The proposed settlement, which requires approval from U.S. District Judge Sharon Johnson Coleman, does not admit liability. In a separate 2022 settlement with the ACLU, Clearview agreed to abstain from contracts with government agencies in Illinois for five years, though the company was permitted to work with government entities in other states and at the federal level.

The current settlement offers a creative solution to compensate the class, given Clearview’s limited assets. If Clearview undergoes an IPO, merger, or sale, the fund will be based on a percentage of the company’s value.

“This structure both provides meaningful relief to the class and flexibility in how to best realize value from its stake in Clearview,” plaintiffs’ lawyers from Loevy & Loevy said in the court filing.

In a statement emailed to Reuters, Jon Loevy of Loevy & Loevy said that Clearview AI “did not have anywhere near the cash to pay fair compensation to the class, so we needed to find a creative solution.”

Alternatively, a court-appointed settlement master could require Clearview to make a cash payment or sell the settlement rights to maximize recoveries.

Source: Reuters

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June 14, 2024 – by Ali Nassar-Smith