7th Circuit vacates approval of Clearview AI privacy settlement, finding the nationwide class lacked fair…
Robert Weissman v. Clearview AI, Inc.
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7th Circuit vacates approval of Clearview AI privacy settlement, finding the nationwide class lacked fair representation when subclass members negotiated the allocation of monetary benefits.
Why it matters
The Seventh Circuit vacated a district court's approval of a class action settlement against Clearview AI, which scraped billions of photos to build a facial recognition database. The court found no inherent problem with the settlement's lack of injunctive relief or its unusual structure of giving class members an equity stake in Clearview instead of cash. However, the court found a critical procedural flaw: the members of the nationwide class, who received far less money than members of state-specific subclasses, had no separate representative advocating for their interests during settlement negotiations.
Who it affects
This ruling directly affects all individuals whose biometric data is or was in Clearview AI's database, particularly those in the nationwide class who stood to receive the smallest share of the settlement. It also affects Clearview AI and its co-founders, who must return to the settlement process under a structure that ensures independent representation for all class members.
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Decision issued Jul 13, 2026
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This case arose from class action lawsuits filed after a 2020 news report revealed that Clearview AI had been scraping photos from public websites and social media to build a massive facial recognition database. Clearview analyzes the photos using artificial intelligence to create facial profiles that can identify people and potentially reveal personal relationships, political affiliations, and religious associations. The lawsuits were consolidated in the Northern District of Illinois and brought claims on behalf of a nationwide class as well as separate subclasses of residents from Illinois, California, New York, and Virginia, each asserting claims under their respective state laws. Because Clearview was an undercapitalized startup unable to make a large cash payment, the parties agreed to a settlement giving the class an equity stake worth 23 percent of Clearview's value, payable upon a future public offering or sale of the company. Two class members, Robert Weissman and Rick Claypool, objected to the settlement and appealed after the district court approved it. They challenged the absence of injunctive relief and the equity-stake structure of the monetary relief. The Seventh Circuit rejected those two specific challenges, finding neither the lack of injunctive relief nor the equity-stake arrangement was inherently problematic. However, the court identified a more fundamental flaw in the settlement process. The settlement allocated significantly greater monetary benefits to members of the state subclasses compared to members of the nationwide class. While differences in state law might justify different benefit levels, the court found that no class representative from the disfavored nationwide class participated in negotiating or endorsing that allocation. The representatives who negotiated the settlement were all members of the more favorably treated state subclasses, meaning they could not adequately represent the interests of nationwide class members on the question of how money was divided. The court vacated the settlement approval and sent the case back to the district court for further proceedings. Going forward, the case signals that when a class action settlement divides a class into groups receiving different benefits, each group, especially the less favored one, must have its own dedicated representative in the negotiation process to ensure fair and adequate representation.
CITATION AND RECORD
Record source: CourtListener
In the United States Court of Appeals For the Seventh Circuit ____________________ No. 25-1673 IN RE: CLEARVIEW AI, INC. CONSUMER PRIVACY LITIGATION RODELL SANDERS, et al., Plaintiffs-Appellees, v. CLEARVIEW AI, INC., et al., Defendants-Appellees. APPEAL OF: ROBERT WEISSMAN and RICK CLAYPOOL, Objectors-Appellants. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:21-cv-00135 — Sharon Johnson Coleman, Judge. ____________________ ARGUED JANUARY 28, 2026 — DECIDED JULY 13, 2026 ____________________ Before HAMILTON, MALDONADO, and TAIBLESON, Circuit Judges. HAMILTON, Circuit Judge. We review in this appeal objec- tions by two class members to the district court’s approval of a settlement. The plaintiff class asserted claims based on the 2 No. 25-1673 use of biometric data taken from public sources on the inter- net for facial recognition. We find no inherent substantive problems with two challenged features of the settlement, first the absence of injunctive relief, and second monetary relief in the form of what amounts to an equity stake in the defendant. But we cannot get past a key procedural problem in the set- tlement process. The settlement provides far greater monetary benefits for members of several favored subclasses based on state residency, leaving the most meager benefits for members of only the nationwide class. Differences in the laws of different states may well make those differences in benefits reasonable, but no representative of the disfavored nationwide class endorsed the allocation of monetary benefits. Class representatives who are members of the favored subclasses cannot also represent the disfavored nationwide class concerning the allocation of monetary relief. Class-action settlement requires structural assurances of fair and adequate representation, and those were lacking here. We therefore vacate approval of the settlement and remand for further proceedings. I. Factual and Procedural Background Defendant Clearview AI, Inc. operates “a search engine for faces.” The company scrapes photographs of individuals from public websites, including social media accounts, and analyzes them using artificial intelligence to produce “facial vectors” reflecting the geometry of a person’s facial features. Searching this database with a photograph of an unidentified person returns results of all other photographs of that person in the database, linked to the websites on which they were found. Depending on the information available on those web- No. 25-1673 3 sites, a search can therefore reveal a wealth of information about a person, including not only their identity but also, de- pending on where the photographs were taken, personal re- lationships and political and religious affiliations, among other facts. This technology has a wide range of applications. For ex- ample, Clearview’s customers originally included private companies that wanted to identify people in surveillance cam- era footage. According to plaintiffs, Clearview also at one time granted database access to its political allies, including certain members of Congress. Since, at the latest, a settlement of a separate lawsuit with the American Civil Liberties Union, however, Clearview’s customers have included only federal and state government agencies and their contractors. This case arises from several putative class-action suits filed after an exposé on Clearview appeared in The New York Times in January 2020. Plaintiffs filed in the Northern District of Illinois and the Southern District of New York against Clearview, a Delaware corporation headquartered in New York. Other defendants included Clearview’s co-founders, defendants Hoan Ton-That and Richard Schwartz; defendant Rocky Mountain Data Analytics LLC, a New Mexico com- pany that allegedly served as a shell entity for Clearview; de- fendant Thomas Mulcaire, Clearview’s general counsel and a vice president of Rocky Mountain; and Macy’s, one of Clear- view’s customers. Pursuant to 28 U.S.C. § 1407, the Judicial Panel on Multidistrict Litigation transferred eleven such cases for coordinated pretrial proceedings in the Northern District of Illinois. After appointment of interim lead class counsel, 4 No. 25-1673 Plaintiffs filed a consolidated class-action complaint asserting the following claims: • On behalf of a Nationwide Class of all indi- viduals in the United States whose bio- metric data is or was in Clearview’s data- base, claims for a declaratory judgment and for unjust enrichment. • On behalf of an Illinois Subclass of Illinois residents, several claims under the state’s Biometric Information Privacy Act (BIPA). • On behalf of a California Subclass of Cali- fornia residents, claims under the state’s Unfair Competition Law, statutory com- mercial misappropriation of identity, com- mon-law right of publicity, and the state constitutional right to privacy. • On behalf of a New York Subclass of New York residents, a claim under the state’s civil rights code. • On behalf of a Virginia Subclass of Virginia residents, claims under statutory commer- cial misappropriation of identity and the Virginia Computer Crimes Act. The case was litigated vigorously through motions to dismiss and discovery, producing over five hundred docket entries by the end of 2022. Sometime that year, the parties entered settlement negotiations and retained as mediator the Honorable Wayne Andersen, a retired federal district judge. This first round of negotiations fell apart because Clearview, an undercapitalized start-up, was not in the financial No. 25-1673 5 condition to make a large and immediate payment or to provide the other forms of relief the Class demanded. The parties returned to mediation in early 2023. This time they agreed in principle that any settlement would be based on payment through what amounted to an equity stake in Clearview. By that time, the American Civil Liberties Union had reached a settlement with Clearview in a separate case. Under the ACLU settlement, Clearview was permanently en- joined from allowing database access to private parties except in compliance with the Illinois BIPA. Clearview was also re- quired to establish an opt-out program for Illinois residents. After months of negotiations shepherded by Judge Ander- sen, the parties agreed to a settlement. The settlement in- cluded appointment of a settlement master, the Honorable Sidney Schenkier, a retired federal magistrate judge. Under the settlement, upon an initial public offering or a “liquidation event”—merger, consolidation, or sale—of Clearview, the Class would receive a payment equivalent to a 23% equity stake in Clearview as of September 6, 2023, “subject to the same dilution by future investments as for the founders.” Al- ternatively, the court-appointed settlement master may in lieu of such payment (a) sell the settlement stake to a third party for a “commercially reasonable price” or (b) make a cash de- mand for 17% of Clearview’s “Generally Accepted Account- ing Principles (GAAP) recognized revenue” from the date of final approval of the settlement by the district court until the date of such demand. Such a demand would need to be made no later
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