Clearview AI’s proposed class settlement will return to the district court after the U.S. Court of Appeals for the Seventh Circuit vacated its approval because members belonging only to the nationwide class lacked separate representation.
In its 13 July 2026 judgment in In re Clearview AI, Inc. Consumer Privacy Litigation, the Seventh Circuit remanded the case to the U.S. District Court for the Northern District of Illinois.
The agreement offered no immediate cash payment. Instead, the class would receive a payment equivalent to a 23% equity stake in Clearview AI if the facial-recognition company completed an initial public offering, merger, consolidation or sale. Settlement master Sidney Schenkier could instead sell the interest or demand 17% of qualifying revenue by 30 September 2027.
The settlement divided any recovery according to state residency. Members of the Illinois subclass were allocated ten shares, those in the California, New York and Virginia subclasses five shares, and members belonging only to the nationwide class one share. Robert Weissman and Rick Claypool, both nationwide-class members, appealed after District Judge Sharon Johnson Coleman granted final approval on 20 March 2025.
Judge Hamilton, writing for a panel with Judges Maldonado and Taibleson, held that the process lacked the structural protections required by Federal Rule of Civil Procedure 23. Every class representative who approved the settlement belonged to a favoured state subclass, and no representative of only the nationwide class endorsed the allocation. Representatives receiving greater benefits could not also represent the nationwide class when their interests conflicted over monetary relief.
The Seventh Circuit did not find an inherent problem with either the absence of further injunctive relief or an equity-based payment. It accepted that differences between state laws might justify different recoveries. The defect was procedural: the nationwide class lacked independent representation when the allocation was agreed.
The panel also directed the district court to consider the replacement of all eight original class representatives if another settlement is proposed. None accepted the agreement, and they were replaced with four representatives from favoured state-specific subclasses.
The court said the change could indicate that class members’ interests had not been protected adequately. The litigation concerns Clearview AI’s collection of photographs from publicly accessible websites and use of artificial intelligence to create searchable facial vectors.
Claims include alleged breaches of the Illinois Biometric Information Privacy Act, alongside state privacy, publicity and unjust-enrichment claims. A separate settlement with the American Civil Liberties Union restricts access to Clearview AI’s database and provides an opt-out process for Illinois residents.
The decision underlines the need to identify conflicts between claimant groups before settlement allocations are agreed. In equity or revenue-based settlements, counsel must also examine the proposed valuation and ensure that groups with materially conflicting interests are represented separately. Law firms presenting similar agreements should be able to show how representation, allocation and competing subclass interests were addressed before seeking judicial approval.