Netflix Subscribers Near $9M Privacy Settlement

(CN) - A federal judge has granted preliminary approval to a $9 million settlement for "tens of millions" of former Netflix subscribers who claim that the company stockpiled their credit card information and rental histories.

The members of the consolidated class action claimed that they canceled their Netflix memberships and then learned that the Los Gatos-based entertainment giant had retained and disclosed their personal information and rental histories without consent.

"Plaintiffs allege that Netflix violated the Video Privacy Protection Act by retaining customer viewing histories longer than 'necessary for the purpose for which [they were] collected' and that Netflix disclosed the information to third parties without prior consent to do so," according to the court's summary of the case.

Virginia resident Jeff Milans initiated the lawsuit in January 2011, and a wave of similar actions followed.

Milans' suit was consolidated with five others, and the plaintiffs reached a $9 million settlement with Netflix during mediation overseen by retired U.S. District Judge Layn Phillips.

Under terms of the agreement, a portion of the funds would be made available cy pres "to not-for-profit organizations, institutions, or programs that educate users, regulators, and enterprises regarding issues relating to protection of privacy, identity, and personal information through user control."

Netflix would also be forced to "decouple" the viewing histories of settlement class members, the agreement stipulates. And, the company must announce the settlement via email and Facebook, as well as on a settlement website and in a half-page ad in People Magazine.

U.S. District Judge Edward Davila, in San Jose, Calif., granted the settlement preliminary approval Thursday, called the deal "fair, reasonable, and adequate."

For settlement purposes, Davila ordered provisional certification for the proposed class, which includes "tens of millions of Netflix subscribers and former subscribers nationwide."

"The instant settlement appears fair, non-collusive and within the range of possible final approval," Davila wrote. "The settlement was a product of arm's length negotiation before a mediator and does not appear to benefit those who participated in the mediation at the expense of any other parties."

"In light of the minimal monetary recovery that would be realistically recoverable by individual settlement class members and the immediate benefits offered to the class by the injunctive relief and cy pres donations, the settlement agreement is deserving of preliminary approval," he added.

Appointed as class counsel are Jay Edelson, Rafey Balabanian, Ari Scharg, and Chandler Givens of Edelson McGuire LLC.

A final approval hearing is scheduled for Dec. 5.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit