Netflix Class Action Lawsuit

[venture]

http://money.cnn.com/2011/11/16/tech....htm?hpt=hp_c2

The Wal-Mart settlement class includes anyone in the U.S. or Puerto Rico who paid a Netflix subscription fee for DVD rentals from May 19, 2005, through September 2, 2011. More details on the lawsuit are available at

http://www.OnlineDVDclass.com

You can register for the the lawsuit online to receive payment via a Walmart gift card. If you want a check, you will have to mail in the claim form. No word yet on the amount, but don't expect much.

[Thunder]

I read the site, but don't understand it. Can you please explain this to me? Who is actually being sued and why? This does not make sense. Not now, not ever.

[SoonerDave]

I'll try to put a Reader's Digest on this for ya.

Netflix was the big, bad guy in DVD-by-mail. Wal Mart thought they'd like to have part of the pie, too, so they tried starting up their own service to compete. Netflix figured with WalMart's huge distribution channels and infrastructure in place, they'd get killed, so they told WalMart "hey, if you'll nix your DVD-by-mail service, we'll promote your DVD *sales* business on our site." WalMart agreed.

Well, a few savvy Netflix customers got together and basically made the claim that NetFlix and WalMart colluded illegally to prevent competition, a "quid pro quo" thus allowing NetFlix to remain the dominant player in DVD's by mail and (eventually) raise their rental rates. Those savvy customers realize they'd been damaged by their collusion in the form of increased DVD rental fees, so they sued, got certified as a class, and now WalMart is bailing out on the defense. They've set up a fund to pay out damages, because they probably realized pursuing an aggressive defense would probably cost more than just paying out a voluntary damage award to the class. NetFlix has made no such concession, but considering there's a decent chance there won't be a NetFlix (surely not in its current form) in, say, three years (to be generous IMHO), it won't make any difference by the time the litigation has passed.

The problem is that the class now includes anyone who was a member of Netflix between the dates in question, and the monies set aside for the "damages" from Wal Mart amount to about $1.50 per probable claimant. If you were a NetFlix customer, you can sign up, and get a WalMart gift card for $1.50.

[Snowman]

I'll try to put a Reader's Digest on this for ya.

Netflix was the big, bad guy in DVD-by-mail. Wal Mart thought they'd like to have part of the pie, too, so they tried starting up their own service to compete. Netflix figured with WalMart's huge distribution channels and infrastructure in place, they'd get killed, so they told WalMart "hey, if you'll nix your DVD-by-mail service, we'll promote your DVD *sales* business on our site." WalMart agreed.

Well, a few savvy Netflix customers got together and basically made the claim that NetFlix and WalMart colluded illegally to prevent competition, a "quid pro quo" thus allowing NetFlix to remain the dominant player in DVD's by mail and (eventually) raise their rental rates. Those savvy customers realize they'd been damaged by their collusion in the form of increased DVD rental fees, so they sued, got certified as a class, and now WalMart is bailing out on the defense. They've set up a fund to pay out damages, because they probably realized pursuing an aggressive defense would probably cost more than just paying out a voluntary damage award to the class. NetFlix has made no such concession, but considering there's a decent chance there won't be a NetFlix (surely not in its current form) in, say, three years (to be generous IMHO), it won't make any difference by the time the litigation has passed.

The problem is that the class now includes anyone who was a member of Netflix between the dates in question, and the monies set aside for the "damages" from Wal Mart amount to about $1.50 per probable claimant. If you were a NetFlix customer, you can sign up, and get a WalMart gift card for $1.50.

By savvy Netflix customers I am guessing you mean lawyers as they generally are the only ones to make much profit in class action suits. As you can see the end result for most Netflix customers is $1.50, which is nothing compared to the fees the lawyers get.

[Thunder]

Then this is totally stupid.

[Bunty]

But surely not to the lawyers involved in the case who must have made a lot of money.

[venture]

It looks like the lawyers will get $8.4 Million. The original plaintiffs will each receive $5000 each. Then the rest is divided among those that put in for it, which will be around $1.50 if half of the Netflix membership requests it.