NETFLIX INC: Court Approves Settlement of DVD Renters' Lawsuit

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Class Action Reporter
Nov 19, 2007

San Francisco Superior Court Judge Thomas Mellon Jr. finally approved the settlement of a class action requiring Netflix Inc. to offer a free month of DVDs to current and former subscribers, Associated Press reports.

In March, Judge Mellon postponed approval of the settlement pending decision on attorney's fees. His final order now provides $1.3 million payment to plaintiff lawyers Adam Gutride and Seth Safier, and another $60,000 to lawyers whose objections to an earlier agreement helped shape the final settlement.

Netflix expects to begin sending out notices of the final settlement later this month, the report said. To learn more about the settlement, visit: http://www.netflix.com/settlement. Netflix was sued for allegedly exaggerating the speed at which it delivers movies to subscribers. It was accused of delaying shipments to frequent renters to accommodate customers who do not return DVDs quickly. The scheme helps Netflix because the Company charges a flat monthly fee and provides postage-paid envelopes for DVD returns.

Netflix reached agreement in the class action five months ago, but the Federal Trade Commission and several attorneys objected to a provision that would have allowed the Company to automatically charge people after the free month of DVD rentals expires. The revised settlement allows Netflix to charge only people who notify the Company that they want to continue the service. It raised the estimated cost of the settlement to $8.95 million from $4 million, assuming Netflix pays $2.53 million in attorney fees.

The agreement provides that eligible subscribers under an original plan of paying $17.99 per month to keep up to three DVDs at time, may check out four DVDs at a time for a month at no additional charge; and about 3.7 million former subscribers will be offered a free month of the $17.99 rental plan. The agreement covers subscribers through Jan. 15, 2005, when the Company changed its service terms to prioritize customers who eep their movies longer.

For more information, contact: (1) Mr. Gutride of Gutride Safier, LLP 835 Douglass Street, San Francisco, CA 94114 (San Francisco County), Phone: 415-271-6469, Fax: 415-438-1285, E-mail: gutridelaw@earthlink.net; and (2) Mr. Seth A. Safier of Gutride Safier, LLP, 835 Douglass Street San Francisco, CA 94114 (San Francisco County), Phone: 415-336-6545, Fax: 415-876-4345, E-mail: safier@post.harvard.edu