Decisions Roundup: $7M Netflix Class Action Settlement Approved

Posted by Matthew Heller

Case: Chavez v. Netflix, Inc.

Court: Calif. 1st District Ct. of Appeal

Date: April 21, 2008

Facts: Plaintiff sued Netflix in a proposed class action over its DVD advertising practices. As part of a $7.3 million settlement, Netflix agreed to provide subscribers with a one-level membership upgrade for one month. An objector, Laura Ellis, argued that the agreement is an improper “coupon settlement” that fails to promote the purposes of class litigation. She and others also objected to the award of $2 million in attorney fees.

Holding: Contrary to Ellis's argument, coupon settlements -- which provide a free service of nominal value and no cash payment to class members -- are not inherently suspect. "In many cases, the coupon might induce the member to make a purchase he or she would not otherwise have made, which may actually produce a net benefit for the defendant. That is not the case here." The appeals court also found "no error or abuse of discretion in the [trial] court's methodology" for calculating the attorney fees award.

To view the opinion, click here.

Case: Richie Ramone v. Wal-Mart Stores

Court: USDC, S. N.Y.

Date: April 18, 2008

Facts: Plaintiff, a member of the punk rock band The Ramones from 1983 to 1987, alleged that the band, retailers and others infringed his copyright in six songs by exploiting them in digital format without his permission. Defendants argued that Richie Ramone licensed the digital distribution of the songs in his 1984 recording agreement with the band. The agreement refers to distribution "by any method now or hereafter known."

Holding: The trial judge granted a motion to dismiss, finding the language of the agreement clearly allows digital distribution. "The phrase 'now or hereafter known,' when referring to forms of reproduction, reveals that future technologies are covered by the agreement" and "It is not reasonable to construe the phrase ... to exclude Defendants' alleged digital download form, which now constitutes a form of reproduction."

To view the opinion, click here.