Wednesday, November 16, 2011

Online DVD Rental Antitrust Litigation / Wal-Mart/Netflix Settlement

Class members (including me) are getting email notice of a class action settlement with Wal-Mart in the Online DVD Rental Antitrust Litigation, No. M 09-2029 PJH (N.D. Cal.). Wal-Mart will pay $27,250,000, in "cash and gift cards" to a settlement fund to be distributed to the class and lawyers.

Of course, there are 40 million class members. That's 68 cents a class member. And you can only get cash if you spend 44 cents on a stamp to submit your claim, though it's possible to ask for a gift card on line.

But wait, there's more. The attorneys and class representatives are asking for $8,592,500 of the $27 million. And "notice and administration costs"—the amount of which is entirely undisclosed—will be deducted from the $27 million before the class will get anything. (This contradicts what the parties told the court in the motion for preliminary approval, which said the entire amount after attorneys' fees and expenses would go to the class.) In reality, the attorneys are asking for over a third and perhaps as much as half of the money available for the class.

That would be bad enough, but the "gift-card" aspect makes this a coupon settlement (the coupons cannot be sold and are good only at Wal-Mart—again, contradicting the motion for preliminary approval, which falsely called them "fully transferable"), and there seems to be no plan to have a fee request that complies with the Class Action Fairness Act's restrictions on coupon settlements.

Lots of class members have contacted us, and, yeah, we're going to be objecting to this one.

Update: a class member writes me to point out that I was misled by the notice. Though the notice says "Wal-Mart gift card," it is not a Wal-Mart gift card, because the gift card is only good at, where prices are often higher when shipping is included.


  1. I just got an email about this last night from and was digging to see if it was legit.
    Of course the attorney's want to keep far more than their 'fair share' of the pie, it's how they operate. I work for one of the largest firms in the country, albeit, one that would be more inclined to defend the corporations that represent the common people. At least my bunch are honest about what they do... as honest as any lawyer can be anyway.
    I don't waste my time joining in these class-action suits, since, as you mentioned about, it's not worth the effort. 27 mill, minus 8.6 mill, divided by 40 million people.. minus the 44 cent stamp... that leaves each of them with literally 2 cents... which is far more than my time to fill out the form and stick it in the mail is worth.

  2. The reason why the class members will receive a net of 2 cents is not because the lawyers are taking half-- it's because there are 40 million class members. Netflix subscribers did not have to request to included in the Netflix case; we were just notified that a settlement had been reached.


    To be included in the Walmart class, you have to request to "remain in the class". The way you request to remain in the WALMART class action is to REQUEST YOUR NETFLIX SETTLEMENT. Presumably considerably fewer than 40 million people will go to the trouble of mailing in to get their 2 cents from Netflix so the Walmart class will be much smaller.

    Hey, when the lawyers finish taking the bites of the Walmart pie, you may get 10 times as much as you did form the Netflix settlement!

  3. These class-action "settlements" where the lawyers are the ones making the money have infuriated me for many years, thanks for taking on these scumbags.

  4. I'm betting that the "alleged" collusion has everything to do with why Netflix isn't offering to rent available 3D movies in 3D.

    Supposedly the agreement reached was that Walmart wouldn't stream movies, and Netflix wouldn't sell DVDs. Each stood to gain. Of course, by Netflix not selling DVDs, Walmart, the nation's #1 DVD retailer, would benefit.

    By Netflix not renting available 3D movie titles, the only way to get them is to buy them. And there's a good chance that's going to be from, like I said, the nations #1 movie retailer - Walmart.

    Very convenient.

  5. Netflix proves again that they are not as they seem, and I am glad I never went with them to begin with. Being that I work for DISH Network I heard about all of the details of their Blockbuster Movie Pass before they released it October 1st. Not only are they renting me DVD’s, Blu-ray’s and video games by-mail for one flat price, but also I get streaming and new releases 28days before Netflix does. This whole lawsuit seems like a waste of time and money, and I am glad I am not one of their subscribers stuck in the middle.

  6. If I am readding the settlement corrently, then even if you request a cash payment there is no guarantee that you will receive one. The settlement is written is such a way that "the cost of mailing" the cash payment is included in the "cost of Notice and Administration" (sec which is capped at 15% (sec 7.6) over an estimate made by "the chosen Claims Administrator", and is included in the "cash component" (i.e. lawyers fees), from which Wal-Mart is only required to pay the estimated + 15%. Section also states that if the "costs become prohibatively expensive relative to the Gift Card Component and would unduly diminish the per-claimant recovery", then each member agrees to mediation before Judge Layn Phillips. The question becomes, who determines what is prohibitively expensive and what is unduly diminishing the per-claimant recovery? The Cash component is what is paid to the lawyers and the original class members, and since Wal-Mart is only required to pay up to 15% over the estimate, it seems that that provision puts the class lawyers in direct conflict with the class. I.E. If too many class member request a cash setlement the class lawyers will force them into arbitration to accept an alternative settlement.

  7. well i just got my claim form today, feb. 22, 2012.
    im wondering why it took so long and if there is anything i can do about it now.

  8. Just got an email... This morning. WTF?!?