Court Orders Netflix to Deliver $2 Million in Attorneys Fees
Since the Law Blog began using Netflix in 2003, our membership plan has been a constant source of befuddlement. What’s better, the 3-DVD plan or the 5-DVD plan? Does the 5-DVD plan translate into more movies watched, or simply a greater selection laying around the house? In either case, can that much screen time be healthy?
Frank Chavez, also once a Netflix user, had different issues with the DVD delivery service, so he sued. In 2004, Chavez, on behalf of a class, sued Netflix for, among other things, fraud and false advertising. According to a court opinion, Chavez alleged that, contrary to its advertising, Netflix was employing algorithms to prioritize the allocation of DVDs to its lowest-consuming members, with the effect that its highest-consuming members would receive fewer DVDs per month. In other words, the more quickly you watch and return movies, the more slowly Netflix sends you new ones. In 2005, Netflix settled with the 697,000 class members (out of a total of 6 million) who made claims, offering them a somewhat disappointing award: a one-month upgrade in service level for current subscribers, or one month free for past subscribers. (The settlement also required Netflix to change its advertising practices.)
We know what you’re thinking. What about the attorneys who brought the case? Do they go home with a one-month service upgrade too? On Monday a California appeals court awarded $2 million in fees to Gutride Safier, a San Francisco class-action law firm comprised of two lawyers — Adam Gutride and Seth Safier, former Orrick litigators. Here’s a report from the NLJ, and here’s the opinion.
According to the report, in granting the fee award, the appeals court determined that the lower court properly calculated the attorney fees, which were about 22% of the settlement, valued at $7.3 million (i.e. 697,000 x the value of the one-month upgrade, or free month of service).
Representing Netflix were Wilson Sonsini’s Keith Eggleton, Rodney Strickland and Dale Bish.
… that’s a lot of booger sugar.
Another arrogant poke from the third leg of democracy.
I am a lawyer in Seattle and this sounds like a joke to me. This was poor class action management. People should have received more than netflix upgrades.
It seems the Court used the retail price for a one month upgrade in service, the $10 difference between the 2 DVD at-a-time and 4 DVD at-a-time monthly plans. A customer complaining to a Netflix CSR about something wrong with Netflix service would get that upgrade for free to keep him or her as a customer.
This lawsuit was just filed to generate income for the two lawyers, whose only expense was in recruiting some Netflix customers to justify the class action. The lawyers should have gotten an hourly rate for their work, since this case was settled on a non-cash basis.
What monthly plan are/were his lawyers on?
so is it $2 million in fees or $7.3 million?
@ ?: “According to the report, in granting the fee award, the appeals court determined that the lower court properly calculated the attorney fees, which were about 22% of the settlement, valued at $7.3 million”
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$2M, as stated several times in the post.
Attorney’s fees are rarely awarded in U.S. cases, so this award is significant. I think the appeals court got it right in its determination that the lower court properly calculated the attorneys’ fees.
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Are you clueless. In Class actions, attorneys fees are routinely awarded. What planet are you on. This was a contigency cases, if attoneys fees are not awarded, why would they take the case. Go home and take your crappy spam with you.
Hey, if free service upgrades and a nontransferable month’s membership are good enough for the plaintiffs — the people supposedly damaged — then they ought to be good enough for the lawyers. Paying seven figures to a couple parasites for shaking down some company for the nuisance value of litigation, payable in bogus coupons, is obscene. The lawyer’s shouldn’t get cash unless their clients get cash.
The Court had to approve it all so it must be legit. These lawyers earned their money, unlike most biglaw attorneys.
If you think the lawyers are overpaid and you can do the job for cheaper, why don’t you form your own law firm and win these lawsuits while charging half the rate or get paid in coupons. You’ll get all the top business since you’ll be undercutting all your competitors.
In the real world, this 2-man law firm does not have a monopoly and the prices are set by the market.
Another case of lawyers fleecing a company in the name of a class who ends up with nothing but a worthless coupon.
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And the plaintiffs bar wonders why so few people have any respect for it.
Why are people groaning about how much Netflix agreed to pay plaintiffs’ counsel? I don’t hear anyone inquiring into, much less complaining about, the fee that Netflix agreed to pay its defense counsel, Wilson Sosini, which quite likely was more than $2 million. Does it really just come down to Counsel for Plaintiff Consumers = Bad, Counsel for Corporate Defendant = Good?
3:07 and 4:30
I agree with you!
As the opinion reads, “After the litigation was initiated, and partly in response to it, Netflix altered the terms of
use disclosed on its Web site to inform members that in determining shipping and
inventory priorities it gave priority to those members who received the fewest DVD’s.” So, because of this lawsuit (and all of the press this case is getting), everyday people who rent a lot of DVDs from Netflix now know that Netflix is not giving them shipping priority (which is basically the most important thing for people renting through Netflix, if you ask me). Those people now have the information they need to decide whether to continue using Netflix or to use a different service. That sounds pretty valuable. I also presume that “coupons” were distributed to paying Netflix customers here because that’s all Netflix felt like giving them after basically admitting that its own disclosures were inadequate (by changing them).
Add $ 2 million to $7.3 million and you get a total award of 9.3 million. 22% of that is about $2 million. Cash fees were added b/c that’s, to say the least, several lifetimes of upgrades for the lawyers, who may prefr to use their compensation otherwise.
This is the typical consumer class action scam. The class gets something of no real value and the lawyers get a couple of million bucks.
Netflix agreed to it because it was cheaper than the alternative: fighting for a while, paying their own lawyers a boatload of money, and then maybe getting stuck with a remedy that might actually cost them something and might actually benefit the class.
Consumer class actions like this one are just big machines for generating legal fees. They accomplish nothing else.
Plaitiffs’ counsel are entirely uninterested in the susbtance of the remedy. All they care about is its cash value for purposes of calculating their fees. Once that math is done and they get their check, they could care less whether any class member anywhere ever accesses the silly little coupon they got in the deal.
These cases bring disrepute upon the entire profession.
As a Net-Flix subscriber and an avid movie watcher, I realized that they were taking a longer time in sending new movies but thought it was some sort of business tactic utilized by the company. I was not a part of the class action and don’t really want to be. We have become too litigious in the United States. We sue for “everything.” If I decide Netflix is taking too long to send new DVDs once I return mine, then I will discontinue their service.
This class action lawsuit is a perfect example of why our legal system needs reform. The class received a paltry upgrade in service and the lawyers receive millions. Our society is becoming more litigious and the crime doesn’t fit the punishment.
This is an absolute joke. I got a ridiculous upgrade and these two lawyers walk a way with $2 million in fees. This is a company that has tremendous potential and some guy who feels he is not getting enough DVD’s tries to bring the whole company down. Despite federal class action reform nothing has changed. We need real class action reform.
Thank god we have attorneys willing to take on these big corporations when they commit consumer fraud. These lawyers take cases without any promise of getting paid for their time and try to hole corporate America accountable. Thank goodness we have a mechanism that allows the offender to pay the fees of the prosecutor. America owes much to these private prosecutors who help enforce our laws. I am glad the lawyers got paid. That is their incentive to hold Netflix accountable.
