Netflix will pay $9 million to resolve a privacy case that began in 2011. U.S. District Court Judge Edward J. Davila in San Jose, Calif., has granted final approval in the case that charged Netflix with retaining consumers' viewing histories and other personal information.
Plaintiffs Jeff Milan and Peter Comstock filed suit in early 2011 alleging violations of the Video Privacy Protection Act (VPPA), recently amended to allow wider sharing of viewing information. A wave of similar suits followed and the court consolidated the cases. After court-supervised mediation, the parties reached a settlement, which the court has now approved.
Those covered by the settlement include all Netflix subscribers as of the date of the preliminary approval, a group estimated at more than 62 million. Because of the unwieldy size of the class, individual class members will not receive any payment. Named plaintiffs Milan and Comstock will each receive a $30,000 payment and, after payment of court costs, attorney fees, etc., any remaining funds will go to nonprofit orgniazations and programs promoting consumer education and privacy protection.
"In light of the minimal monetary recovery" that individual class members would receive, the court agreed that the lump sum payments to further consumer education about privacy issues was an appropriate solution. Details can be found at www.videoprivacyclass.com.
This is what is known as a "cy pres" remedy, a structure that gives class members an indirect benefit rather than a check or other direct direct personal benefit. It is frequently used where proof of individual damage would be difficult. In this case, for example, it was not conclusively shown that any of the viewing histories or other data were distributed to third parties in a way that made individual users identifiable by name.
A similar settlement was used in privacy litigation involving Google Buzz. In that case, it was argued that tens of millions of Gmail users' personal information was wrongly disclosed when Google introduced its now-defunct Buzz social networking service. In that case, the settlement included an $8.5 billion payout to nonprofit groups working to further consumer privacy protection and security.
Besides making the payment, Netflix has agreed to "decouple" viewing histories from customers' identification and payment methods within one year of the settlement.