Revised Netflix Settlement Approved

A revised class-action settlement involving online DVD rental service Netflix has been approved six months after an original settlement was proposed. Netflix had been sued for promising "one day delivery" and "unlimited" rentals after it disclosed it delayed DVDs to frequent renters.

San Francisco Superior Court Judge Thomas Mellon Jr. had taken issue with a number of points in the initial settlement, including a payout of $2.5 million to lawyers involved in the case. The FTC voiced its opposition in January saying, "the settlement would serve more as a promotional vehicle for Netflix."

Netflix users will now receive a one-month service level upgrade free of charge. This means that Netflix users subscribed to the 3 DVDs at-a-time program will be upgraded to 4 DVDs at-a-time for one month. Former subscribers can also apply to receive one month of free service.


Lawyers for both sides had originally crafted the proposal to allow Netflix to automatically bill customers after the free month. That option has been stricken from the new settlement, and the two primary lawyers in the case, Adam Gutride and Seth Safier, will now only receive $1.3 million.

420,000 individuals accepted the initial settlement. However, if the revised agreement encourages more users to sign up for a free month from Netflix, Gutride and Safier could receive another $1.1 million in fees.

In a statement, Netflix said it "settled the case in the best interest of all parties."

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