## Facts

- Former Netflix subscribers filed a consolidated class action alleging violations of the Video Privacy Protection Act (VPPA), 18 U.S.C. § 2710.
- Plaintiffs claimed Netflix improperly retained former subscribers’ personally identifiable information (PII), including viewing history and related account information, and disclosed PII to third parties to improve recommendations.
- Multiple related suits were consolidated; plaintiffs filed an amended consolidated class complaint.
- After mediation and arm’s-length negotiations, the parties reached a settlement and sought preliminary, then final, approval under Federal Rule of Civil Procedure 23(e).
- Plaintiffs assessed significant litigation risk: the VPPA “ordinary course of business” exception threatened the disclosure theory, and existing authority cast doubt on a damages remedy for wrongful retention.
- The settlement provided (1) injunctive changes to certain retention/disclosure practices, (2) a $9 million cy pres fund for organizations focused on online privacy education and related initiatives, and (3) attorneys’ fees, costs, and modest service awards for class representatives.
- Notice was provided to the class; numerous class members objected, arguing the settlement was unfair because it lacked direct payments and allegedly lacked an adequate nexus between cy pres recipients and class interests.

## Issues

1. Whether the proposed class settlement was fair, reasonable, and adequate under Rule 23(e) given the weakness of the claims and the absence of direct monetary distributions to class members.
2. Whether a cy pres–only monetary component satisfied Ninth Circuit requirements, including a sufficient connection between the cy pres recipients and the class’s interests and statutory objectives.
3. Whether the requested attorneys’ fees, costs, and service awards were reasonable.

## Decision

- The court granted final approval of the class settlement under Rule 23(e).
- The court approved the cy pres-only monetary relief and the selected recipients.
- The court approved attorneys’ fees, costs, and service awards, making adjustments where appropriate.
- The court overruled objections that the settlement was per se unfair due to the lack of direct payments, finding the settlement fell within the range of reasonable approval given litigation risks, delay, and the value of injunctive relief.

## Legal Principles

- A class settlement may be approved under Rule 23(e) if, considering the totality of circumstances, it is fair, reasonable, and adequate, including in light of the strength of the claims, litigation risks, likely duration and expense, and the relief obtained.
- Cy pres relief may be appropriate when individual distributions are impracticable; recipients must reasonably approximate the interests of the class and bear a strong connection to the underlying claims and statutory purposes.
- The absence of direct monetary relief does not automatically defeat settlement approval where the probability of recovery is low, the likely individual recovery is minimal, and non-monetary relief provides meaningful benefit.
- Attorneys’ fees and representative service awards must be reasonable in relation to the results obtained and the work and risks undertaken.

## Conclusion

The court approved a VPPA privacy class settlement providing injunctive reforms and a $9 million cy pres fund, concluding that substantial merits risks and distribution impracticability justified the structure and that the cy pres recipients sufficiently matched the class’s privacy interests under Rule 23(e).


In re Netflix Privacy Litig., No. 5:11-cv-00379-EJD, 2013 WL 1120801 (N.D. Cal. Mar. 18, 2013)