Netflix Class Action Lawsuit Costs Millions, Pays Pennies

Posted by · November 17, 2011 11:41 am

Hey Netflix subscribers, you’ve got mail.  No, it’s not another apology from CEO Reed Hastings, it’s a notification about a class action lawsuit filed in 2009 by a group of Netflix users who are crying foul on Netflix and Wal-Mart.  The lawsuit charges the two companies with collusion, citing a deal struck by Wal-Mart and Netflix in 2005 in which Wal-Mart agreed to stop its DVDs-by-mail subscription and encourage its customers to subscribe to Netflix and, in return, Netflix agreed to promote Wal-Mart DVD sales.

The subscribers who filed the suit claim that the deal helped both companies dominate their respective markets and caused Netflix to raise its subscription prices.   While a ruling has yet to be made on the case, a California judge certified the lawsuit as class action last year and thus involved all Netflix subscribers in the lawsuit.

Wal-Mart, having deep pockets and less at stake than Netflix, reached a settlement earlier this year and agreed to pay $27.25 million in cash and gift cards.  Most of this money will go to the lawyers, so Netflix subscribers stand to make approximately $1.50 or less should they choose to demand a payout from the Wal-Mart settlement.

Yesterday’s email notified Netflix subscribers of the settlement and gave instructions on how to claim the pennies that they stand to earn or exclude themselves altogether from the lawsuit in case, you know, they choose to sue Netflix individually.

Netflix is still fighting the charges (likely because they stand to lose a whole lot of money if a ruling is not made in their favor) and neither company is willing to admit any fault.  If you’re not a Netflix subscriber, didn’t receive the email or just want to learn more about the lawsuit, you can visit

Personally, I have just one question: What the heck is wrong with Americans these days? The economy is in the crapper. The housing market is on the fritz. People in other countries are dying of hunger or diseases from contaminated drinking water every minute, and we’re worried about a deal that occurred six years ago and may or may not have had a direct effect on the cost of our non-essential Netflix subscription.

But by all means, folks, take your pay out.  And just remember as you’re cashing that fat check: $1.50 is $1.49 more than you deserve.

*Photo courtesy of Thomas Hawk.