Editor’s Note – This article is a joint submission to the Baker Hostetler Class Action Lawsuit Defense Blog and Data Privacy Monitor. Be sure to check out the Data Privacy Monitor for the latest news, trends, and analysis on data privacy issues. 

Two Federal District Courts recently approved settlements in two significant class actions brought under the Video Privacy and Protection Act, 18 U.S.C. § 2710, et seq. (“VPPA”), which limits the disclosure of personally identifiable information about subscribers as well as the amount of time that video rental service providers can retain subscriber information.

On July 5, 2012, Judge Edward Davila of the Northern District of California approved a $9 million settlement in a class action suit alleging Netflix violated the VPPA by disclosing subscribers’ personal information and keeping former customers’ personal information and video rental history past the statutorily allowed time period of one year.  Specifically, the plaintiffs alleged that Netflix kept their viewing histories, credit card numbers, and billing and contact information.

The first case against Netflix was brought in January 2011 and five similar cases were filed soon thereafter.  On August 12, 2011, the court consolidated the cases against Netflix under the caption In re: Netflix Privacy Litigation (5:11-CV-00379). 

The parties reached a settlement in March after mediation with retired U.S. District Judge Layn R. Phillips.  Netflix did not admit fault, but agreed to decouple former subscribers’ rental history from subscribers’ identification data one year after cancellation of their service and further agreed to pay $9 million to establish a common settlement fund, out of which class fees and settlement expenses will be paid.  The balance of the fund will be distributed to cy pres recipients, who will be non-profit organizations that educate on privacy issues.

Judge Davila certified a class for settlement purposes estimated to be “tens of millions” of current and former subscribers and found that the immediate injunctive relief and minimal monetary recovery that would be available to class members mitigated in favor of approval.  Further, in justifying its findings, the court referred to the cy pres settlements in recent privacy class actions against Google and Facebook, which settled for $8.5 million and $9.5 million, respectively. 

Notice to class members of the settlement will be provided through email and publication in People magazine, and a settlement website will be established.  A hearing on the final approval of the class action settlement will be held on December 5, 2012.

To read the settlement order in In re: Netflix Privacy Litigation, click here.

Also, yesterday, Judge John R. Tunheim of the District Court of Minnesota preliminarily approved a settlement in a class action brought under the VPPA against Blockbuster in Missaghi v. Blockbuster, LLC (Civil No. 11-2559).   As with In re: Netflix, the suit, filed in September 2011, alleged on behalf of all current and former Blockbuster subscribers that Blockbuster violated the VPPA by keeping their viewing histories and personal data, including credit card numbers past the statutorily allowed date.

Blockbuster filed a motion to dismiss arguing that based on the allegations of the complaint, it was a predecessor to Blockbuster LLC – Blockbuster, Inc. – that had collected the plaintiff’s personally identifiable information and that the terms of Blockbuster  LLC’s purchase of that entities’ assets out of Chapter 11 proceedings barred plaintiff’s action.  After Blockbuster filed the motion to dismiss, the parties engaged in multiple mediation sessions and protracted settlement discussions before arriving at an agreement in April.  The motion remained pending at the time the parties reached an agreement and was withdrawn on July 2.

The court certified a class for purposes of settlement of “[a]ll current and former ‘Blockbuster’ members in the United States and its territories and possessions” and preliminarily approved the settlement agreement.   Unlike the Netflix settlement, the Blockbuster settlement does not provide for a monetary recovery.  Rather, while it has denied any liability, Blockbuster has agreed to modify its privacy policy to state that all accounts continue unless they are affirmatively terminated.  Blockbuster further agreed to create a process for former subscribers to request to have their personal information deleted from the company’s database.  In addition, the settlement provides for Blockbuster to pay $140,000 in fees to class counsel.

Notice of the settlement will be provided to class members by publication in USA Today on two consecutive Mondays, with notice to be completed by September 6.  A fairness hearing on the settlement will be held on November 27, 2012.

To read the settlement order in Missaghi v. Blockbuster LLC, click here.