In re Online DVD Rental Antitrust Litigation

Certification of a settlement class under Fed. R. Civ. P. 23(a) and (b) may be proper even when class representatives receive incentive awards; a claimant fund sharing approach may be proper even when few class member actually filed claims; and, award of attorneys’ fees under the Class Action Fairness Act provisions governing “coupon settlements” generally do not apply to settlements to be paid in gift cards.

In 2009, a class of Netflix, Inc. ("Netflix") DVD subscribers brought an action challenging as anti-competitive a 2005 “Promotion Agreement” between Netflix and Wal-Mart Stores, Inc. (“Wal-Mart”), under which the companies divided DVD-related business and allegedly drove up online DVD-rental prices. In November 2011, the district court granted Netflix’s motion for summary judgment; subsequently, a settlement was reached with Wal-Mart. Plaintiffs and objectors appealed the settlement decision to the Ninth Circuit. On appeal, the panel reviewed the district court’s decisions to approve the settlement between the class of Netflix subscribers and Wal-Mart, to certify the settlement class, and to grant the class counsels’ motion for attorneys’ fees. First, the panel held that the district court did not abuse its discretion in certifying the settlement class. Second, the panel held that the district court did not err in approving the settlement. The panel found the district court’s approval proper after determining that the district court had not abused its discretion in employing the claimant fund mechanism; the district court’s notice of settlement did not violate Fed. R. Civ. P. 23 or due process; and the district court did not err in approving the settlement as fair, reasonable, and adequate. Finally, the panel held that the district court did not err in approving the fee award because the portion of the settlement to be paid in Wal-Mart gift cards was not a “coupon settlement” within meaning of the Class Action Fairness Act. Further, the district court properly calculated attorneys’ fee awards as a percentage of the total settlement fund, provided adequate notice to the class about the attorneys’ fee petition and an adequate explanation of its rationale in awarding a 25% benchmark award only, as requested by the class counsel. AFFIRMED.