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Preliminary Approval Given by Judge for Netflix Settlement

Preliminary approval has been granted by a federal judge for Netflix Inc.’s $9 million settlement of a class-action litigation lawsuit that accused the video company of violating privacy laws protecting consumers. U.S. District Judge Edward Davila said that the settlement agreement, which was reached in February, ‘compares favorably’ to recent settlements involving other consumer privacy cases. Judge Davila presides in San Jose, California.

According to the judge’s order, issued on Thursday, a nationwide class of current and former subscribers of Netflix were certified. The number of subscribers is believed to be in the tens of millions. Netflix was accused of violating the Video Privacy Protection Act of 1988 by allegedly storing records of DVD and Internet videos that its customers watched for a period of two years after the customers canceled the company’s service. Netflix was also accused of holding onto credit card information of former customers.

The lawsuit claims that Netflix then used the data when it marketed and advertised without consent, which violates a legal requirement that the company has to purge ‘personally identifiable information’ one year after it is not needed for the reason it was collected. The complaint stated that most people feel ‘extremely uncomfortable’ that Netflix kept their viewing histories and credit card data for such a lengthy time. Netflix is headquartered in Los Gatos, California.

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The lawsuit was filed by former Netflix customers Peter Comstock and Jeff Milans. There is a final approval hearing set for December 5. Netflix has yet to admit wrongdoing in the case and accounted for the settlement money in the fourth quarter of 2011.

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