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Online DVD Rental Antitrust Litigation / Wal-Mart/Netflix Settlement

Class members (including me) are getting email notice of a class action settlement with Wal-Mart in the Online DVD Rental Antitrust Litigation, No. M 09-2029 PJH (N.D. Cal.). Wal-Mart will pay $27,250,000, in "cash and gift cards" to a settlement fund to be distributed to the class and lawyers.

Of course, there are 40 million class members. That's 68 cents a class member. And you can only get cash if you spend 44 cents on a stamp to submit your claim, though it's possible to ask for a gift card on line.

But wait, there's more. The attorneys and class representatives are asking for $8,592,500 of the $27 million. And "notice and administration costs"—the amount of which is entirely undisclosed—will be deducted from the $27 million before the class will get anything. (This contradicts what the parties told the court in the motion for preliminary approval, which said the entire amount after attorneys' fees and expenses would go to the class.) In reality, the attorneys are asking for over a third and perhaps as much as half of the money available for the class.

That would be bad enough, but the "gift-card" aspect makes this a coupon settlement (the coupons cannot be sold and are good only at Wal-Mart—again, contradicting the motion for preliminary approval, which falsely called them "fully transferable"), and there seems to be no plan to have a fee request that complies with the Class Action Fairness Act's restrictions on coupon settlements.

Lots of class members have contacted us, and, yeah, we're going to be objecting to this one.

Update: a class member writes me to point out that I was misled by the notice. Though the notice says "Wal-Mart gift card," it is not a Wal-Mart gift card, because the gift card is only good at walmart.com, where prices are often higher when shipping is included.