Netflix, Wal-Mart attract more class-action lawsuits

Almost 40 parties sue since Jan. 2 claim of collusion

By Danny King -- Video Business, 2/5/2009

FEB. 5 | More than three dozen parties have filed lawsuits against Netflix and Wal-Mart since the companies were sued in a Jan. 2 class-action claim that alleged that the companies colluded to restrict competition in the online DVD rental market.

About 20 cases have been filed since the beginning of last week, according to U.S. court records. The lawsuits follow the early January class-action claim in the U.S. District Court of Northern California that was led by San Francisco resident Andrea Resnick and five other Netflix customers.

Customers are claiming that a 2005 agreement between the two companies, which entailed that Netflix would stop selling DVDs and Wal-Mart would stop renting them online, enabled Netflix to overcharge customers.

As part of the agreement, which was born out of meetings between Netflix CEO Reed Hastings and Wal-Mart chief marketing officer John Fleming, Wal-Mart, the world’s largest retailer, put a link on its Web site encouraging customers to transfer subscriptions to Netflix, according to the Jan. 2 claim. Netflix, the largest U.S. movie-rental service via mail, in turn promoted Wal-Mart’s sales of DVDs.

A class-action lawsuit filed last week, led by Chicago plaintiff Marci Badgerow, particularly takes issue with Netflix raising its monthly subscription price from $14.99 to $17.99, on the heels of calling its truce with Wal-Mart. Prior to aligning with Netflix, Wal-Mart was offering a significantly cheaper $12.97 a month subscription plan. In that claim, plaintiffs are seeking three times the amount of unspecified financial damages relating to Netflix subscriptions, including attorney fees.

Wal-Mart has repeatedly disputed the claims, while Netflix has declined to comment.

Susanne Ault contributed to this report.