In Surprise Ruling, Judge Throws Out Netflix Price-Fixing Lawsuit

A week ago, millions of Netflix subscribers received an email saying they would receive a payment over price-fixing in the online movie market. They will still be paid—just not by Netflix after an unusual bit of good news for the company.

In a ruling handed down in San Francisco, a federal judge dismissed a class action suit that accused Netflix of colluding with Wal-Mart.com in 2004 to divvy up the DVD market. According to the complaint, the CEO’s of the two companies struck a deal over dinner in which Netflix agreed not to sell DVD’s if Wal-Mart said it wouldn’t rent them. Lawyers for the plaintiffs said that the scheme resulted in Netflix subscribers overpaying for DVDs between 2005 and 2010. The dismissal is a surprise because Netflix’s alleged co-conspirator agreed to settle the suit earlier this year. The email last week announced that Wal-Mart had set aside $27 million and provided a website that will soon announce the terms of collection. Ordinarily, in this situation, the other member of an alleged price-fixing conspiracy would also reach a settlement but Netflix fought on and began preparing for a jury trial scheduled for early next year. The decision to dig in appears to have paid off.

(11/23)