Top Class Action Lawsuits
Ladies and Gentlemen…Check your Portfolios! A lot of securities litigation this week—and at the top of the list is the Zynga securities class action. Not familiar with Zynga? Well, either you’ve been under a rock or you simply haven’t gotten sucked up into their addiction-creating game: FarmVille. Ask your kids…
The Zynga class action lawsuit was filed in the U.S. District Court for the Northern District of California (Case No. 12-cv-124007) on behalf of purchasers of the common stock of Zynga, Inc. (“Zynga” or the “Company”) between February 28, 2012 and July 25, 2012, inclusive (the “Class Period”) and includes those investors who acquired Zynga stock pursuant to and/or traceable to Zynga’s secondary stock offering on April 3, 2012. No class has yet been certified in the above action.
According to the Complaint, Zynga completed a secondary stock offering on April 3, 2012 which enabled Zynga insiders to sell over 43 million shares of their Zynga stock at a price of $12.00 per share for proceeds of approximately $516 million. On July 25, 2012, Zynga announced its financial results for the second quarter of 2012, reporting substantially lower than expected earnings and lowering its 2012 guidance. Following this announcement, the Company’s common stock plummeted 40% in value down to $2.97 per share.
The Complaint asserts violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10(b)(5) promulgated thereunder, against Zynga, certain of its officers and directors, and those who served as underwriters in connection with Zynga’s secondary stock offering. The Complaint alleges that the defendants issued false and misleading statements and omissions, including a false and misleading Registration Statement and Prospectus in connection with Zynga’s secondary offering, about Zynga’s business, operations, and growth prospects.
Top Settlements
More from the Inflated Credit Card Rates Story (the one that never ends…) This week JPMorgan Chase & Co. reached a $100 million settlement of a credit card rate class action lawsuit in which JPMorgan was accused of improperly increasing its credit card minimum payments as a means to generate higher fees. (Could you recite these charges by heart… ya think?)
Filed in 2009, the Chase credit card lawsuit ( re: Chase Bank USA NA “Check Loan” Contract Litigation, Case No. 9-md-2032, U.S. District Court, Northern District of California) alleged the bank decided in late 2008 and 2009 to boost minimum monthly payments for thousands of cardholders from 2 percent to 5 percent of account balances. Cardholders alleged that JPMorgan induced them to transfer credit card balances from other lenders to Chase card accounts, where the bank promised to consolidate their debt into loans with “fixed” interest rates until the balance were paid off.
However, the lawsuit claims JPMorgan increased minimum payments to force credit card holders to either accept higher rates in order to keep the lower payment, to make more late payments and trigger more fees or a 29.99% penalty interest rate, or to close underperforming accounts. This manipulation resulted in millions of dollars in additional fee income from thousands of new cardholders.
According to court documents, lawyers for the cardholders claim that the $100 million class action settlement is 45% of the $220 million in up-front transaction fees that their clients paid for the promotional loans. They called the class action lawsuit settlement an “excellent result” for cardholders, who would recover “a substantial portion of the transaction fees they paid.” The Chase credit card class action lawsuit settlement awaits final court approval.
Netflix Privacy Fix. Netflix made headlines this week due to a proposed settlement in a privacy class action lawsuit that claims the movie rental company unlawfully kept and disclosed customer information, including records on the movies and TV shows its customers viewed. Netflix denies that it has done anything wrong. Of course.
Here are the straight goods: Any current or former Netflix subscriber as of July 5, 2012 and lives in the U.S. or its territories is included in the Settlement.
The Settlement has been preliminarily approved by the United States District Court for the Northern District of California. Netflix has agreed to change its data retention practices so that it separates (known as “decoupling”) Entertainment Content Viewing History (that is, movies and TV shows that someone watched) from identification information for those subscribers who have not been a Netflix for at least 365 days, with some exceptions.
In addition, Netflix will pay $9 million into a Settlement Fund, from which it will make donations to Court-approved not-for-profit organizations, institutions, or programs that educate users, regulators, and enterprises regarding issues relating to protection of privacy, identity, and personal information through user control, pay notice and settlement administration expenses, attorneys’ fees of up to $2.25 million plus up to $25,000 in expenses, and a total incentive award of $30,000 to the Named Plaintiffs (a total of six individuals).
Proposals from potential donation recipients will be sought, and, after consideration, recommendations will be made to the Court. A list of the proposed donation recipients will be posted on the website. Class Members who do nothing will remain in the Settlement and their rights will be affected. If they do not want to be included, they must exclude themselves by November 14, 2012. If they exclude themselves they keep the right to sue Netflix about the claims in this lawsuit.
Class Members who remain in the Settlement can object to it by November 14, 2012.
The Court will hold a hearing on December 5, 2012 to consider any objections, whether to approve the Settlement, award attorneys’ fees, and incentive award. Any Class Member can appear at the hearing, but they don’t have to. They can hire an attorney at their own expense to appear or speak for them at the hearing.
Ok folks –it’s time for poolside libations! See you—well, you know where.
