Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Lifelock $68M class action settlement gets preliminary approval, (Jan 25, 2016)

By Linda O’Brien, J.D., LL.M.

Preliminary approval of the $68 million settlement of a false advertising class action lawsuit against identity theft protection company LifeLock has been granted by the federal district court in San Francisco (Ebarle v. LifeLock, Inc., January 20, 2016, Gilliam, H.).

LifeLock, Inc. provides identity theft protection services to its subscribers. In January 2015, consumers Napoleon Ebarle and Jeanne Stamm filed a putative class action complaint alleging that LifeLock’s advertisements of identity theft protection services violated Arizona’s Consumer Fraud Act. The alleged misrepresentations included LifeLock’s promise to (1) provide comprehensive services in detecting fraud, (2) provide continuous alerts of potential fraud 24 hours a day every day of the year, (3) keep customers’ personal data secure, and (4) provide insurance of up to $1 million against identity theft.

In July 2015, the FTC filed an enforcement action against LifeLock violating for the terms of a 2010 federal court order requiring the company to secure consumers’ personal information and prohibiting the company from engaging in deceptive advertising. LIfeLock negotiated a separate settlement that provides for a $100 million judgment in favor of the FTC for the purpose of consumer redress. In December 2015, the FTC settlement was approved. The consumer plaintiffs moved for preliminary approval of their settlement with LifeLock.

Certification of settlement classes. Under the terms of the settlement, LifeLock agreed to establish a fund of $68 million for the benefit of the eligible class members, which includes the class and subclass. LifeLock also agreed not to oppose an application for $10.2 million in attorney fees and expenses, and $2,000 to each of the class representatives.

For purposes of the settlement, the following two classes were certified: (1) all members of LifeLock’s identity theft protection plan in the United States at any time between September 1, 2010 and January 20, 2016, and (2) a subclass of all individuals enrolled in LifeLock’s identity theft protection plan in the United States between January 1, 2012 and April 30, 2015.

Approval of settlement agreement. The court found that the requirements of Federal Rule of Civil Procedure 23 were satisfied. The potential class of over six million members was so numerous that joinder of all members was impracticable. The commonality requirement was met because LifeLock’s alleged policies and practices were issues common to all members. The claims and defenses of the class representatives were typical of the claims and defenses of the class and there was no evidence that class representatives or proposed class counsel had a conflict of interest with other class members.

Additionally, common questions of law and fact predominated over questions affecting only individual members of the proposed class and the judicial economy achieved through common adjudication made a class action superior for adjudicating the claims of the proposed class.

Finally, the court determined that the settlement agreement was the result of serious, informed, non-collusive negotiations, had no obvious deficiencies, did not grant preferential treatment to class representatives or segments of the class, and fell within the range of possible approval. Thus, the settlement was fundamentally fair, adequate, and reasonable in light of the strength of the plaintiffs’ case; the risk, expense, and complexity of further litigation; the amount offered in the settlement; the extent of discovery completed; the presence of a governmental participant; and the reaction of class members to the proposed settlement.

The case is No. 3:15-cv-00258-HSG.

Attorneys: Binni N. Shah (Stroockl & Stroock & Lavan LLP) for Napoleon Ebarle. Luanne Sacks (Sacks, Ricketts & Case, LLP) for LifeLock, Inc.

Companies: LifeLock, Inc.

Cases: Advertising CaliforniaNews