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Court tosses lawsuit claiming Netflix colluded with Walmart

updated 07:30 pm EST, Wed November 23, 2011

Netflix wins summary ruling after Walmart settles

A federal judge in California has dismissed a class action suit against Netflix on Tuesday. The plaintiffs had sought up to $654 million in damages, claiming that movie rental and streaming giant had entered into an illegal "market allocation" agreement with Walmart. The judge summarily dismissed the case, which was filed in January, 2009, after finding that the plaintiffs hadn't shown any collusive agreement.

"The Promotion Agreement on its face discloses an agreement by both parties to undertake cross-promotional efforts with respect to each other's complementary online DVD rental and sales services, in light of Walmart's independent decision to exit the DVD rental market." stated US District Judge Phyllis Hamilton. "Not only does the agreement expressly acknowledge the 'independent nature of Walmart's decision to exit the market, but it furthermore expressly states that Walmart is free to re-enter the same market. Under these circumstances, the court cannot agree that the agreement on its face reflects a blatant agreement to eliminate Walmart from the online DVD rental market as a form of market allocation."

Although not successful in this court action against Netflix, the plaintiffs were more successful against Walmart. Last December, rather than incur legal costs in a prolonged legal battle, Walmart chose to try and settle independently. The settlement for $27.3 million was finally agreed to in September.

Netflix chose not to settle and thus hasn't had to pay at all. The plaintiffs can appeal the judge's decision, but it's not known if they will at this stage. [via Hollywood Reporter]

by MacNN Staff



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