Is Sending Settlement Notices to Consumers’ Smart TVs the Way to Fix the Class Action Notice System? (Hint: It Might Be.)

It’s an old trope by now to wax on and on about how consumers have irreversibly gravitated away from print media. But how this fact of life in 2018 pertains to our little corner of the Internet is that, after a class action lawsuit settles, there’s no longer any concentrated-enough space in which attorneys can effectively alert the masses. It’s in this scenario that we can see that the Internet’s incalculable vastness is in many regards both its greatest strength and most dangerous fault—particularly when a certain group of consumers needs to be informed that, due to a class action settlement, they’re owed some money.

It hasn’t always been like this. Historically, attorneys working on a case could easily identify a media outlet—for instance, a leading newspaper or magazine—that they believed those who could potentially claim a piece of a settlement would likely read regularly (or at least be more likely to stumble upon). This was done in addition to sending out snail-mail notices and sometimes in lieu of mailing out direct notices in cases where attorneys could not readily identify the contact information of those eligible for a settlement.

Alas, while this may have been the tried-and-true method for ages, things have changed in 2018. Getting consumers’ attention is more difficult than ever—and, maybe more importantly, getting them to care is even harder. While the factors that contribute to why most settlement money is left on the table are so myriad and laden with legalese that it would put you to sleep if I went on and on about it here (hint: budgetary restrictions and consumers’ indifference tend to play a role), one thing is clear—the claim rate for class action settlements is far lower than most people realize.

One conversation between Duke University and two prominent class action attorneys attempted to put a number on it: settlement claim rates are usually between only one and 10 percent. Numbers aside, another attorney, speaking to Law360 (paywall) in April 2017, put it more bluntly:

Class action notice programs simply do not involve the kind of money or operate long enough to build the kind of brand recognition developed over many years by the manufacturers of the products who defend and settle these cases. Consequently, no one should expect notice programs to achieve the level of response obtained by highly sophisticated marketers of consumer products with huge budgets.”

The bottom line is that the class action notice system is due for significant revision. And a recent development in a settled case against smart TV manufacturer Vizio may give us our first glimpse at what the future of the class action notice system might look like.

That is, if the judge allows it. 

Welcome to the (Possible) Future of Class Action Settlement Notices

As first detailed by Hollywood Reporter, Vizio has asked a California federal judge to grant to all parties an extended timeframe in which to submit a motion for a preliminary $2.2 million settlement in the consolidated lawsuit over the TV maker’s consumer data collection and dissemination practices. Why ask for a time extension even though the settlement is more-or-less locked in?

The plaintiffs’ and defendants’ counsel want permission from Judge Josephine L. Staton to notify as many as 11 million consumers that they’re part of the settlement by displaying a message directly on their Wi-Fi-connected smart TVs. And, since this is uncharted territory, the plaintiffs’ and defendants’ lawyers need time to hammer out the specifics. From the court documents:

The Parties are developing a class notice program with direct notification to the class through VIZIO Smart TV displays, which requires testing to make sure any TV notice can be properly displayed and functions as intended. The additional time requested will allow the parties to confirm that the notice program proposed in the motion for preliminary approval is workable and satisfies applicable legal standards.”

The initial lawsuits, which were filed in 2015 after a report from investigative news outlet Pro Publica revealed Vizio was surreptitiously tracking smart TV viewers’ habits and then sharing that data with advertisers without consent, were consolidated after a judge ruled Vizio had no way of escaping consumers’ claims.

What we have here is a glimpse of what an ostensibly improved class action notice system could very well look like. Now, though, it seems consumers may have no way of escaping being told that they might be able to take part in the settlement.

Will This Even Work?

At the surface level, this potentially new way of sending notices to class members seems like a no-brainer. It’s already commonplace for attorneys to use email to get information in front of consumers’ eyes, so why not apply that reasoning to televisions right in consumers’ living rooms? (And let’s not ignore the shade of irony in all this, given that Vizio is trying to let consumers know they can take part in the settlement in a manner adjacent to what got the company in legal trouble in the first place.)

But something about consumers more or less being forcefully informed that they can claim settlement money may not sit as well with some as, say, a non-descript email that can be tucked away in an inbox to be viewed at one’s leisure. United States law mandates that notices about class action lawsuits be delivered in a manner that’s “practicable under the circumstances, including individual notices to all members who can be identified through reasonable effort.” Through that lens, then, sending consumers notice through their televisions would certainly check off those boxes; but it’s important to ask at the same time if this is the kind of precedent that needs to be set in 2018, when private, governmental and corporate privacy protection is at the forefront of the news cycle.

It’s worth discussing what might come next, should Judge Staton give this direct-to-your-living-room notice request the green light. Would the door be open for text messages to be sent to consumers notifying them of a settlement? Would other companies be allowed to send notices to consumers’ smart TVs, even if the case at hand had nothing to do with data collection practices? And, more importantly, even if the way with which consumers are informed of class action settlements changes, what are the next steps toward addressing the other pieces of the puzzle? Informing consumers is certainly instrumental, but there are other issues that also need to be looked at in any serious discussion about how to fix the class action notice system.

The biggest unknown hanging over all of this, should the Vizio settlement be given the go-ahead: Will it even work? Will there be any verifiable benefit? Or will viewers dismiss the message out of hand like any other pop-up ad, commercial, or leisure time intrusion? It’s not a bad place to start, but such steps should be taken carefully and only after timely consideration.

The parties have an October 3 deadline to present a concrete plan to the court.