5 Key Terms to Know in Sony Hack Settlement

Neville Johnson - S 2015
Courtesy of Neville Johnson

Neville Johnson - S 2015

A proposed deal above $5.5 million could settle the class-action lawsuit brought by former Sony employees. Here is what it would mean for all parties involved.

This story first appeared in the Oct. 30 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

Will a proposed settlement really end a class action lawsuit brought by ex-employees against Sony Pictures over the 2014 hack? An Oct. 19 deal worth more than $5.5 million will be scrutinized by U.S. District Judge R. Gary Klausner for its fairness to those who believe the studio could have done more to safeguard personal data. Here are key terms:

1. The Money

Sony employees would see a $2 million fund — as much as $1,000 each — to reimburse them for identity-theft preventive measures. That's in line with economic damages estimated by the plaintiffs' expert. But in taking the deal, employees would walk away from tens of millions of dollars in potential statutory and punitive damages.

2. Extra Damages

Sony employees could see an additional $2.5 million allocated for anyone making a claim of up to $10,000 of unreimbursed loss from identity theft attributable to the hack. The last part is important: Sony previously challenged employees — some of whom also were victims of hacks against Target, eBay and Home Depot — to show how the studio leak was directly responsible for their injuries. Those who collect will have to show proof, including police reports.

3. ID Theft Protection

Sony would make ID-theft services available for free to ex-employees for two years through vendor AllClear ID. The typical cost for two years of coverage is $359. However, the plaintiffs' identity-theft expert originally indicated at least three years of coverage would make more sense.

4. Big Lawyer Fees

Attorneys for the plaintiffs would get $3.5 million in fees, more than typical. A study by Vanderbilt law professor Brian Fitzpatrick says plaintiffs' lawyers receive, on average, 15 percent of total settlement money.

5. Other Cases Dropped

Those who brought suits in state court would have to end their cases, or Sony could terminate the deal. That might not be a problem. Says Neville Johnson, who represents one such plaintiff, "It's a good settlement for all."