Spying TVs: Legal Settlement Provides a Few Bucks for Vizio Owners; Millions for Lawyers

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The end is near in a class action lawsuit against Vizio, the manufacturer of internet-connected smart televisions. On Thursday, lawyers for a group of plaintiffs who alleged that Vizio televisions had collected and disseminated private viewing data pushed for preliminary approval of a $17 million settlement. Of course, the devil is in the fine print. Those who purchased these spying TVs may each get as little as $0.62, though thanks to the ambivalence of those who may hardly bother with such a paltry sum, the more likely takeaway amount will be enough to buy a month of Netflix. In contrast, the attorneys who worked on the case will walk away with millions of dollars.

The lawsuit came in the aftermath of a ProPublica expose headlined, "Own a Vizio Smart TV? It's Watching You."

The article caused lawmakers and regulators to take notice. Perhaps even more disconcerting was that for a short time, Vizio was primed to be acquired by the Chinese company LeEco. The $2 billion merger collapsed last year with charges that LeEco had misrepresented its financial health and had stolen customer information from Vizio.

As the Trump Administration took charge of the government and the prospects of strong privacy regulation faded, the Federal Trade Commission came to a $2.2 million settlement in February 2017 whereby Vizio pledged it would forever get consent from its customers before collecting and sharing data.

Nevertheless, the class action persisted against Vizio with the plaintiffs boosted twice — in March 2017 and in July 2017 — by the judge's refusal to dismiss the case. The development became concerning for Corporate America. In fact, the Chamber of Commerce attempted to intervene with an amicus brief urging certification of an interlocutory appeal over what it characterized as a "highly important" case where interpretation of privacy laws would "radically affect business models for developers of Internet-enabled devices and other technologies."

Because the plaintiffs had overcome motions to dismiss, they enjoyed ample discovery and were able to not only see what Vizio had collected, but also what this information was sold for in licensing agreements. 

If the case had gone to trial, the plaintiffs could have pursued liquidated or statutory damages under the Video Privacy Protection Act or the Wiretap Act for $2,500 and $10,000, respectively. It's estimated there are 16 million class members who were impacted by Vizio capturing up to 100 billion data points each day from more than 10 million televisions.

Of course, most class action lawyers work on a contingency basis, and if the law firms of Gibbs Law Group and Cotchett, Pitre & McCarthy were to lose at trial, they'd get nothing. Thus, in a memorandum in support of settlement approval, they highlight why the case is no slam dunk and the settlement amounts to a strong recovery. In particular, they point to restrictive standards of what qualifies as "personally identifiable information" under the VPPA. Vizio didn't share the specific names, ages, and addresses of its users; Instead, what was disclosed were things like MAC addresses, a string of numbers.

"Put simply, whether the information Vizio discloses would require too much detective work for an ordinary person to link an individual to viewing data is a factual matter that could be challenging for Plaintiffs to establish under Ninth Circuit law," states the memorandum. "We say this recognizing that the Ninth Circuit itself left open the possibility that 'modern technology may indeed alter — or may already have altered — what qualifies under the statute' as personally identifiable."

At trial, the plaintiffs would also have to show that the contents of their communications were "intercepted," a novel concept when applied to internet-connected devices like televisions that hasn't before been tested at trial and the appellate court level.

And so, the law firms have struck a $17 million deal — one that allows these attorneys to petition the California federal court for an award of' fees and reimbursement of costs. Of the pot of money, the lawyers can request an amount that doesn't exceed 33 percent of the settlement fund. After $5,000 awards for the named plaintiffs in the case, the rest will be disbursed to those making a settlement claim who purchased a Vizio Smart Television between Feb. 1, 2014 and Feb. 6, 2017. Again, there's an expectation of ambivalence. Assuming a 2 percent to 5 percent claims rate, as the attorneys in this case do, the average compensation would amount to $13 to $31.

Accordingly, the plaintiffs' lawyers are attempting to put the settlement in the best light by highlighting the worth of the injunctive relief being attained. The government already got Vizio to agree to a consent model where owners must opt-in on data collection and dissemination, so the plaintiffs looked to other avenues to remedy Vizio's behavior. Here, through this settlement, Vizio has agreed to prominent displays of notifications on TV screens plus additional language in the device's quick start guide as well as the deletion of contested viewing data in Vizio's possession. The lawyers quantify the value of the injunctive relief as "conservatively, $6 to $8 million," which reasonable or not, has the added benefit of framing a potential decrease in the percentage of the settlement they will be seeking.

Finally, as discussed in an earlier article, there's a novel class action notice system whereby Vizio TVs will be programmed to alert its owners to the settlement

It appears there's no way to opt-out of this notice, a strange coda on the case.

As the court brief describes it, "First, notice will be provided directly to Vizio Smart TVs three separate times, unless a person viewing the notice selects to dismiss the notice, in which case it will only appear one more time (for a total of two times). The notice will time out after 45 seconds. It tells class members that this is a class action; it references the class definition ('Purchased a VIZIO Smart TV Connected to the Internet Between February 1, 2014 and February 6, 2017? You Could Get Money From a $17 Million Class Action Settlement')... This notice is estimated to reach 6 million Smart TVs."

More information will be provided at www.VizioTVsettlement.com.

Because the judge has to approve it, potential class members can object to the terms. A fairness hearing may take place. Read more about the terms of the settlement here: