The U.S. District Court for the Northern District of California has preliminarily approved an $85 million settlement in a class action privacy lawsuit filed by a group of individual Zoom users. At issue were alleged privacy and security violations that occurred during the use of the Zoom Meetings Application. Zoom has not admitted any liability in the case, nor has the court decided who is right or wrong. The case was settled to avoid additional litigation and related expenses.
Specifically, the class action privacy lawsuit alleges that Zoom:
- Shared certain user or subscriber information with third parties
- Should have done more to prevent unwanted meeting disruptions by third parties (Zoom-bombing)
- Advertised its Zoom Meetings App as encrypted “end-to-end” which the plaintiffs alleged was not true
Zoom denies the allegations, denies any liability, and believes that no member of the settlement class, including the plaintiffs, have sustained any damages or injuries as a result of the allegations.
Settlement details
A settlement fund of $85 million will be set up to pay valid claims are deducting Court-approved attorneys’ fees, up to $21,250,000, and expenses up to $200,000, plaintiffs’ service payments, and notice and administration costs. Zoom has already made and is committed to making changes to their policies and practices to benefit members of the settlement class. In addition, settlement class members can submit one of two types of claims:
- Paid subscription claim: Users who paid for a Zoom Meetings App subscription between March 30, 2016 and July 30, 2021 can file a claim for $25, or 15% of the money paid to Zoom for their core subscription, whichever is greater. Add-ons to the subscription are not eligible, OR
- User claim: Users who are not eligible for a paid subscription claim, but registered, used, opened or downloaded the Zoom Meetings App between March 30, 2016 and July 30, 2021 may file a claim for $15.
These payments are subject to change, pending the court’s final approval of the settlement. To file a claim, individual subscribers and users may submit a claim online at ZoomMeetingsClassAction.com or mail in a paper claim form postmarked by March 5, 2022. Paper claim forms can be downloaded from the website or can be obtained by calling 1-800-397-3418. Subscribers and Zoom users who do nothing will not be eligible to receive a cash payment.
Who is included and excluded from the settlement?
Individual users in the U.S. who registered, used, opened or downloaded the Zoom Meetings App between March 30, 2016 and July 30, 2021 are included in the settlement. Enterprise-level account holders and those with Zoom for Government accounts are not included. Zoom officers and directors, the judge or magistrate judge handling the case, and members of the judges’ staff or immediate family members are also excluded from the case.
Insider Take
In a case where it is difficult to prove wrongdoing or injury, the Zoom settlement seems generous. However, after you deduct attorneys’ fees and expenses, and parcel out payments to individual subscribers and users, individual payments of $15 or $25 are minimal. The settlement won’t put much of a dent in Zoom’s bottom line.
In the company’s third quarter of fiscal year 2022 financials, reported in November, Zoom had total revenue of $1.05 billion, a 35% increase year-over-year. GAAP net income was $340.3 million, or $1.11 per share, up from $198.4 million, or $0.66 per share in the third quarter of fiscal year 2021. An $85 million settlement represents 25% of Q3 FY22 net income and 8.1% of total revenue for the quarter. More than anything, this is a lesson learned when virtual meetings became the norm during COVID. Don’t take privacy for granted, and always assume bad actors will try to attack you.
