Defendants in a consumer electronics class action often hope that agreeing to settle the suit will bring an end to litigation over a product or component. However, Sony’s settlement in 2008 of a class action regarding Optical Block technology used in its LCD Rear Projection HDTVs has been followed-up with the filing of new class actions regarding Optical Block against Sony and Hitachi in the Southern District of California. (fn1) The new suits claim that Optical Block contained a defect that eventually caused the TVs to display bright blue and red haze, spots and streaks which covered the programming on the screen. The complaints, which allege that the manufacturers were aware of the defect at the time of sale, request relief under the unfair competition, deceptive advertising and warranty laws of California and other states.
In the New York action, after filing a motion to dismiss, Sony agreed to settle the action. In the settlement agreement, while Sony was not required to pay a specific sum to the plaintiffs, Sony agreed to: (i) extend the limited warranties on the affected units to permit repair or replacement of the Optical Block until June 30, 2009, (ii) refund prior expenses paid by customers to replace the Optical Block; (iii) refund money paid by customers for extended service plans; and (iv) refund money paid by certain customers who had previously exchanged affected units for other Sony TVs. (fn2)
The total cost of the settlement to Sony cannot be determined from the court documents. However, the settlement class contained approximately 175,000 members. In its Opinion and Order approving the settlement, the Court noted that Sony had indicated that it made fixes to eliminate problems with the Optical Block technology in 2006. The Court also noted that at a settlement hearing, Plaintiffs counsel stated “we do think that Sony has successfully remanufactured the component.” (fn3)
Plaintiffs’ counsel was awarded $1.6M in attorneys fees and costs. This resulted in a 21% premium over the value of plaintiffs’ counsels’ services if computed under the lodestar method (which computes attorneys fees on a hours x hourly rate basis). (fn4)