Zappos data breach settlement falls apart over attorneys’ fees

Back in January 2012, Zappos, which is owned by Amazon, disclosed that it had been hacked and that they were notifying more than 24 million customers. Less than one week later, the first lawsuit had been filed. Shortly thereafter, state attorneys general opened their own investigation into the breach.

In January 2015, Zappos settled with the nine state attorneys general. Things did not go as well with the consumer lawsuit, however.  Zappos tried – unsuccessfully – to get the lawsuits dismissed on the basis of the arbitration clause in its user agreement. After that motion failed,  they reached a tentative settlement with the plaintiffs on everything but attorney fees, with a mediation session on that issue scheduled for November 12, 2014. The mediation session did not take place, however, because when Zappos counsel saw how far apart the plaintiffs’ requested attorney fees were from what Zappos considered reasonable, they felt there was no point in a mediation session.

So instead of finalizing any agreement, Zappos decided to litigate the case and on January 30, 2015 filed a renewed motion to dismiss the plaintiffs’ second amended complaint.

And although plaintiffs moved the court to enforce a class action settlement, the court held that it could not enforce one because of the lack of agreement on the attorneys’ fees, which the court considered a material and essential component of the agreement.

Courtney Coren of reports that the Nevada federal judge granted a motion by the plaintiffs to extend the amount of time they have to issue a response to his ruling of March 27.

The Zappos Data Breach Class Action Lawsuit is In Re Zappos, Inc., Security Breach Litigation, Case No. 3:12-cv-00325-RCJ-VPC, filed in the U.S. District Court of the District Nevada.

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