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June 30, 2008

Our legal system at work (with an economics test after)

From an actual document I recently received, not one word made up.

Why did I get this notice package?

You may have been a Time Warner Cable subscriber at some time between January 1, 1994 and December 31, 1998 and may have been on a list of subscribers whose personal information may have been made available for sale by Time Warner Cable to other companies for marketing purposes. . . .

What is this lawsuit about?

The lawsuit claimed that Time Warner Cable sold personal information about its subscribers to other companies that wanted the information to advertise and try to sell you products and services. The lawsuit claimed that Time Warner Cable is required to tell subscribers how it collects and uses their personal information, and that Time Warner Cable failed to do so in compliance with applicable law. Time Warner Cable denies that it did anything wrong or that it violated any law, and believes that it would have ultimately prevailed at trial. . . .

What benefits does the settlement provide?

If you qualify, you may receive $5 or free services. If you choose to receive free services, here are the free Time Warner Cable services you can get. . . .

(1) One free month of any Time Warner Cable service that is available on a monthly basis and that you don't already have.


(2) Two (2) free Movies on Demand. . . .

Are there other settlement benefits in addition to the $5 of free services?

Yes. As part of the settlement, Time Warner Cable has agreed: (1) to change its disclosure to subscribers about how it collects and uses their personal information; (2) to employ a Chief Privacy Officer in charge of making sure the company complies with privacy laws; (3) to give money to two public interest groups that care about and work on privacy issues; (4) to pay the costs of sending and publishing this notice and giving out the free services and $5 checks; (5) to give money to the two Class Representatives who participated in this case for all the subscribers; and (6) to pay for the lawyers who represented the subscribers throughout this case.

Now, for some questions--and a prize offer--please read the continuation.

UPDATE: For a different view on the merits of this settlement, see the comments of Daniel L. Anderson, the attorney who represented objectors to the original settlement agreement.

1. As a consequence of this lawsuit--or, probably, as a consequence of just the law to which the document refers--I've received--more than once, if I remember right--a booklet from Time Warner Cable outlining its "privacy policy". The booklet had at least four or five pages of single-spaced, tiny, tiny print. (The policy, as posted here, is a bit over 2900 words.)

A. What percentage of Time Warner Cable's actual customers care one iota about this?

B. Of the group in A, what percentage read all, or part, of the booklets?

C. Of the group in B, what percentage did, or will do--ever--anything differently?

D. For whatever harm was done to the percentage of customers stated in part C--and please recall three uses of "may" in the first paragraph quoted from the document above--how completely does either $5 cash or between $8 and $12 of in-kind services, received at least ten years after the harm, compensate them?

E. Bonus question: how much does funding "two public interest groups that care about and work on privacy issues" compensate or assist the damaged parties in C?

2. For those who respond, "Yes, but the amount Time Warner pays will deter them from further heinous acts," please answer the following questions.

A. The document clearly states that a subscriber selecting one of the free services will be billed for it after the free month ends, unless the subscriber cancels it. What percentage of subscribers selecting a free service will forget to cancel and therefore mistakenly pay for something they didn't want?

B. Is your answer for 2A bigger or smaller than your answer for 1C?

C. Time Warner Cable, from time to time, offers limited periods of free premium channels and free movies on demand. What percentage of such "free" service--actually, advertising--will Time Warner Cable simply replace with the services they are required to provide by this settlement?

D. In the long run, a for-profit, unsubsidized business must recover its full economic cost of providing its product or else it will stop producing. Presuming that Time Warner Cable is 1) a for-profit, unsubsidized business, and 2) even if its contractual or regulatory environment is unusual--I don't know any of the details--it still must cover its cost, then how much will Time Warner Cable raise its prices, or cut its services, to pay for any higher net costs it may incur because of this settlement? In answering, note that for at least the short- and intermediate-terms, Time Warner has, in my area at least, very little, poor competition in supplying cable TV services (as far as I know, just Direct TV). (But I don't know the extent of potential competition, however.)

3. Extra credit questions: How much does a Chief Privacy Officer earn, and describe, in detail, what occupies his or her time, 8 hours a day, 5 days a week, 49 weeks a year.

For each complete and correct set of answers submitted to me, I will award the submitter $5 divided by the number of forms received, or 1/10,000 of my settlement amount--less postage cost--from Time Warner Cable, whichever is smaller, on or after June 30, 2018.

Subject to the court's certification of the class.

And if I feel like it.


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Could there be even one person with both a sufficiently low enough opportunity cost to make reading this worth the 'reward' and 2) someone smart enough to follow all the detail. It's a typical class action boondoggle designed to benefit lawyers. These are kept because the law has a lot of 'principles' that are really pretexts, and so you spend a lot of time arguing about things not relevant.

I spent a long time in a legal fight that cost me most of my life savings, a legally sanctioned mugging, Luca Brazi with a briefcase. The lame allegations always had two sides, a pretext, a tactical use, and a principle that one could defend. The relevance of the principal was superficially strong, and the obviousness of the pretext and the irrelevance of the principle only observable after getting through much detail, and judges are averse to getting into case particulars (ie, issues of 'merit' are for juries). The length of time (and thus money) it takes for civil cases to get to juries, the fact that you have different states, and federal to try these cases, and that juries have an element of randomness to them, all present the US legal system as a tactical haven for truly stupid lawsuits. A loser pays system is the most obvious corrective.

Bob K

Of course, a Chief Privacy Officer performs the important function of overseeing the Assistant Privacy Officers.

Donna B.

I got that notice too. I laughed and thought again how silly these class action suits are. The "wronged" get $5 or less and the lawyers get thousands of dollars.

The paralegal who researched companies that may or may not have "wronged" a million or so people in some minor meaningless way probably didn't even get a bonus.

Ric Locke

Just wondering: is there any requirement at all for due diligence on the part of the organizers of the "class"?

That is, the whole point of "class action" is that the members of the class may not be aware that they have been wronged, and the organizers are doing them a favor. Is there any requirement that the organizers make a good-faith attempt to find out who the members of the class are and notify them of the existence of the suit? (I don't count newspaper notices as "good faith attempts".) Is the number of responses to such an attempt relevant in any way?



Find out how much the lawyers made, that would be the really great part. Then the Subscribers could sue the lawyers for legal malpractice, particularly in light of 2A.


A thought on these class action lawsuits:

Is there any way to officially remove yourself from the class? I'd like to just to slightly reduce the money received by the lawyers. I'd bet that doing this on a massive organized scale could have enough of a disincentive effect to prevent the most egregious of these lawsuits.


"Chief Privacy Officer" is just another title that gets given to some VP. All-in-all, the job probably takes 15-20 hours every year.

Class-action lawsuits are premised on the idea of dissuading companies from doing the same thing. In theory, at least, Comcast is looking at Time-Warner and saying "what can we do to avoid that." In practice, paying off the plaintiff's attorneys for a minor wrong is just a cost of doing business.

Joseph B

According to the settlement information, the lawyers will receive $5 million.

If the total harm to a subscriber is $5 then the lawsuit is frivolous and the lawyers should be sanctioned.

If the total harm to a subscriber was substantially more than $5, and yet the lawyers settled for $5 per subscriber, then the lawyers should be sanctioned for not adequately representing the class.

JP: There is a way to officially remove yourself from the class. You must do this if you wish to bring your own lawsuit. Or, as a member of the class, you can file an official objection to the settlement.

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