Stark v. Patreon, Inc., 3:22-cv-03131

Background

Plaintiffs sued Patreon under the Video Privacy Protection Act (VPPA), alleging Patreon shared users' video-viewing data with Meta; parties reached a $7.25M class settlement providing monetary pro rata payments (claims process) and injunctive relief (removal/disablement of Meta Pixel).
Court preliminarily approved notice and set January 15, 2025 as the deadline for claims and opt-outs; claims administrator emailed notices to millions and processed ~105,000 valid claims (≈6% claims rate).
Claims administrator received 1,290 timely opt-out requests; 927 were submitted in a single package by Lexclaim Recovery Group US LLC (a for‑profit buyer of class claims) and used Lexclaim’s own opt‑out/assignment form collected via an advertising campaign.
Lexclaim sought to enforce those opt-outs and asserted it owned the assigned VPPA claims; Patreon and Plaintiffs moved to invalidate the 927 opt-outs and the assignments and sought curative notice to those individuals; Lexclaim objected and argued (among other things) magistrate jurisdiction did not extend to deciding assignment validity.
The magistrate judge held a fairness hearing, found the settlement fair and reasonable, approved attorneys’ fees and expenses, and concluded (i) Lexclaim’s communications were misleading/incomplete, (ii) the 927 opt-outs violated the settlement’s prohibition on group opt-outs and lacked required identifying information, and (iii) VPPA claims are personal and not assignable under California law or federal common law; the court ordered the 927 opt-outs invalidated and directed curative notice and an opportunity to cure.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether magistrate (by consent) can adjudicate validity of opt-outs/assignments	Court (Plaintiffs) may decide validity of opt-outs and assignments to protect absent class members and enforce settlement procedures	Lexclaim: absent‑member consent required or district judge must decide because opt‑outs remove class absence	Magistrate has authority; Koby permits named‑plaintiff consent to magistrate jurisdiction and magistrate may determine opt‑out validity and assignment issues
Whether Lexclaim’s solicitation rendered the 927 opt-outs invalid (misleading/incomplete communications)	Lexclaim misled class members, omitted material facts (e.g., likely payout if they stayed in class, existence of court notice website/hearing, discovery risks), so opt-outs induced by those communications are invalid	Lexclaim: disclosures were adequate and not misleading; class members knowingly contracted	Opt-outs invalid: communications were materially misleading/incomplete and interfered with Rule 23 notice scheme; curative notice required
Whether group/mass opt-outs and defective forms violated the Settlement Agreement	Settlement prohibits group opt-outs and requires specific identifying info; Lexclaim submitted a mass package of uniform, deficient forms	Lexclaim: submissions reflect individual consents/assignments and are valid	927 opt-outs invalid for independent reasons: (1) mass/group submission prohibited; (2) forms lacked required address/phone needed to verify identity; (3) misleading solicitation
Whether VPPA claims are assignable and thus whether Lexclaim owned the assigned claims	Plaintiffs: VPPA claims are personal privacy tort–type claims (intrusion/public disclosure analogues) and non-assignable under both California law and federal common law	Lexclaim: Sprint and modern law support assignability of federal statutory claims; assignments were effective	Court: assignments invalid. Under both California law and federal common‑law principles tort/personal‑privacy claims (including VPPA analogues) are nonassignable; Sprint (contracts/collection) is distinguishable
Whether curative relief (notice and opportunity to re‑opt or claim) is permissible and consistent with First Amendment	Plaintiffs: curative notice is narrowly tailored to remedy deception and protect absent members' due process; permissible commercial‑speech regulation (Zauderer)	Lexclaim: ordering curative statements forces compelled, content‑based speech and burdens Lexclaim’s speech rights	Court approved curative notice limited to factual corrections and procedural instructions; Zauderer/Zauderer‑style commercial speech standards control and curative notice is permissible

Key Cases Cited

Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992) (judicial policy favors settlement of class actions)
Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (court must ensure class settlement is fair, reasonable, and adequate)
Briseno v. Henderson, 998 F.3d 1014 (9th Cir. 2021) (district court must guard against collusion in class settlements)
In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (lodestar and percentage methods for fee awards; cross‑check encouraged)
In re Mercury Interactive Corp., 618 F.3d 988 (9th Cir. 2010) (common‑fund/percentage‑of‑recovery method affirmed)
Koby v. ARS Nat’l Servs., Inc., 846 F.3d 1071 (9th Cir. 2017) (named plaintiffs’ consent to magistrate jurisdiction suffices in class actions)
Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626 (1985) (disclosure requirements imposing factual, uncontroversial information in commercial speech are permissible)
Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981) (district courts have broad authority to regulate class‑action communications but must balance restraints against free‑speech concerns)
Lugosi v. Universal Pictures, 25 Cal.3d 813 (Cal. 1979) (California law on assignability of privacy/right‑of‑publicity interests; distinguishes economic right of publicity from other privacy torts)
Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269 (2008) (assignee standing for collection/contract‑type claims; not dispositive for tort claims)
Pony v. County of Los Angeles, 433 F.3d 1138 (9th Cir. 2006) (California nonassignability rule for personal injury torts applied)
Lexington Ins. Co. v. S.H.R.M. Catering Servs., Inc., 567 F.3d 182 (5th Cir. 2009) (federal/common‑law recognition that personal injury claims generally are not assignable)