Berkson v. Gogo LLC

147 F. Supp. 3d 123, 2015 WL 7960042
District Court, E.D. New York·Decided December 4, 2015·No. 14-CV-1199·Published·Cited by 7 cases

Opinion

MEMORANDUM AND ORDERS

Jack B. Weinstein, Senior United States District Judge:

TABLE OF CONTENTS

I.Introduction ... 125

II. Facts ... 126

A. Prior Practice of Defendants ... 126

B. Present Practice of Defendants ... 127

III. Procedural History .., 128

IV. Proposed Settlement ... 129

V. Law ... 130

VI. Preliminary approval is appropriate ... 131

A. Generally, settlements that can be characterized as “coupon” settlements are disfavored .,. 131

B. The special nature of the class in this case and social utility that has already been achieved make the proposed coupon settlement appropriate ... 133

C. Fee Award ... 133

VII. Conclusion ... 134

Appendix 1: Settlement Agreement and Release, Claim Form, Proposed Preliminary and Final Approval Orders, and Notices to Class Members ..; 135

Appendix 2: Second Amended Class Action Complaint ... 172

Appendix 3: Signed Order Granting Motion for Preliminary Approval of Class Action, Certifying the Class and Subclasses, Directing Dissemination of Class Notice, Setting Hearing on Fairness of Settlement, and Setting Dates ... 184

I. Introduction

This putative class action involves the purchase of internet service connections (“Wi-Fi”) on air flights.

Denied was defendants’ motion to transfer venue, compel arbitration and dismiss; [126]*126found inadequate was notice, given through a computer hyperlink, of waiver of normal court rights. Berkson v. Gogo LLC, 97 F.Supp.3d 359, 403-05 (E.D.N.Y.2015) (“Berkson I”). That decision and a contrary district court decision, Nicosia v. Amazon.com, 84 F.Supp.3d 142 (E.D.N.Y.2015), have been appealed. Notice of Appeal, Apr. 28, 2015, ECF No. 61; Notice of Appeal, Nicosia v. Amazon.com, No. 14-CV-4513 (E.D.N.Y. Feb. 13, 2015). This memorandum and order does not cover those issues; it was not raised by . the pleadings. Cf. Nat’l Super Spuds, Inc. v. N.Y. Mercantile Exch., 660 F.2d 9, 17-19 (2d Cir.1981) (“claims ,.. which were not within the description of claims assertable by the class” are not part of settlement).

The parties have now agreed on a settlement. Preliminary approval of the proposed settlement appears to be appropriate.

II. Facts

A detailed factual background is in the court’s April 8, 2015 memorandum and order. Berkson I, 97 F.Supp.3d at 368-76. It is deemed incorporated in this memorandum and order.

Gogo is the dominant provider of Wi-Fi access on domestic airlines. Its website advertised the cost of a monthly Wi-Fi subscription and the cost of a single day pass. Monthly access cost approximately $40; a day pass went for about $10.

Plaintiffs allege that, when potential customers registered for the monthly service, no notice was given about a recurring monthly charge. Gogo, it is claimed, obtained no signature or affirmative authorization to charge plaintiffs for recurring fees if they failed to cancel the service by telephone. Nor did Gogo, it is claimed, send any communication to plaintiffs on a monthly basis, as is customary, to notify them of continuing new charges if the service was not cancelled by the subscriber. After the month-long period from the date of original sign-up ended, Gogo continued to bill each of plaintiffs’ credit cards monthly.

A. Prior Practice of Defendants

In August 2011, when named plaintiff Welsh claims to have purchased Gogo’s inflight Wi-Fi, a potential user of the service was not required by Gogo to affirmatively assent to the website’s “Terms of Use” when creating an account. An image of the sign-up page is set out below:

[127]*127[[Image here]]

Id. at 372 (enhancements added).

If a user clicked on the underlined phrase “Terms of Use,” a hyperlink would have been activated, connecting him to a separate screen where, after scrolling down, he or she would have found detailed choice of law and venue notice. In September 2012, when plaintiff Berkson claims to have purchased Gogo’s Wi-Fi service, there was no arbitration provision in the “terms of use.” It was insértéd in December 2012. Id. at 376.

B. Present Practice of Defendants

After the case was brought, defendants’ practice was changed to alert the customer of continuing costs. The new interface on defendants’ website, displays an easy-to-read matrix that clearly identifies which of its products automatically renews each month, and which do not. The new interface is a significant and meaningful improvement in warning consumers of their financial obligations to defendants. See infra Parts VI. A and B; Expert Report of Dr. Michael A. Kamins, Nov. 10, 2015, ECF No. 93-1 (“Kamins Report”), at ¶ 9. The present sign-up page is:,

[128]*128[[Image here]]

Kamins Report at App’x C (enhancements added).

There has not been any change to defendants’ website with respect to the “terms of use” hyperlink.

III. Procedural History

Named plaintiff Adam Berkson filed a complaint on February 25, 2014.against Gogo LLC and Gogo Inc. (collectively, “Gogo,” “the company,” or “defendants”). Class Action Compl., Feb. 25, 2014, ECF No. 1. On behalf of a New York sub-class, he alleged violation of New York General Business Law § 349, and, on behalf of a nationwide class, he claimed breach of the implied covenant of good faith and fair dealing, and violation of various consumer protection statutes. Id. A cause of action on behalf of the nationwide class, unjust enrichment/was alleged in the alternative. Id. On the same day, a motion for class certification-was filed. Pl.’s Mot. for Class Certification, Feb. 25, 2014, ECF No. 5.

On April 4, 2014, defendants filed a motion to compel arbitration or transfer the action to the Northern District of Illinois, or,' alternatively, to dismiss the action for lack of standing or failure to state a claim. Notice of Mot., Apr. 4, 2014, ECF No/ 9 (“Defs,’ Mot. to Dismiss”).

Plaintiff Berkson, joined by plaintiff Welsh, filed an amended class action complaint adding ¡three new causes of action for purported violations of several California statutes on April 24, 2014. Am. Class Action Compl., Apr. 24, 2014, ECF No. 17.

[129]*129On May 12, 2014, defendants again filed a motion to compel arbitration or transfer the action to the Northern District of Illinois, or, alternatively, to dismiss the amended complaint for lack of standing or failure to state a claim. Defs.’ Mots, to Dismiss, May 12, 2014, ECF No.'21.' '"

Oral argument was heard on October 15, 2014. See Hr’g Tr., Oct. 15, 2014. Following a period for additional discovery, the parties submitted supplemental, briefing. Order, Feb. 23, 2015, ECF No. 53. On April 8, 2015, the court denied defendants’ motions. See Berkson I.

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Berkson v. Gogo LLC, 147 F. Supp. 3d 123, 2015 WL 7960042 (E.D.N.Y. 2015).

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