Subject:
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PayPal finally has to ante-up (long read)
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Newsgroups:
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lugnet.faq
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Date:
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Thu, 29 Jul 2004 11:49:30 GMT
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8634 times
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For those of you who have been PayPal members (between Oct 99 and Jan 04), this
applies to you - but you should have received this already. It does not appear
to be a hoax as links are on the PayPal site. I believe this realates to the
many stories I have heard in the past about PayPal messing with and or
restricting people's accounts with no good reason for their actions.
Read on...
IF YOU OPENED A PAYPAL ACCOUNT BETWEEN OCTOBER 1999 AND JANUARY 2004, YOU MAY BE
ENTITLED TO A PAYMENT FROM A CLASS ACTION SETTLEMENT.
PLEASE READ THIS NOTICE CAREFULLY.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
In re PayPal litigation
Case No. CV-02-01227-JF (PVT)
NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED SETTLEMENT
1. WHY DID I GET THIS NOTICE?
You have been sent this Notice because the records of PayPal, Inc. indicate you
are a current or former PayPal account holder. This means you may be eligible to
receive a payment from the proposed class action settlement in the lawsuit In re
PayPal Litigation, Case No. 02 1227 JF PVT, pending in the United States
District Court for the Northern District of California in San Jose. This Notice
provides a summary of the terms of the proposed settlement. It also explains the
lawsuit, your legal rights under the settlement, what benefits are available to
you under the settlement, and how to get them.
2. WHAT IS A CLASS ACTION?
In a class action, one or more people, called Class Representatives (in this
case Roberta Toher and Jeffrey Resnick), sue on behalf of people who have
similar claims. All of these people are members of the Class. One court resolves
the issues for all Class Members, except for those who exclude themselves from
the Class. United States District Judge Jeremy Fogel is in charge of this class
action.
3. WHAT IS THIS LAWSUIT ABOUT?
In early 2002, Plaintiffs Roberta Toher and Jeffrey Resnick filed separate
lawsuits against PayPal, Inc. These two cases were later consolidated into one
lawsuit in the United States District Court for the Northern District of
California, San Jose Division, entitled In re PayPal Litigation, Case No. CV 02
01227-JF (PVT). The lawsuit alleges that PayPal violated the federal Electronic
Fund Transfer Act ("EFTA"), 15 U.S.C. §§ 1693 et seq., including provisions
requiring PayPal to supply customers with information about dispute resolution
procedures and to follow certain procedures when investigating complaints of
unauthorized or incorrect electronic fund transfers. For example, the lawsuit
claims that PayPal did not provide account statements in the manner required by
the EFTA. The lawsuit further alleges that PayPal has placed inappropriate
restrictions or other limits on customers' accounts and engaged in other
improper practices. Based on these practices, the lawsuit asserts claims under
California state law for conversion, money had and received, negligence, and
violations of consumer protection statutes.
PayPal does not believe that it did anything wrong. In fact, PayPal disputes
that the EFTA, originally passed in 1978, applies to its business. PayPal denies
any and all liability for the claims alleged in the lawsuit. The Court did not
decide in favor of the Plaintiffs or PayPal. Instead, beginning in the fall of
2003, the parties began a series of settlement negotiation sessions mediated by
United States Magistrate Judge Edward Infante. Eventually, in November 2003,
both sides agreed to a settlement in principle. By settling their claims, both
parties avoided the uncertainty and cost of a trial. The settlement provides
money and other benefits to the Class. On June 11, 2004, the parties entered
into a formal, written Settlement Agreement, which is on file with the Court and
available on the Internet at https://www.paypal.com/settlement/. By entering
into the Settlement Agreement, PayPal is not admitting any wrongdoing. PayPal
continues to believe that it did not do anything wrong. The Representative
Plaintiffs and the attorneys appointed by the Court to represent the Class
believe that the settlement is fair to Class Members. By this notice, the Court
is not expressing any view on the merits of the lawsuit.
4. HOW DO I KNOW IF I AM PART OF THE SETTLEMENT?
On July 12, 2004, Judge Fogel entered an order granting preliminary approval of
the settlement and certifying the following class for purposes of the
settlement: All Persons who opened a PayPal account during the period from
October 1, 1999 through January 31, 2004. Excluded from the class are any
judicial officer to whom the lawsuit is assigned; PayPal and any of its
affiliates; any current or former employee, officer, or director of PayPal;
anyone who resides in Austria, Belgium, Denmark, Germany, Greece, Finland,
France, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, The Netherlands, or
United Kingdom; and all persons who timely and validly request exclusion from
the class pursuant to this notice.
Thus, if you opened a PayPal account between October 1, 1999 and January 31,
2004, and are not one of the excluded persons listed above, you are a member of
the class.
5. WHO REPRESENTS ME IN THIS CASE?
To represent the class, the Court has appointed Plaintiffs Roberta Toher and
Jeffrey Resnick as Representative Plaintiffs and their counsel of record as
Class Counsel. The Court has also appointed the following attorneys and law
firms as Co-Lead Counsel:
A. J. De Bartolomeo
Girard Gibbs & De Bartolomeo LLP
601 California Street, Suite 1400
San Francisco, California 94108
Robert C. Finkel
Wolf Popper LLP
845 Third Avenue
New York, New York 10022
6. WHAT DOES THE SETTLEMENT PROVIDE?
A. Injunctive Relief
The settlement requires that PayPal consent to the entry of an order, called an
injunction, that mandates various changes to PayPal's business practices. PayPal
has already implemented these changes. The injunction includes PayPal's
agreement to comply with certain notice and error resolution procedures of the
EFTA, and to follow certain procedures for limiting accounts and responding to
and returning funds to customers whose accounts have been limited. A copy of
this injunction can be found as Exhibit D to the Settlement Agreement, entitled
"Form of Injunctive Order."
B. Monetary Relief
Under the settlement, PayPal will pay $9.25 million into a settlement fund, to
be held in an interest-bearing account. The fund will be used (1) to make
payments to class members who submit valid claims before the claims deadline;
(2) to pay certain costs of giving notice to the Class and of settlement
administration, as approved by the Court; and (3) to pay attorneys' fees and
expenses to Class Counsel in the amount awarded by the Court. Class Counsel have
proposed that, after deduction of notice and administrative costs and Class
Counsel's attorneys' fees and expenses, the balance of the fund ("Net Settlement
Fund") be applied in accordance with a written plan of allocation. (The
following explanation is qualified in its entirety by reference to the Plan of
Allocation attached to the Settlement Agreement as Exhibit C, a copy of which is
on file with the Court and available on the Internet at
https://www.paypal.com/settlement/.)
1. Certain Definitions
Certain capitalized words are used in this part of the Notice to describe the
way in which the Net Settlement Fund will be allocated. These capitalized words
have the following meanings:
(a) "Released Persons" means PayPal and its past and present partners,
affiliates, predecessors, successors, assigns, parents, subsidiaries, officers,
directors, attorneys, and employees.
(b) "Fund Claimants" are class members who submit timely, valid claims in
accordance with the procedures described in this notice.
(c) "Dispute Resolution Claimants" are Fund Claimants who contend that, prior to
February 1, 2004, they:
(i) experienced or reported to PayPal an unauthorized or incorrect electronic
transfer to or from their PayPal account including, without limitation,
electronic transfers initiated by (a) the Fund Claimant; (b) PayPal in
connection with, among other things, chargebacks, refunds, buyer complaints,
PayPal's Seller Protection Policy, Buyer Complaint Process and/or Buyer
Protection Policy; or (c) any third party;
(ii) had access to their PayPal account improperly, incorrectly or erroneously
limited or restricted, in whole or in part;
(iii) made a request for information in connection with PayPal's restriction or
limitation of the Fund Claimant's PayPal account or regarding an incorrect or
unauthorized electronic transfer to which PayPal did not respond at all or did
not respond to the Fund Claimant's satisfaction.
(d) "Statutory Damage Fund Claimants" are all Fund Claimants who are not Dispute
Resolution Claimants.
2. Statutory Damage Fund Claimants
The plan of allocation designates $1 million of the Net Settlement Fund to a
"Statutory Damage Fund," to be distributed equally among all Fund Claimants who
are not Dispute Resolution Claimants. This means that if you are a member of the
Class and do not fall within the definition of a "Dispute Resolution Claimant,"
as set out above, you can make a claim for a payment from the Statutory Damage
Fund. The Statutory Damage Fund provides compensation for potential statutory
damages under the Electronic Fund Transfer Act ("EFTA"), 15 U.S.C. §§ 1693 et
seq. Statutory damages under the EFTA are limited by law to no more than
$500,000 for any class of individuals claiming "the same failure to comply."
Plaintiffs' counsel contended in the litigation and for purposes of settlement
that PayPal was potentially liable for multiple failures to comply, a position
PayPal vigorously opposed.
The Statutory Damage Fund Claim Form requires you to provide certain identifying
information and sign a statement under penalty of perjury authenticating your
claim, which may be subject to verification by PayPal's records. To make a claim
for payment from this fund, please complete and submit the Statutory Damage Fund
Claim Form available on the Internet at https://www.paypal.com/settlement/ in
accordance with the instructions on the form.
3. Dispute Resolution Claimants
The balance of the Net Settlement Fund will be allocated for distribution to
Dispute Resolution Claimants. If you fall within the definition of a "Dispute
Resolution Claimant," as set out above, you have the right to make a Dispute
Resolution Claim. You can choose to submit either the Short Claim Form or the
Long Claim Form available on the Internet at https://www.paypal.com/settlement/.
If the Court awards attorneys' fees and costs in the amount requested, Class
Counsel estimate that there will be approximately $4.3 million to pay the claims
of Dispute Resolution Claimants. Half of the money allocated to Dispute
Resolution Claimants will be allocated to pay Short Form Claimants (the "Short
Form Fund"). The other half will be allocated to pay Long Form Claimants (the
"Long Form Fund").
a. Short Form Claimants
The Short Claim Form requires you to provide certain identifying information and
sign a statement under penalty of perjury, which may be verified using PayPal's
records, that you experienced an unauthorized or incorrect electronic transfer
or an account limitation or denial of access to your account. If you make a
timely, valid claim using the Short Claim Form, you will receive a payment of
$50, unless the amount needed to pay all of the Short Form claims exceeds the
Short Form Fund. In that case, the Short Form Fund will be divided equally among
all Short Form Claimants. If the amount needed to pay all of the Short Form
claims is less than the amount of the Short Form Fund, the money left over will
be added to the Long Form Fund.
b. Long Form Claimants
The Long Claim Form requires you to provide certain identifying information;
give the details of the account restriction(s) and/or unauthorized electronic
fund transfer(s) you experienced; state the amount of your claim, and sign a
statement, under penalty of perjury, which may be subject to verification by
PayPal's records, that you actually suffered the claimed damages. You should
also provide any documentation you have that will support your claim, as
explained in more detail on the Long Form.
If you make a timely, valid claim using the Long Claim Form, an independent,
court-approved claims administrator will evaluate your claim and determine the
amount you should receive. In making this determination, the claims
administrator will take into account the amount of damages you claim; the nature
of your complaint; the quality of the supporting documentation you provide; your
recoverable damages; the probability that you would be successful on your
complaint; and such other factors that the claims administrator considers
relevant. If the amount needed to pay all of the Long Form claims is less than
the amount of the Long Form Fund, the money left over will be added to the Short
Form Fund.
c. Balance after payment of Long Form and Short Form Claimants
If there are sufficient funds to pay all Short Form and Long Form Claimants in
full in accordance with the written plan of allocation, any remaining funds will
be divided equally among all Dispute Resolution Claimants to supplement their
recoveries.
7. HOW DO I MAKE A CLAIM AND GET A PAYMENT?
To make a claim for payment, please complete one of the claim forms (Statutory
Damage Claim Form, Short Claim Form, or Long Claim Form) available on the
Internet at https://www.paypal.com/settlement/. To make a valid claim, you will
need to (1) fill out the claim form electronically and (2) print the signature
page of your claim form, sign it and return it by mail to the address provided
on the claim form. You must complete the claims procedure no later than October
23, 2004. Your payment will be transferred electronically to your PayPal
account. If you do not have a current, unrestricted PayPal account or you
indicate on the claim form that you prefer to receive a check, payment will be
made in the form of a check, sent by first class mail to the address provided on
the claim form. If you are paid by check, a $1.00 charge will be deducted from
your payment to cover the cost of issuing and mailing the check. The claims
administrator will not issue checks for less than $1.00. Such amounts will
instead be reallocated to those claimants who are entitled to receive
distributions.
8. WHAT AM I GIVING UP IF I PARTICIPATE IN THE SETTLEMENT?
If you do not exclude yourself from the class and the settlement is granted
final approval, the judgment entered upon approval of the settlement will
dismiss the lawsuit with prejudice, and will release any and all claims,
demands, rights, liabilities, and causes of action of every nature and
description whatsoever, known or unknown, matured or unmatured, at law or in
equity, existing under federal or state law, that were or could have been
asserted in the Litigation against the Released Persons, including without
limitation, claims under the Electronic Fund Transfer Act, California Business
and Professions Code §§ 17200 et seq.; the California Consumers Legal Remedies
Act, Cal. Civ. Code §§ 1750 et seq.; and for PayPal's alleged conversion, breach
of the User Agreement or other contract, money had and received, unjust
enrichment, and negligence under California law or any other state or federal
law arising out of, among other things, PayPal's restriction or limitation of
accounts; PayPal's dispute resolution policies, practices and procedures;
PayPal's debit of accounts following the receipt of chargebacks, buyer
complaints, reports of unauthorized access or in connection with its Seller
Protection Policy, Buyer Complaint Process or Buyer Protection Policy; PayPal's
alleged conversion of funds; and PayPal's compliance with the Electronic Fund
Transfer Act, 15 U.S.C. §§ 1693 et seq., or any similar legislation arising
under the laws of any state. You will be permanently barred from bringing any
such claims that arose prior to February 1, 2004. With regard to accounts that
were limited prior to February 1, 2004, however, you will not be releasing
claims to recover any balance that remained in the account 180 days after the
account was initially limited.
In summary, if you do not exclude yourself, you will not be able to sue,
continue to sue, or be part of another lawsuit against PayPal relating to the
legal issues in this case. You will be bound by all proceedings, orders, and
judgments entered in connection with the settlement, whether favorable or
unfavorable, and will be represented by the Representative Plaintiffs and Class
Counsel for purposes of the settlement. If you do not exclude yourself from the
class, and the settlement is granted final approval, your claims against PayPal
and its affiliates will be released as described above. If you are a class
member, you may, if you wish, appear in this lawsuit through your own attorney
at your own expense. You need not do so to participate in the settlement,
however.
9. WHAT IF I WANT TO EXCLUDE MYSELF (OPT-OUT) FROM THE SETTLEMENT?
If you do not want to remain a member of the class and participate in the
settlement, then you must mail or deliver (email is not considered adequate),
such that it is RECEIVED on or before September 7, 2004, (1) an original
written, signed request for exclusion to Co-Lead Counsel at the following
address:
Co Lead Counsel:
PayPal Class Action Settlement
A. J. De Bartolomeo
Girard Gibbs & De Bartolomeo LLP
601 California Street, Suite 1400
San Francisco, California 94108
and (2) a copy of the written signed request to PayPal's counsel at the
following address:
PayPal's counsel:
PayPal Class Action Settlement
Morgan Lewis & Bockius LLP
One Market
Spear Street Tower
San Francisco, California 94105
This request for exclusion must contain your name and address; be signed by you;
and include the reference "In re PayPal Litigation, Case No. CV-02-1227-JF
(PVT)."
If you exclude yourself from the class, you will not participate in the
settlement and cannot receive any payment from the settlement. Your claims will
not be released.
10. HOW WILL THE LAWYERS FOR THE CLASS BE PAID?
From the inception of the litigation in early 2002 to the present, Class Counsel
have not received any payment for their services in prosecuting the case, nor
have they been reimbursed for any out-of-pocket expenses. If the Court approves
the proposed settlement, Class Counsel will make a motion to the Court for an
award of attorneys' fees of up to $3,332,500 and reimbursement of expenses of up
to $135,000, to be paid from the $9.25 million settlement fund. Class Counsel
will also seek reimbursement from the settlement fund on behalf of certain of
the named plaintiffs in the litigation for reimbursement of their expenses
related to their service as class representatives in the litigation, in an
aggregate amount not to exceed $15,000. The motion will be heard at the
settlement hearing described below in Section 11.
Class Counsel's motion for an award of attorneys' fees and reimbursement of
expenses is based on various factors that include the benefits obtained for the
class through litigation. These benefits include the $9.25 million cash
settlement and PayPal's agreement to the injunctive relief requirements. In
addition, certain changes to PayPal's business practices are attributable in
part to this litigation, including PayPal's decision to undertake to return to
its customers approximately $5.1 million in those accounts to which access was
limited for 180 days or more; modifications to PayPal's arbitration provision in
its User Agreement and its replacement with a clause that limits PayPal's
ability to compel arbitration where the total amount of the award sought is
$10,000 or greater; and various other changes in PayPal's business practices
during the pendency of the litigation.
Class Counsel submitted their proposed request for attorneys' fees to the
Magistrate Judge who had previously presided over discovery and settlement
discussions. Class Counsel's request for attorneys' fees is equal to the amount
recommended by the Magistrate Judge.
11. WHEN AND HOW WILL THE COURT DECIDE WHETHER TO APPROVE THE SETTLEMENT?
The Court will hold a hearing on September 24, 2004, at 9:00 a.m., before the
Honorable Jeremy Fogel, United States District Judge, United States District
Court for the Northern District of California, Courtroom 3, 5th Floor, 280 South
First Street, San Jose, California 95113. The purpose of the hearing will be to
determine (a) whether the proposed settlement should be approved as fair,
reasonable, and adequate; (b) whether the application by Class Counsel for an
award of attorneys' fees and expenses should be granted; and (c) whether the
lawsuit and class members' claims should be dismissed with prejudice pursuant to
the settlement. The Court reserves the right to adjourn or continue the hearing
without further notice to the class.
You may attend the hearing if you wish, but are not required to do so to
participate in the settlement.
If the settlement is not approved by the Court, the lawsuit will proceed. If
there are further actions taken in the case that affect your rights, you will
receive notice as determined by the Court.
12. CAN I COMMENT ON THE SETTLEMENT?
If you decide to remain in the class, and you wish to comment in support of or
in opposition to the settlement or Class Counsel's motion for attorneys' fees
and expenses, you may do so by mailing or delivering your written (non-email)
comments, such that they are RECEIVED on or before September 3, 2004, as
follows: (1) the original must be sent to the Court at the following address:
Clerk of the Court
United States District Court for the Northern District of California
280 South First Street
San Jose, California 95113
and (2) copies must be sent to Co Lead Counsel and PayPal's counsel at the
addresses listed in Section 9, above.
Your written comments must contain your name and address; be signed by you; and
include the reference In re PayPal Litigation, Case No. CV-02-1227-JF (PVT). If
you wish to appear and present your comments orally at the hearing, your written
comments must contain a notice that you intend to appear and be heard, a
statement of the position you intend to present at the hearing, and any
supporting arguments.
If you do not comply with the foregoing procedures and deadlines for submitting
written comments or appearing at the hearing, you will not be entitled to be
heard at the hearing; contest or appeal from approval of the settlement or any
award of attorneys' fees or expenses; or contest or appeal from any other orders
or judgments of the Court entered in connection with the settlement.
13. HOW CAN I GET MORE INFORMATION ABOUT THE SETTLEMENT?
You can get more information by writing Plaintiffs' Co-Lead Counsel
electronically or by first class mail at:
paypalsettlement@settlement4onlinepayments.com
Girard Gibbs & De Bartolomeo LLP
601 California Street, Suite 1400
San Francisco, California 94108
Wolf Popper LLP
845 Third Avenue
New York, NY 10022
This notice is a summary and does not describe all details of the settlement.
For full details of the matters discussed in this notice, you may wish to review
the Settlement Agreement dated June 11, 2004 and on file with the Court or visit
https://www.paypal.com/settlement/. Complete copies of the Settlement Agreement
and all other pleadings and papers filed in the lawsuit are also available for
inspection and copying during regular business hours, at the Office of the Clerk
of the Court, United States District Court for the Northern District of
California, 280 South First Street, San Jose, California 95113.
PLEASE DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE.
DATED: July 12, 2004
BY ORDER OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
CALIFORNIA
This PayPal notification was sent to dastolfo1@cogeco.ca. To modify your
notification preferences, go to https://www.paypal.com/PREFS-NOTI and log in to
your account. PayPal will not sell or rent any of your personally identifiable
information to third parties. For more information about the security of your
information, read our Privacy Policy at https://www.paypal.com/privacy. Replies
to this email will not be processed. Copyright© 2004 PayPal, Inc. All rights
reserved. Designated trademarks and brands are the property of their respective
owners. PayPal is located at 2211 N. First St., San Jose, CA 95131.
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