updated 04:02 pm EDT, Wed August 21, 2013
Court refuses suit, citing sufficient Netflix investor notifications
US District Court Judge Samuel Conti in San Francisco has ruled in Netflix's favor in a class action suit, and denied an effort by shareholders to force the media streaming company to pay damages. The shareholders and the Arkansas Teacher Retirement System alleged that Netflix didn't provide accurate information about the company in a series of quarterly earnings statements, leading up to and through the company's 2011 reorganization.
The company's stock took a beating amidst mass customer exodus surrounding news that the company was attempting to spin off its DVD rental business. Netflix claimed that it did not properly educate the public about rising costs in the industry. "Defendants made clear throughout the class period that the success of a streaming-focused business model was contingent on other factors, primarily the growth and retention of Netflix's subscriber base," ruled the judge.
"All of plaintiffs' allegations -- new and old -- depend on the tenuous theory that defendants withheld discrete and accurate financial information about streaming while also touting streaming's profitability," Conti wrote. "The court has not found this to be the case."