Case: 4:15-md-02669-JAR Doc. #: 354 Filed: 07/21/17 Page: 1 of 14 PageID #: 5915

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

IN RE: ASHLEY MADISON CUSTOMER
DATA SECURITY BREACH LITIGATION
This Document Relates to:
ALL CASES

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MDL No. 2669
Case No. 4:15-MD-02669-JAR

ORDER GRANTING PRELIMINARY APPROVAL OF SETTLEMENT, DIRECTING
NOTICE TO THE CLASS, SCHEDULING A FINAL APPROVAL HEARING, AND
CERTIFYING A SETTLEMENT CLASS
I. INTRODUCTION
Plaintiffs Brian Farr, Steven Coward, Marc Benefield, Nhung Truong, Gustavo Alfaro,
David Yagel, John Hiles III, Matthew Lisuzzo, Britt Garrett, Christopher Russell, David Miller,
James Mike Shows, Todd Witengier, Byron Goetting, Marvin Cabiness, Keith Macomber, Paul
Jack, and Anthony Imbarrato, individually and on behalf of the Settlement Class (the “Class
Representatives” or “Plaintiffs”), and Defendants Ruby Corp. (previously named Avid Life
Media Inc.) and Ruby Life Inc. (previously named Avid Dating Life Inc.) (together, “Avid), and
Noel Biderman (altogether, “Defendants”) have reached a proposed settlement, as set forth in the
parties’ Stipulation of Settlement (the “Stipulation” or the “Settlement”). Plaintiffs, on behalf of
themselves and the Settlement Class (as hereinafter defined), have applied to the Court pursuant
to Rule 23(e) of the Federal Rules of Civil Procedure for an order: (1) granting preliminary
approval of the Settlement in the above-captioned litigation (the “Action”) in accordance with
the Stipulation; (2) dismissing of the Action with prejudice as against all of the Released Parties
(as defined in the Stipulation), upon the terms and conditions set forth in the Stipulation; (3)
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certifying of the Action as a class action for settlement purposes only; (4) appointing the
Representative Plaintiffs as Class Plaintiffs and the law firms of The Driscoll Firm, P.C., 211 N.
Broadway, 40th Floor, St. Louis, Missouri 63102; Heninger Garrison Davis, LLC, 2224 1st
Avenue North, Birmingham, Alabama 35203 and Dowd & Dowd, P.C., 211 North Broadway,
Suite 4050, St. Louis, Missouri 63102 as Class Settlement Counsel; (5) scheduling a Final
Approval hearing and establishing all related deadlines; (6) directing that notice be provided to
the Class in accordance with the Notice Program; and (7) preliminarily enjoining all Class
Members who have not opted out from pursuing, as class members, actions based on or relating
to the claims to be released by the Class Agreement; and further enjoining all persons from
pursuing a lawsuit in any jurisdiction involving Class Members who have not timely excluded
themselves that is based on or relating to the claims to be released by the Class Agreement.
On July 20, 2015, Avid announced that it had been the victim of an intrusion of its
computer network by an unauthorized person or persons who subsequently publicly released
personal and account information of Avid customers. Following the announcement, multiple
putative class action lawsuits were filed against Avid related to its alleged inadequate data
security practices and to alleged misrepresentations regarding Ashley Madison, an online data
website owned and operated by Avid Dating Life since 2007. Two of these lawsuits also named
Noel Biderman, former Chief Executive Officer of Avid Life Media, as a defendant.
Since December 9, 2015, the United States Judicial Panel on Multidistrict Litigation
(“JPML”) has transferred twenty-four Data Breach Cases to the United States District Court for
the Eastern District of Missouri (the “Court”) for coordinated or consolidated pretrial
proceedings under docket number 4:15-md-02669-JAR. The multi-district litigation has been
assigned to Judge John A. Ross. On January 7, 2016, the Court ordered Plaintiffs to file a

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consolidated class action complaint (ECF No. 75). On June 3, 2016, Plaintiffs filed a
Consolidated Class Action Complaint (ECF No. 180), which they amended on June 24, 2016
(ECF No. 186). On July 1, 2016, the Court issued an order for limited discovery and briefing
related to anticipated motions to compel arbitration by Defendants (ECF No. 189.).
On August 29, 2016, Defendants moved to dismiss or stay and to compel arbitration
based on an arbitration clause and class action waiver contained in the Ashley Madison Terms
and Conditions (“Arbitration Motion”). Plaintiffs opposed Defendants’ Arbitration Motions,
which remain pending before the Court. While the Arbitration Motion was pending, the parties
began settlement discussions. (Settlement at 2-3).
This matter has now come before the Court pursuant to Plaintiffs’ Motion for Preliminary
Approval of Class Action Settlement and for Certification of a Settlement Class (the “Motion”).
The Court finds that it has jurisdiction over the Action, the Parties, and all Settlement
Class Members for purposes of settlement under 28 U.S.C. § 1331 and 28 U.S.C. § 1332(d).
The Court held a Preliminary Approval Hearing on July 21, 2017, and has considered all
of the presentations and submissions related to the Motion and is otherwise fully advised of all
relevant facts in connection therewith, and has found good cause for entry of the following
Order.
IT IS HEREBY ORDERED AS FOLLOWS:
(1)

This Order (the “Preliminary Approval Order”) hereby incorporates by reference

the definitions in the Stipulation, and all terms used herein shall have the same meanings as set
for the in the Stipulation;
(2)

The Court, having fully reviewed Plaintiffs’ unopposed Motion, the supporting

Memorandum and Declarations filed in support thereof, determines that the Settlement appears

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to be the product of thorough, serious, informed, and non-collusive negotiations between
experienced attorneys familiar with the legal and factual issues of this case; has no obvious
deficiencies; does not improperly grant preferential treatment to the Settlement Class
Representatives or segments of the Class; and appears to be fair, reasonable, and adequate within
the meaning of Rule 23 of the Federal Rules of Civil Procedure, such that preliminary approval
of the Settlement should be granted, notice of the Settlement should be directed to the Settlement
Class Members, and a Final Approval Hearing should be set; and
(3)

The Court enjoins all members of the Settlement Class from filing, commencing,

prosecuting, continuing to prosecute, supporting, intervening in, or participating as plaintiffs,
claimants, or class members in the Related Actions or in any other lawsuit, or other proceeding
in any jurisdiction based on, relating to, or arising out of the claims, or the facts and
circumstances at issue, in this Action, the Related Actions, and/or the Released Claims unless
and until (i) they have been excluded from the Settlement by action of the Court, (ii) termination
of this Settlement, or (iii) the Judgment or Final Judgment becomes Final, whichever occurs
earliest..
Accordingly, the Motion is GRANTED.
II. THE SETTLEMENT CLASS
The Court hereby certifies, for settlement purposes only pursuant to Rules 23(a) and
(b)(3) of the Federal Rules of Civil Procedure, a Settlement Class defined as follows:
All residents of the United States of America who used Ashley Madison during the
Settlement Class Period (as defined in paragraph 2.32 of the Stipulation), including, but not
limited to, all persons whose Personal Information was compromised or released publicly as a
result of the Data Breach, who purchased the Paid Delete or Full Delete option on Ashley

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Madison on or before July 20, 2015, or who purchased credits or account upgrades on Ashley
Madison or otherwise paid to use Ashley Madison.
The following entities and individuals are excluded from the Class:
A.

Defendants’ officers, directors and employees;

B.

Judicial officers and their immediate family members and associated court

staff assigned to this case; and
C.

All those otherwise in the Class who or which timely and properly exclude

themselves from the Class as provided in the Agreement.
III. THE SETTLEMENT FUND
The Settlement creates a non-reversionary settlement fund of $11.2 million subject to the
Court entering a Final Approval Order. Defendants shall cause to be deposited an amount equal
to five hundred thousand and no cents ($500,000) (the “Notice Reserve”) into the Escrow
Account within ten (10) business days of entry of this Preliminary Approval Order. No later than
fifteen (15) calendar days after the Final Approval Order, Avid shall deposit an amount equal to
ten million, seven hundred thousand dollars and no cents ($10,700,000) into the Escrow
Account.
After deductions for any attorneys’ fees and costs that Class Counsel may apply for and
the Court may award, the Class Representative Service Awards, any Notice and Administration
Costs, the cost of the Claims Review Process, and other Court-approved costs, expenses, or
amounts, the balance of the non-reversionary $11.2 million settlement fund will be distributed to
Settlement Class Members as set out in in the proposed Claims Process set forth in Paragraph 8
of the Stipulation.

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To summarize that process, a Settlement Administrator, working under the supervision of
Class Counsel and subject to the jurisdiction of this Court, shall administer a process of
receiving, reviewing, and approving or denying Settlement Class Member claims.
First, each Settlement Class Member will be reimbursed from the Net Settlement Fund
for out-of-pocket losses stemming from the Class Member’s use of AshleyMadison.com. Such
out-of-pocket losses shall consist of three components: (1) purchasing Full Delete; (2)
purchasing or using credits to communicate with Engagers; and (3) reimbursing losses caused by
the Data Breach.
Second, after Settlement Class Members are compensated for their out-of-pocket losses,
the balance of the Net Settlement Fund will be allocated on a pro rata basis defined by reference
to the number of Settlement Class Members who submit a Valid Claim Form and Reasonable
Documentation demonstrating that his or her Personal Information was released publicly as a
result of the Data Breach. In the event that this pro rata distribution of funds to Settlement Class
Members that only have a claim for public release of his or her information under Section 8.2.2
makes distribution economically impractical, the remaining Net Settlement Fund shall not be
distributed to Class Members making these non-out-of-pocket loss claims, but rather will be
donated to one or more Internal Revenue Code Section 501(c)(3) charitable digital privacy or
other similar organizations chosen jointly by Class Counsel (on behalf of the Settlement Class)
and Avid (a “Charity”). If the Net Settlement Fund is not exhausted by compensating for out-ofpocket losses and those whose Personal Information was released publicly, then any remainder
will be donated to a Charity subject to approval of the Court.
Defendants do not admit wrongdoing in the Settlement and deny the material allegations
and claims asserted in the Consolidated Class Action Complaint. In exchange for the benefits

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conferred on Settlement Class Members by the Settlement, Settlement Class Members who do
not opt out agree to release all claims that could have been asserted, or that arise out of the same
transactions or occurrences as the claims against Defendants that were or could have been
asserted in this Action, commensurate with the res judicata effect at the conclusion of the
litigation, as described in the Settlement.
IV. PRELIMINARY FINDINGS
The Court preliminarily finds that this Settlement complies with this Court’s standard for
preliminary approval of class action settlements. See Schoenbaum v. E.I. Dupont De Nemours &
Co., No. 4:05CV01108ERW, 2009 WL 4782082 (E.D. Mo. Dec. 8, 2009). Furthermore, the
Court finds, on a preliminary basis, that the Settlement appears to be within the range of
reasonableness of a settlement which could ultimately be given final approval by this Court, and
that the Settlement is fair and reasonable to Settlement Class Members when balanced against
the probable outcome of further litigation, liability and damages issues, and potential appeals of
rulings, in particular given the Parties’ dispute over the mandatory arbitration and class action
waiver provisions contained in Defendants’ Customer Account Agreements.
The Court preliminarily finds, for purposes of settlement only, that the proposed
Settlement Class as defined above meets the numerosity requirement of Rule 23(a)(1) such that
joinder would be impractical; that there are questions of law and fact common to the Settlement
Class as required by Rule 23(a)(2); that these common questions predominate over individual
questions as required by Rule 23(b)(3); that the claims of the proposed Settlement Class
Representatives are typical of the claims of the Class under Rule 23(a)(3).
In addition, the Court preliminarily finds that the Class Counsel and Plaintiffs will fairly
and adequately represent the interests of the Class under Rule 23(a)(4), have done so, and are

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adequate under Rule 23(g)(1) and (4), and, therefore, hereby appoints them as Class Counsel and
class representatives, under Rules 23(c)(1)(B) and 23(g) to implement and complete the
Settlement Approval Process.
V. NOTICE TO CLASS MEMBERS
Under Rule 23(c)(2), the Court approves, as to content and format, the Long Form Notice
(Ex. C) and the Summary Publication Notice (Ex. D), attached to the Stipulation of Settlement
(collectively, “Notice”). The Court further finds that the method of disseminating Notice, as set
forth in the Motion, the Declaration of Steven Weisbrot, Esq. On Adequacy of Notice Program,
dated July 13, 2017, and the Parties’ Stipulation—including an extensive and targeted
publication campaign composed of both consumer magazine publications in People and Sports
Illustrated, as well as serving 11,484,000 highly targeted digital banner ads to reach the
prospective class members that will deliver approximately 75.3% reach with an average
frequency of 3.04 —is the best method of notice practicable under the circumstances and
satisfies all requirements provided in Rule 23(c)(2)(B) and all Constitutional requirements
including those of due process.
The Court further finds that the Notice fully satisfies Rule 23 of the Federal Rules of
Civil Procedure and the requirements of due process; provided, that the Parties, by agreement,
may revise the Notice, the Claim Form, and other exhibits to the Stipulation, in ways that are not
material or ways that are appropriate to update those documents for purposes of accuracy.
Specifically, the Court further finds that the Notice adequately advises the Settlement Class
about:
A.

The class action;

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B.

The terms of the proposed Settlement, the benefits available to each

Settlement Class Member, and proposed fees and costs to Class Counsel;
C.

Each Settlement Class Member’s right to object or opt out of the

settlement, and the timing and procedures for doing so;
D.

Preliminary court approval of the proposed Settlement; and

E.

The date of the Final Approval Hearing as well as the rights of Settlement

Class Members to file documentation in support of or in opposition to and appear in
connection with said hearing.
Defendants shall also disclose to the Settlement Administrator information regarding
Settlement Class Members claiming to have been a part of the Data Breach during the Class
Period. The Settlement Administrator shall not provide this information to any Person other than
Class Counsel.

Class Counsel shall keep such information confidential and will use the

information only in connection with the administration of the Settlement. In addition, the
Settlement Administrator shall adopt data security measures reasonably calculated to protect that
information from disclosure.
The Settlement Administrator shall publish the Long Form Notice, the Summary
Publication Notice substantially in the form attached hereto as Exhibits C and D by no later than
15 days after the Preliminary Approval Order. The Court otherwise hereby directs that such
notice be disseminated in the manner set forth in the Settlement to Settlement Class Members
under Rule 23(e)(1).
VI. SETTLEMENT ADMINISTRATION
The Court finds that the costs associated with the notice plan described above and the
estimated costs of administering the Settlement are fair and reasonable.

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The Court approves Angeion Group to act as the class action administrator (“Settlement
Administrator”).
VII. SCHEDULE AND PROCEDURES
The Court orders the following schedule and procedures for disseminating Notice, filing
claims, requesting exclusion from the class, filing objections to the Settlement, and filing the
motion for final approval:

DATE

EVENT

July 21, 2017

Preliminary Approval Hearing

10 days after Preliminary Approval Order

Defendants will deposit Notice Reserve into
Escrow Account

15 Days After Preliminary Approval Order

Class Notice Date

60 Days After Class Notice Date

Objection Deadline and Opt-out Deadline

150 Days After Class Notice Date

Deadline to Submit Claim Form

75 Days After Class Notice Date

Class Representatives to File Motion for Final
Approval and/or Attorneys’ Fees

75 Days After Class Notice Date

Class Counsel will prepare and file a list of
Opt-Outs with the Court

95 Days After Class Notice Date

Class Representatives to file Reply on Final
Approval and/or Attorneys’ Fees

85 Days After Class Notice Date

Class Representatives and/or Defendants to
file response to any written Objection

105 Days After Class Notice Date

Final Approval Hearing

15 Days After Final Approval Order

Defendants deposit the remaining Settlement
Fund into Escrow Account

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VIII. FINAL APPROVAL HEARING
The Final Approval Hearing shall take place on November 20, 2017, at 10:00 a.m. at the
United States District Court for the Eastern District of Missouri, United States Courthouse, 111
South 10th Street, St. Louis, Missouri, 63102, before the Honorable John A. Ross, to determine
whether the proposed Settlement is fair, reasonable, and adequate and should receive the Court’s
final approval.
A.

Objections by Settlement Class Members (who do not timely elect to

exclude themselves from the Class) to the proposed Settlement will be considered if filed
in writing with the clerk within 60 days of the Class Notice Date.
B.

At the Final Approval Hearing, Settlement Class Members (who do not

timely elect to exclude themselves from the Class) may be heard orally in support of or in
opposition to the Settlement, provided each such person filed with the clerk not later than
sixty days after the Class Notice Date a written notification of his or her desire to appear
personally, indicating (if in opposition to the Settlement) briefly the nature of the
objection. Failure to comply with the notification requirement may be excused upon a
showing of good cause.
C.

Settlement Class Counsel and counsel for Defendants should be prepared

at the hearing to respond to objections filed by Settlement Class Members and to provide
other information, as appropriate, bearing on whether or not the Settlement should be
approved.

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IX. OTHER PROVISIONS
Settlement Class Counsel and Defendants are authorized to take, without further Court
approval, all necessary and appropriate steps to implement the Settlement including the approved
Notice Program.
The deadlines set forth in this Preliminary Approval Order, including, but not limited to,
adjourning the Final Approval Hearing, may be extended by Order of the Court, for good cause
shown, without further notice to the Settlement Class Members, except that notice of any such
extensions shall be included on the Settlement Website. Settlement Class Members should check
the Settlement Website regularly for updates and further details regarding extensions of these
deadlines. Exclusions and Objections must meet the deadlines and follow the requirements set
forth in the approved Class Notice in order to be valid.
If, for any reason, the Court does not execute and file an Order of Final Approval, or if
the Effective Date does not occur for any reason whatsoever, the proposed Settlement and the
proposed Settlement subject of this Order and all evidence and proceedings had in connection
therewith, shall be without prejudice to the status quo ante rights of the parties to the litigation as
more specifically set forth in the Settlement.
Class Counsel and Defendants’ Counsel are hereby authorized to use all reasonable
procedures in connection with approval and administration of the Settlement that are not
materially inconsistent with the Preliminary Approval Order or the Settlement, including
making, without further approval of the Court, minor changes to the Settlement, to the form or
content of the Notice, or to any other exhibits that the Parties jointly agree are reasonable or
necessary.

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To “secure the just, speedy, and inexpensive determination” of this and related actions,
FRCP 1, the Court also hereby stays further proceedings in related actions pending (i) Judgment,
or (ii) termination of this Settlement, whichever occurs earlier.
X. SUMMARY
In summary, the Court:
A.

preliminarily approves the Settlement as being a fair, reasonable, and

adequate settlement as to Settlement Class Members within the meaning of Rule 23 of the
Federal Rules of Civil Procedure;
B.

certifies, for settlement purposes only, the Settlement Class pursuant to

Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure;
C.

appoints Representative Plaintiffs as Class Plaintiffs, appoints their

counsel as Class Counsel to execute this Settlement on behalf of Representative Plaintiffs
and the Settlement Class, and authorizes Class Counsel to take approved steps to proceed
with this Settlement on behalf of the Settlement Class;
D.

schedules a Final Approval hearing and establishing all related deadlines;

E.

directs notice to be disseminated as set forth in the Settlement, and find

that the Notice Program and materials satisfy Rule 23 and due process;
F.

subjects the Settlement Fund to the continuing jurisdiction of the Court;

G.

conditionally and temporarily stays related cases; and

H.

preliminarily enjoins all Class Members who have not opted out from

pursuing, as class members, actions based on or relating to the claims to be released by
the Class Agreement; and further enjoins all persons from pursuing a lawsuit in any

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jurisdiction involving Class Members who have not timely excluded themselves that is
based on or relating to the claims to be released by the Class Agreement.
The Court shall maintain continuing jurisdiction over these proceedings for the benefit of
the Class as defined in this Order.
IT IS SO ORDERED.

Dated this 21st day of July, 2017.

JOHN A. ROSS
UNITED STATES DISTRICT JUDGE

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