Proposed Settlement In ValueClick/CJ Adware Class Action Lawsuit
A proposed settlement has been reached and preliminarily approved in the class action lawsuits on behalf of publishers and advertisers against ValueClick/CJ. The cases centered on the presence of adware in CJ/BF and the impact on both publishers and advertisers. The two cases were consolidated earlier this year by the courts and the settlement covers both cases.
A court date of January 2009 has been set for a Fairness Hearing to determine if the settlement will have final approval by the court.
I’m posting two documents obtained through the courts which give detailed information regarding the settlement and the procedures which will follow.
Exhibit A: Agreement For Settlement Of Carrier And NAR Litigation
VCLK/CJ deny all allegations in both cases but agree to the following settlement (summarized):
1. $1 Million to be paid into a Common Settlement Fund. Both Advertisers and Publishers will be compensated from this fund. Thirty (30) percent of the fund will be allocated to Advertisers and seventy (70) percent to Publishers of the class. The first document linked above defines both classes and outlines how the fund will be dispersed.
2. An independent audit of CJ’s Network Quality practices and efforts related to detection, prevention and response to third parties using software to force or hijack clicks on CJ. The Auditor will submit a report and make recommendations on how CJ can improve and enhance Network Quality practices. The parties will then issue a statement to Class Members summarizing the measures to be implemented by CJ in response to the Audit and report.
3. CJ will begin tracking additional data/information and will implement enhancements of its primary investigative tools and automated software investigative tools. This additional data includes (quoted from the Settlement Agreement):
49. Tracking of Additional Data and Information: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal and dismisses the Action with prejudice, CJ will supplement its existing detection procedures and practices by implementing systems responsible for tracking the following categories of data and information:
A. Prior Publisher Investigations: CJ will design and implement fields and/or tables in its database that identify and record: 1) the number of instances on which any publisher has been assigned a “fraud role” or has been under investigation for the potential use of malicious software to “force” or “hijack” clicks; 2) the time period of each such investigation; 3) the CJ employee(s) responsible for conducting the investigation; and 4) the outcome of the investigation. CJ agrees to maintain such information for a period of no less than 3 years.
B. Termination/Deactivation Codes: CJ will design and implement detailed codes identifying the specific reason(s) that a particular publisher was deactivated or terminated from its network, including specific codes identifying whether a publisher was terminated for “forcing” or “hijacking” clicks using malicious software. CJ agrees to record and preserve such reason codes for each publisher deactivated or terminated from its network for a period of no less than 3 years following such deactivation or termination.
C. Software Testing: CJ will design and implement a database and/or table identifying all software that is manually tested or investigated by CJ to determine whether it is being utilized to “force” or “hijack” clicks, and for each such software application, will record in such database and/or table: 1) the particular software application tested; 2) the time, date and manner in which such software was tested; 3) any publishers determined to be using such software; and 4) the conclusions of the testing. CJ agrees to record and preserve such information for a period of no less than 3 years.
50. Primary Investigative Tools: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal, and dismisses the Action with prejudice, it will implement the following enhancements to its Network Quality procedures:
A. CJ will continue to circulate to all members of its Network Quality team a daily “hijack report” identifying all instances of two clicks for the same end user being dropped within five seconds of each other, and will assign a member of its Network Quality team to be principally responsible for reviewing daily “hijack” reports and for investigating instances of potential click “hijacking” based on such reports.
B. CJ will begin to circulate a weekly “high conversion report” to all members of its Network Quality team identifying all publishers with a lifetime conversion ratio greater than 30% and a percentage of “null” referring URLs greater than 50%, and will assign a member of its Network Quality team to be principally responsible for reviewing weekly “high conversion reports” and for investigating instances of potential “forced” clicks using malicious software based on such reports.
C. CJ will agree to consider in good faith implementing any additional investigative reports or tools recommended by the auditor to assist in its efforts to detect forced click and hijacking activity.
51. Automated Software Investigative Tool: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal and dismisses the Action with prejudice, CJ will implement an automated testing protocol utilizing a proprietary software tool designed to detect particular publishers’ use of known malicious software applications. The tool will run on a continuous basis, and the independent auditor will be permitted to evaluate the automated tool and to make recommendations concerning the design and implementation of the automated tool in his or her Report.
52. Preservation of Publisher Data During Publisher Investigations: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal and dismisses the Action with prejudice, CJ will implement an automated system for preserving all “click data” associated with a particular publisher during any period of time that such publisher is under investigation for the potential use of malicious software to “force” or “hijack” clicks on CJ’s network. Notwithstanding the foregoing, no failure to preserve such data during the pendency of any such investigation shall be admissible to establish liability or breach of any discovery obligation in any collateral litigation, and no inadvertent failure to preserve such data shall give rise to any claim for breach of this Settlement Agreement.
The agreements with regards to compliance efforts are more significant than the amount of dollars reached in the settlement, in my opinion. I am glad to see such issues addressed in the agreement.
More information regarding who is included in the classes, procedures for opting out of the settlement and mechanisms for opposing the settlement terms can be found in the documents linked at the beginning of this post.
More information regarding who is included in the classes, procedures for opting out of the settlement and mechanisms for opposing the settlement terms can be found in the documents linked at the beginning of this post.
[…] Proposed Settlement In ValueClick/CJ Adware Class Action Lawsuit […]
Pingback by ValueClick/CJ $1 Million Adware Class Action Lawsuit - 5 Star Affiliate Marketing Blogs — July 6, 2008 @ 10:16 pm
[…] /Kellie over at Affiliate Fair Play has published the documents of a proposed settlement agreement in the class action lawsuit against Commission Junction for their failure to sufficiently monitor and prevent Publisher Code of Conduct violations by affiliates using “malicious software” to hijack commissions. The plaintiffs in this lawsuit are two current and former members of the Commission Junction (”CJ”) Network who entered into either a publisher service agreement (”Publishers”) or an advertiser service agreement (”Advertisers”) with the defendants. They contend that the defendants did not do enough to monitor the CJ Network for the use by third-parties of software programs that do not comply with CJ’s Publisher Code of Conduct and are intended to steal or divert commissions from Publishers and Advertisers on CJ’s Network (”Non-Compliant Software”) or to monitor for or prevent third parties from engaging in the theft or “hijacking” of commissions from Advertisers and Publishers on CJ’s Network. They further contend that the Defendants failed to make sufficient disclosures regarding the existence of such Non-Compliant Software and commission theft, resulting in losses to both Advertisers and Publishers on CJ’s Network. As a result, the plaintiffs believe both Advertisers and Publishers suffered losses on the CJ Network. […]
Pingback by Commission Junction Adware Class Settlement | Jangro.com — July 7, 2008 @ 6:21 am
Amazing what additional steps, procedures, operating costs CJ, and others, have to take to protect the BHO’s swimming openly in their commission pool. Basically less then .001% of all CJ affiliates require daily policing and special compliance testing to satisfy the courts…. that their not stealing from other affiliates.
Comment by Mike Hyland — July 7, 2008 @ 9:02 am
[…] It’s been pretty quiet around this case, but now news comes out that a proposed settlement has been reached on behalf of affiliate and merchants against ValueClick/CJ, according to Kellie Stevens of AffiliateFairPlay.com. A proposed settlement has been reached and preliminarily approved in the class action lawsuits on behalf of publishers and advertisers against ValueClick/CJ. The cases centered on the presence of adware in CJ/BF and the impact on both publishers and advertisers. The two cases were consolidated earlier this year by the courts and the settlement covers both cases. […]
Pingback by ValueClick/Commission Junction Adware Class Action Lawsuit | Affiliate Marketing Blog by Shawn Collins — July 7, 2008 @ 9:20 am
It’s a very good day for value-minded affiliates! Thanks for bringing us the details!!!
Comment by Pat Grady — July 7, 2008 @ 9:31 am
Anything CJ can do to protect the good publishers from loosing commissions to unscrupulous ones, sounds good to me! Better late than never. As an advertiser, the idea of adware/spyware/cookie hijacking being permitted within the networks is horrible and hard, but not impossible to believe! I suspect other networks have similar issues, but CJ was the largest, and thus the precident will fall on them first. I hope the other networks are taking notice.
Comment by Joshua — July 7, 2008 @ 12:09 pm
Hey Kellie,
Excellent breakdown of the settlement. Thank you for keeping us informed and doing the work that you do.
Angel
Comment by Angel Djambazov — July 7, 2008 @ 5:08 pm
No doubt some will not be happy with the monetary award in the settlement. I see it as court ordered change having a more long term impact positively for both advertisers and publishers however. And $1M isn’t exactly chump change to come up with (along with the legal fees) especially with VCLK stock down to a low today of $14.86. Putting it into perspective, VCLK as a whole only paid $2.9M in their settlement with the FTC on the lead gen stuff. And the questionable activity there accounted for 60% of VCLK’s *total* revenue (according to VCLK themselves).
Some of the compliance changes will start happening soon as well. That is yet another positive side of the settlement. Waiting for the case to go to trial could have been years.
My own personal opinion is that this settlement could be a long-term positive thing for CJ, advertisers and publishers.
Comment by Kellie AFP — July 7, 2008 @ 6:44 pm
[…] It’s been pretty quiet around this case, but now news comes out that a proposed settlement has been reached on behalf of affiliate and merchants against ValueClick/CJ, according to Kellie Stevens of AffiliateFairPlay.com. A proposed settlement has been reached and preliminarily approved in the class action lawsuits on behalf of publishers and advertisers against ValueClick/CJ. The cases centered on the presence of adware in CJ/BF and the impact on both publishers and advertisers. The two cases were consolidated earlier this year by the courts and the settlement covers both cases. […]
Pingback by AffiliateMoneyHome » Blog Archive » ValueClick/Commission Junction Adware Class Action Lawsuit — July 8, 2008 @ 12:57 am
Does anyone know who how many people sued and who they are? I didnt see plaintiff’s names listed anywhere….
Comment by Melissa — July 18, 2008 @ 4:40 pm
Melissa,
It’s a class action. Originally there were two separate cases were consolidated by the courts. You can see who the named plaintiffs are by clicking on the links of the settlement documents and looking at the top.
I don’t know how many will opt into (or out of) the class when the notices go out.
Comment by Kellie AFP — July 18, 2008 @ 6:26 pm
[…] Parasites are pretty universally looked down upon amongst white-hat, legit affiliate marketers. Recently there was a class-action lawsuit against Commission Junction for allowing affiliates using parasitic software to continue earning commissions, so this is serious business. More specific types of software that tend to fall under this category are malware, spyware, and adware. […]
Pingback by TrishaLyn - Online Marketing Glossary: Parasite — July 21, 2008 @ 11:32 am
Some information that may interest you:
1. ValueClick set up reserves to pay $1.5 million, but ultimately settled for $1 million. See ValueClick’s 2007 Annual Report: http://sec.edgar-online.com/2008/02/29/0001047469-08-002074/Section8.asp
2. Half of the $1 million settlement fund probably will go to the plaintiff’s lawyers for costs (up to $25,000) and legal fees (up to $475,000). After other payments that will be made from the settlement fund, only $375,000 will be left for distribution to the victims. See Sections 53 through 56 of the Settlement Agreement.
3. If you don’t opt out of the class but you do fit within its definition, then you will be bound by the settlement if the Judge approves it. But if you opt out, you probably can’t afford to bring your own action against the alleged practices.
4. The settlement will include very broad releases of present AND FUTURE claims arising out of “Non-Compliant Software” meaning “software that does not comply with CJ’s Publisher Code of Conduct and is intended or used to steal or divert commissions from Publishers and/or Advertisers on CJ’s Network.” See Sections 39 and 40 of the Settlement Agreement and its definitions of “Released Claims” and “Non-Compliant Software.”
I certainly hope that one or more champions will arise to contest the very unfair waiver of future claims. Your “class representatives” have already agreed to thye broad waivers because their lawyers get paid so much if the settlement is approved. [This is no different than most class actions, which primarily benefit the lawyers who bring them.]
5. As a practical matter, members of the class have the opportunity to (a) influence the choice of the expert who will help design the Audit practices, and (c)influence the design of the audit itself. Best bet is for groups of affiliates to begin preparing recommendations and have them ready to present to the court by the time of the Fairness Hearing in January 2009. If appearing at the hearing is too expensive, send copies to lawyers for both the plaintiffs and the defendants at the addresses given in the notice of settlement, with a Copy to Hon. Florence-Marie Cooper, Judge, United States District Court, Central District of California, 255 East Temple Street, Los Angeles, CA 90012. It is especially important to send copies of your proposals to the Judge. As a practical matter, neither the attorneys for Valueclick nor the attorneys for the plaintiff classes, have your interests in mind.
6. Since Value Click reservered to pay $500,000 more to settle the case than it ultimately agreed to pay, it is probably good for another half million in payments to lawyers who step forward to protect the real interests of the class and work to get Value Click’s practices changed so that your commissions won’t be cyphoned off in the future.
Comment by Anonymous Lawyer — August 5, 2008 @ 12:29 pm
Hi Anonymous Lawyer, thanks for your thoughts and comments.
It is a common practice for companies to place monies in reserve for known forthcoming legal settlements. As the link you provided indicates, VCLK also did this for the settlement reached with the FTC (for the amount of $2.9 million).
However, your assessment that
“..it is probably good for another half million in payments to lawyers who step forward to protect the real interests of the class and work to get Value Click’s practices changed so that your commissions won’t be cyphoned off in the future.”
does not seem accurate. This statement seems based off of point #2
“Half of the $1 million settlement fund probably will go to the plaintiff’s lawyers for costs (up to $25,000) and legal fees (up to $475,000).”
While these are the accurate amounts provided in the court documents attorney costs and fees, the settlement agreement clearly states that these costs do not come out of the Common Fund to be paid to advertisers and publishers (the $1M) but are being paid separately by VCLK.
Quoting from the Class Settlement documented (page 15 on the document linked here and page 14 if downloaded from the cjsettlement.com site) Bolding is by me:
“55. Attorneys’ Fees, Costs, & Expenses: Pursuant to the express terms of written contracts between the Parties, any party that primarily prevails in an action brought under those contracts is entitled to recover from the other party its reasonable attorneys fees and costs. Without admitting or denying whether one or another party, if any, would be deemed to be the prevailing party in this Litigation, in order to fully resolve all issues relating to the subject of this Litigation, the Parties and their counsel have agreed that in addition to payments made towards the creation of Common Funds, as described above, Defendants will pay Class Counsel’s fees, expenses and costs in an amount to be approved by the Court. No portion of Plaintiffs’
Attorneys’ Fees, Costs and Expenses shall be deducted from the Advertiser Fund and/or Publisher Fund. Class Counsel will file a motion for reimbursement of reasonable out-of-pocket
litigation costs up to $25,000 and for attorneys’ fees not to exceed $475,000. Defendants will not oppose this request. No other agreement exists between the Parties as to attorney’s fees,
expenses, and costs.”
That seems pretty straight forward and clear cut. So that totals $1.5 million that VCLK disclosed in the SEC filing.
With regards to Point #5 were you state:
“members of the class have the opportunity to (a) influence the choice of the expert who will help design the Audit practices,”
I don’t see where that is the case. The Settlement document seems to state otherwise:
“The identity of the auditor will be mutually agreed upon by the parties on or before the date that the motion for final approval of the Settlement Agreement is submitted to the Court.”
Since preliminary approval of the settlement agreement has been approved in the case (what this blog is about), I have to think that the auditor has already been agreed upon parties.
You also say:
“influence the design of the audit itself. Best bet is for groups of affiliates to begin preparing recommendations and have them ready to present to the court by the time of the Fairness Hearing in January 2009. ”
Again, from the Settlement document I’m not sure that is how the process is working:
“Plaintiffs’ counsel and Designated Consultant pursuant to Section III.E shall have an opportunity to provide input and suggestions to the auditor with respect to the scope of the Audit
prior to the commencement of the Audit.”
It’s not sounding like they are soliciting input from affiliates who may or may not be in the class and included in the final settlement.
This case is important. Anyone who has questions regarding the legal process, their legal rights, and the implications of opting into or out of the Settlement, should consult their own attorney providing a copy of the court documents.
Anyone who wishes to formally oppose the settlement should again consult with a qualified attorney.
But I don’t think there is another $500,000 reserved by ValueClick up for grabs by some other attorney “who step forward to protect the real interests of the class and work to get Value Click’s practices changed so that your commissions won’t be cyphoned off in the future.”
I am interested as to exactly what you feel should be the exact changes ValueClick is made to implement outside of what is currently outlined in the Settlement. Of course since the auditors report hasn’t happened yet, we can’t know exactly what all CJ will implement. But abvoe and beyond what CJ had already agreed to which is spelled out in the Settlement. What do you feel those measures should be?
Comment by Kellie AFP — August 5, 2008 @ 3:55 pm
sorry I did not have a website so I hope it is ok that I put the site I found information on this as my own.
The lawsuit as was stated was going on for almost a year now and others happened very similar over the last 4 years. I read the scam alerts and news there because it has always helped me save time on joing things then I look them up. Another way I found this page too.
It seems millions are staying with them and we will probably all have to go through cj to sell for those companies still if we want to but, as they say it is not about money and maybe we are better off selling our own things since it seems all affiliate things boil down to just a few companies that never pay proper.
Does this mean that as they had stated we do nothing unless we want out but if they do it for us with all in the lawsuit we really will not be getting much at all. ? Are there that many people in this cj program too?
Comment by wilsoninhome — August 13, 2008 @ 9:18 pm
oh sorry if people do not know what i meant by the article it is at http://www.zolaenterprises.com I clicked their news link to find it. I think it is hard to find all their articles since they have so much on all the pages.
Comment by wilsoninhome — August 13, 2008 @ 9:19 pm
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