Zoom has agreed to pay users $85 million and implement a variety of privacy reforms in its online meeting application, in a settlement of a class action lawsuit approved April 21 by a federal magistrate in San Francisco.
U.S. Magistrate Judge Laurel Beeler in the Northern District of California granted final approval of the groundbreaking settlement agreement on behalf of a nationwide class action of users and subscribers of Zoom Video Communications, Inc., a San Jose-based company with a market capitalization of approximately $30 billion.
Lawyers said the settlement requires Zoom to pay $85 million to users and implement changes to its business, including a user-support ticket system for tracking reports of meeting disruptions, a documented process for communicating with law enforcement about meeting disruptions involving illegal content, and security features like waiting rooms for attendees, a suspend-meeting button and the ability to block users from specific countries.
The settlement resolves numerous lawsuits filed in 2020, including an action against Zoom by a San Francisco church alleging that its Bible study classes were the victim of “zoombombing.”
The Saint Paulus Lutheran Church, one of the oldest churches in the city, held a Bible study class in May 2020, including senior citizen attendees. The lawsuit alleged that minutes into the class, pornographic video was streamed onto their computer screens, including those showing abuse of infants and children.
Numerous other actions were filed by Zoom users and Saint Paulus eventually became one of a dozen named plaintiffs in the consolidated class-action suit. Their complaint alleged that Zoom improperly shared user data through third-party software from companies such as Facebook and Google, while falsely claiming to have end-to-end encryption and failed to prevent “Zoombombing” by unauthorized third parties.
Last year, the court ruled on Zoom’s motion to dismiss, addressing several novel issues raised by the case, including application of Section 230 of the Communication Decency Act and alleged violation of privacy and unfair competition laws in California.
The court allowed several claims in the litigation to move forward. After intensive discovery, the parties then negotiated the settlement by which Zoom will pay $85 million in cash compensation and implement comprehensive reforms to its business practices.
Zoom stock is down nearly 80% since its October 2020 peak, due to a combination of slowing growth and reduced valuation multiples for technology stocks.
The legal teams for the plaintiffs were led by Ahdoot and Wolfson of Burbank and Cotchett, Pitre & McCarthy of Seattle. This month’s final approval of the settlement will allow Zoom customers to immediately receive the benefits of the settlement.
Mark Molumphy, a partner at Cotchett, Pitre and McCarthy, said: “Millions of Americans continue to use Zoom’s platform with the expectation that their conversations will be kept private and secure. This groundbreaking settlement will provide a substantial cash recovery to Zoom users and implement privacy practices that, going forward, will help ensure that users are safe and protected.”
Tina Wolfson, a partner at Ahdoot Wolfson added: “In the age of corporate surveillance, this historic settlement recognizes that data is the new oil and compensates consumers for unwittingly providing data in exchange for a “free” service. It also compensates those who paid for a product they did not receive and commits Zoom to change its corporate behavior to better inform consumers about their privacy choices and provide stronger cybersecurity.”
The case is In re Zoom Video Communications, inc. Privacy Litigation, Case No. 5:20-cv-02155-LB (N.D.Cal).