Thursday, September 23, 2004
Fw: Fw: Notice of Pendency of Class Action and Proposed Settlement
----- Original Message -----
From: "Peter"
To: "Richard Newman"
Sent: Monday, August 02, 2004 10:57 PM
Subject: Re: Fw: Notice of Pendency of Class Action and Proposed Settlement
And now ebay suspended my account, on the closing day of about $100
worth of auctions. No notice or anything. They charge up front for listing,
and now my account's suspended before I can finish the auctions.
Know any good trial lawyers?
-Peter
----- Original Message -----
From: "Richard Newman"
To:
Sent: Sunday, August 01, 2004 10:08 PM
Subject: RE: Fw: Notice of Pendency of Class Action and Proposed Settlement
> class actiosn are weird. basically, if the class action succeeds,
everyone else in the class may be precluded from suing. So, it is generally
in your interest to join the the suit since you may be precluded from
recovery later. I would have to read the judges opinion to be sure about
this one.
>
>
>
> In Truth, Brotherhood, Scholarship, and Service,
> R. Newman
>
>
>
>
> ----Original Message Follows----
> From: "Peter"
> To: "Richie I Newman"
> Subject: Fw: Notice of Pendency of Class Action and Proposed Settlement
> Date: Thu, 29 Jul 2004 23:18:21 -0400
> PayPalI did have my paypal account suspended due to a buyer complaint, let
me know what you think of this, and any advice, please.
>
> -Peter
>
> ----- Original Message -----
> From: PayPal
> To: ngrimmm@hotmail.com
> Sent: Thursday, July 29, 2004 3:21 AM
> Subject: Notice of Pendency of Class Action and Proposed Settlement
>
>
>
>
>
> Dear Peter Newman,
>
>
> 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 ngrimmm@hotmail.com. 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.
>
>
¶ 9:39 AM
From: "Peter"
To: "Richard Newman"
Sent: Monday, August 02, 2004 10:57 PM
Subject: Re: Fw: Notice of Pendency of Class Action and Proposed Settlement
And now ebay suspended my account, on the closing day of about $100
worth of auctions. No notice or anything. They charge up front for listing,
and now my account's suspended before I can finish the auctions.
Know any good trial lawyers?
-Peter
----- Original Message -----
From: "Richard Newman"
To:
Sent: Sunday, August 01, 2004 10:08 PM
Subject: RE: Fw: Notice of Pendency of Class Action and Proposed Settlement
> class actiosn are weird. basically, if the class action succeeds,
everyone else in the class may be precluded from suing. So, it is generally
in your interest to join the the suit since you may be precluded from
recovery later. I would have to read the judges opinion to be sure about
this one.
>
>
>
> In Truth, Brotherhood, Scholarship, and Service,
> R. Newman
>
>
>
>
> ----Original Message Follows----
> From: "Peter"
> To: "Richie I Newman"
> Subject: Fw: Notice of Pendency of Class Action and Proposed Settlement
> Date: Thu, 29 Jul 2004 23:18:21 -0400
> PayPalI did have my paypal account suspended due to a buyer complaint, let
me know what you think of this, and any advice, please.
>
> -Peter
>
> ----- Original Message -----
> From: PayPal
> To: ngrimmm@hotmail.com
> Sent: Thursday, July 29, 2004 3:21 AM
> Subject: Notice of Pendency of Class Action and Proposed Settlement
>
>
>
>
>
> Dear Peter Newman,
>
>
> 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 ngrimmm@hotmail.com. 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.
>
>
¶ 9:39 AM
