Class Action Lawyers Get Creative

The good thing about class action lawsuits is that they allow enterprising lawyers to consolidate many small claims, any one  of which would not be worth pursuing on its own, and win settlements for consumers who may not even realize they've been injured. The bad thing about class action lawsuits is that they allow enterprising lawyers to consolidate many small claims, any one  of which would not be worth pursuing on its own, and win settlements for consumers who may not even realize they've been injured. Which category does Vibhu Talwar and Patrick Finkelstein v. Creative Labs fall into?

According to the settlement agreement, the lead plaintiffs, who filed their federal lawsuit in California, alleged that Creative had misled consumers by exaggerating the capacity of its MP3 players. The fraud allegation hinged mainly on two different definitions of gigabyte. According to the decimal definition (the only one I knew until today), a gigabyte is 1 billion (109) bytes. According to the binary definition, a gigabyte is 1,073,741,824 (230) bytes. While Creative used the decimal definition in its advertising, the settlement says, "certain computer operating systems report hard drive capacity using a binary definition." On those systems, a 20GB Creative Zen player would register as only 18.6GB or so, about 7 percent less than advertised.

I see the potential for confusion (I'm confused just trying to explain the grounds for the suit), but I'm not sure this amounts to fraud, or that consumers have suffered an injury, or if they have that the injury amounts to anything in practical terms. I've got 8,346 tracks on my 40GB Creative Zen Nomad Jukebox (which for some reason registers on my computer as 38.1 GB, 2 5 percent less than advertised), and I still have 18.4GB to spare. I suspect the machine will die before I fill it up.

Still, according to the email notice I received today, I'm eligible for "a 50% discount off the price of a new 1 GB MP3 player" (which I have no interest in purchasing) or "a discount certificate good for 20% off the price of any single item purchased at www.us.creative.com" (which I might actually use). I guess the measliness of the settlement, which few "class members" will bother to collect, matches the imperceptibility of the injury pretty well. As usual in this sort of class action, the real beneficiaries are the lawyers, Brian Strange and Barry Fisher of Los Angeles, who will collect $900,000 for their trouble.

At least Strange and Fisher have done a public service by encouraging companies to be more honest. Or maybe not. As of 2003, Creative has included in its packaging a notice informing consumers that "1GB = 1,000,000,000 bytes," that "available capacity will be less" than total capacity (because of the operating software), and that "reported capacity will vary." But Creative offered that clarification two years before Strange and Fisher sued the company. I wonder where they got the idea for the lawsuit.