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In October 2005, Netflix proposed a settlement for those who had enrolled as a paid Netflix member prior to January 15, 2005.

These earlier members would be able to renew their subscriptions with a one-month free membership, and those early members with current subscriptions would receive a one-month free upgrade to the next-highest membership level.

Netflix's settlement denied allegations of any wrongdoing, and the case did not reach a legal judgment.

Netflix estimated the settlement cost at approximately US $ 4 million, which included up to US $ 2. 53 million to cover plaintiff lawyer fees.

A controversial aspect of the settlement offer was that the customer's account would continue at the renewed or upgraded membership level after the free month provided by the settlement, with customers being charged accordingly unless they opted out after the month-long free period ended.

After Trial Lawyers for Public Justice filed a challenge to the proposed settlement and the Federal Trade Commission filed an amicus brief urging the rejection or modification of the settlement, Netflix offered to alter the settlement terms requiring customers to actively approve any continuation after the free month.

The final settlement hearing took place on March 22, 2006.

Implementation of the settlement was delayed pending appeal the California Appellate Courts.

The settlement was affirmed on April 21, 2008, with the court saying, " the trial court did not abuse its discretion in approving the amended class action settlement agreement, approving the notice given to class members, or determining the amount of fees.

" Interestingly, the court approved email notice and an online claims submission process.

The court said: