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Judge provides preliminary approval of settlement in the MoFi misleading marketing case
By Chris Cooke | Published on Monday 15 May 2023
A US judge last week gave preliminary approval to a settlement agreement negotiated in one of the class action lawsuits that was filed over the way Chicago-based Mobile Fidelity Sound Lab promoted its high quality audio recordings. That’s despite claims by the plaintiffs in another lawsuit filed over the same dispute that that settlement was the result of “a collusive reverse auction”.
The mastering processes employed by Mobile Fidelity Sound Lab – aka MoFi – became a talking point online last summer. It’s a company that specialises in pressing up high quality reissues of records for the community of music fans that like such things.
The online chatter was caused by the revelation that the company had started using direct stream digital – or DSD – technology when mastering many of its releases in 2011. However, this had not been reflected in the firm’s marketing copy.
As the resulting controversy began to build within the audiophile community, MoFi President Jim Davis posted a statement declaring: “We apologise for using vague language, allowing false narratives to propagate, and for taking for granted the goodwill and trust our customers place in the Mobile Fidelity Sound Lab brand”.
Legal action then followed, with multiple lawsuits being filed, all seeking class action status so that anyone who bought a MoFi disc that had been misleadingly promoted could benefit.
Earlier this year, it emerged that a settlement deal had been negotiated in one of those lawsuits, which had been filed in the US state of Washington. Worth $25 million, the deal would allow affected customers to return any records they had bought for a full refund, or to keep the records and get a partial refund or a voucher for a future purchase.
That deal was pretty much agreed in January but was pending court approval, with a few technicalities to be sorted out. However, given that deal would benefit all customers affected by MoFi’s misleading marketing, the music company argued that all the other class actions – including one in its home state of Illinois – should be paused.
It then transpired that the plaintiffs in the Illinois case were trying to block the deal in the Washington litigation. That was based on the argument that what had been agreed in that case didn’t provide adequate relief to the class members and was the result of “a collusive reverse auction”.
That’s a scenario that can occur when multiple class action lawsuits are filed with US courts in relation to the same dispute. Plaintiffs might then cherry pick one of the lawsuits based on their belief that it is being led by the least capable legal team.
The hope is that those less capable lawyers will then settle for a lower price, especially if the attorneys themselves are assured a decent fee as part of the deal. And once that class action is settled, the plaintiff can call for all the other lawsuits to be dismissed.
However, according to Law360, the judge overseeing the case in Washington has concluded that that didn’t happen here. The lawyers repping the plaintiffs in that lawsuit “boast a record of effective class action advocacy” the judge said. Plus MoFi’s lawyers prioritised this particular lawsuit simply because it was the first to be filed.
So that seems like good news for MoFi and the plaintiffs in the Washington case. Though final court approval of the deal won’t come until later this year.
