Friday, November 30, 2012

Sirius XM Radio Inc (NASDAQ:SIRI): “Overturn” Sought by Subscribers due to Unfair Settlement

Various satellite radio subscribers have requested an appeals court to overturn a class-action settlement between Sirius XM Radio Inc(NASDAQ:SIRI) and its customers, on the grounds that lawyers got paid way too much and the class got only peanuts. A lower court approved a settlement of $180 million, but attorneys for dissenting members of the class argued before the U.S. Court of Appeals in Manhattan today asking judges to veto the verdict.

Sirius XM Radio was sued in 2009 by subscribers who alleged that it was in violation of antitrust laws after hiking prices after acquisition of its rival, XM Satellite Radio, in 2008. Sirius had made false promises to get the merger approval from the Federal Communications Commission. U.S. District Judge Harold Baer in Manhattan ruled in August of last year that subscription rates will not change for 5 months till December 31 of that year and subscribers with canceled plans could resume without any charge. Even though the deal was of $180 million, none of the subscribers got any money.

 Attorneys representing the class were paid $13 million as fees, according to the opposing class members. They want the charges of the lawyers to be reversed. James Sabella a lawyer for the class said the $180 million figure was calculated according to what subscribers would have paid during the 5-month price deadlock.

Class members who agreed to the settlement stated that only 85 people were objecting among a class of 15.7 million members. They clarified that a lengthy and costly trial might have been necessary and winning would be touch as the U.S. Justice Department had concluded that the merger wasn’t likely to harm competition. Sirius XM on the other hand argued that objectors hadn’t sought to put the settlement on hold pending the outcome of the appeal and the price freeze mechanism was put in place.

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