8-K: ZoomInfo Reaches $26-$29 Million Settlement in Class Action Lawsuits Over Data Usage

ZoomInfo has agreed to a settlement of approximately $26 to $29 million to resolve class action lawsuits related to the use of personal data in Illinois, California, Indiana, and Nevada.

Summary

• ZoomInfo has reached a settlement agreement to resolve multiple class action lawsuits.
• The lawsuits allege that ZoomInfo used the names of residents in Illinois and California on public-facing web pages without consent, violating right of publicity laws.
• The settlement also includes similar unfiled claims in Indiana and Nevada.
• ZoomInfo has agreed to pay 3% of statutory damages to each eligible class member in the four states.
• The estimated total settlement amount is between $26 million and $29 million.
• The final settlement amount will be determined after confirmatory discovery, which is expected to be completed by May 24, 2024.
• The settlement is subject to court approval and other conditions.
• ZoomInfo expects to incur the settlement charges primarily in the first half of 2024.
• The settlement is not an admission of wrongdoing by ZoomInfo, but the company believes it is in their best interest to resolve the claims.

Sentiment

Score: 6

Explanation: The settlement is a necessary expense to resolve legal issues, but it is not a positive development for the company's financials. The resolution of the lawsuits is a positive, but the cost is a negative.

Positives

• The settlement resolves multiple class action lawsuits, reducing future legal uncertainty.
• The settlement is not an admission of wrongdoing by ZoomInfo.
• The company has a clear path to resolving these claims.

Negatives

• ZoomInfo will incur charges of approximately $26 to $29 million to settle the class actions.
• The settlement charges will primarily impact the first half of 2024.
• The final settlement amount is subject to change based on confirmatory discovery.

Risks

• The proposed settlement may require more activity or expense than expected.
• The company may face objections or appeals regarding the proposed settlement.
• The settlement class size could increase following confirmatory discovery, potentially increasing the settlement amount.
• The settlement is subject to court approval and other conditions.

Future Outlook

The company expects to incur charges of approximately $26 million to $29 million to settle the Class Actions, with substantially all of these charges to be incurred in the first half of 2024. The charges that the Company expects to incur are subject to a number of assumptions, including the number of class members in each state, and actual expenses may differ materially from the estimates disclosed.

Management Comments

• The settlement is not an admission of fault or wrongdoing by ZoomInfo.
• The company believes that a resolution of these claims at this time is in the best interest of the Company given the costs and risks inherent in litigation.

Industry Context

This settlement highlights the increasing scrutiny and legal challenges faced by companies that collect and use personal data, particularly in the context of right of publicity laws. Other companies in the data and information services industry may face similar legal challenges.

Comparison to Industry Standards

• While specific settlement amounts vary, class action lawsuits related to data privacy are becoming more common in the tech industry.
• Companies like Facebook (Meta) and Google have faced similar lawsuits and settlements related to data usage and privacy.
• The settlement amount of $26-$29 million is within the range of other settlements for similar cases, but the specific details of each case vary significantly.

Legal Proceedings

• ZoomInfo has entered into a settlement agreement to resolve class action lawsuits in Illinois, California, Indiana, and Nevada related to the use of personal data.

Stakeholder Impact

• Shareholders will see a negative impact on earnings due to the settlement charges.
• Class members in the affected states will receive compensation as part of the settlement.
• The settlement may reduce legal uncertainty for the company.

Next Steps

• Complete confirmatory discovery by May 24, 2024.
• Obtain preliminary and final approval of the settlement from the Illinois District Court.
• Finalize the settlement agreement.
• Incur settlement charges primarily in the first half of 2024.

Key Dates

Keywords

settlement, class action, lawsuit, ZoomInfo, data privacy, right of publicity, litigation, legal, Illinois, California, Indiana, Nevada