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Settlement will stand in Netflix 'throttling' case

Judge rejects the arguments of four Netflix subscribers who challenged terms of 2006 settlement.

The terms of a 2006 settlement in a lawsuit against Netflix will be allowed to stand over the objections of four Netflix subscribers, according to a report by Reuters.

In the initial lawsuit, the customers accused the company of "throttling." They alleged that Netflix held up delivery of DVDs to customers who were heavier users of the service--and therefore less profitable--in order to fill orders for new customers and less frequent users.

In 2006, Netflix reached a settlement agreement, but the four Netflix subscribers challenged it, saying the attorneys' fees awarded by the trial court were "excessive" and they were improperly notified of the terms of the agreement.

As part of the settlement, Netflix agreed to give 5.5 million users a free month of service and to pay attorneys' fees.

On Tuesday, however, a California appeals court upheld the settlement, marking a victory for the online video rental company.