• paidContent, Tuesday, January 17, 2012 12:06 PM

A group of disgruntled investors has filed a class-action suit against Netflix, on the grounds that the company withheld information from them prior to its dramatic stock-price plunge, last year. “The lawsuit was filed in U.S. District Court in Northern California, by the City of Royal Oak Retirement System, on behalf of ‘all plaintiffs similarly situated,’” paidContent reports.

“Expedited by law firm Robbins, Geller, Rudman & Dowd LLP, a practice that specializes in class-action complaints, the suit alleges that Netflix senior management didn’t reveal to investors that many of its contracts to stream content would soon need to be renegotiated at substantially increased cost.”

Defendants named include Netflix CEO Reed Hastings; CMO David Wells; chief content officer Ted Sarandos; chief product officer Neil Hunt and CMO Leslie Kilgore. The suit, posted on the law firm’s site, states: “At the beginning of the class period, Netflix was facing increasing competition for streaming business, and content providers were exploring new ways to distribute their content and/or maximize their licensing fees … Rather than fully disclose the devastating cost increases which were then threatening Netflix’s entire business, the defendants talked about [their] ability to grow.”

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