The LifeMD privacy settlement is a useful teaching case, not because the payment was interesting — $10 in cash or a $25 voucher — but because almost every procedural feature that confuses people about class actions shows up in it at once. A federal docket that says the case was dismissed. A refiling in state court. A settlement with no aggregate cap. A voucher option. Five opt-outs out of more than 800,000 people. And a release that binds everyone who did nothing.
Table of Contents
- Why the federal docket misleads
- What “without prejudice” actually preserved
- Why a plaintiff moves a case to state court
- Claims-made with no cap is not a common fund
- What a voucher option does to settlement value
- Five opt-outs out of 835,159
- Fees and service awards, paid separately
- The release is the product
- What a settlement does not reach
- Questions people ask
Why the federal docket misleads
Anyone who looks this case up in the federal system finds an action that ended without a judgment, and reasonably concludes the claims went nowhere. The trail:
- August 23, 2023 — Matthew Marden files in the U.S. District Court for the Southern District of New York.
- March 4, 2024 — LifeMD moves to dismiss the amended complaint.
- July 12, 2024 — the parties mediate.
- November 1, 2024 — plaintiffs voluntarily dismiss the federal action without prejudice.
- November 25, 2024 — the claims are refiled in the District Court of Clark County, Nevada, as W.M.F. & Matthew Marden v. LifeMD, Inc., No. A-24-906800-C.
- April 29–30, 2025 — the settlement agreement is signed.
- June 4, 2025 — preliminary approval.
- September 22, 2025 — claim, exclusion and objection deadlines.
- September 30, 2025 — fairness hearing and final approval; dismissal with prejudice.
- January 21, 2026 — distribution of benefits begins.
Two dismissals, opposite meanings, fourteen months apart. Reading only the first one produces the wrong answer about a case that ended in an approved, funded settlement.
What “without prejudice” actually preserved
A voluntary dismissal without prejudice ends the case and leaves the claims intact. Nothing is adjudicated, no defence is established, and the plaintiff keeps the right to bring the same claims again, subject only to the limitation period continuing to run in the background.
That is why it is a tactical instrument rather than a concession. Here it followed a pending motion to dismiss and a mediation session — a sequence in which both sides had already learned a great deal about the strength of the pleading and the shape of a deal. Dismissing and refiling elsewhere is what a plaintiff does when the claims are viable but the chosen forum is not the best place to finish them.
Why a plaintiff moves a case to state court
Federal court is not automatically the stronger venue for a consumer class claim, and in privacy cases it is frequently the weaker one.
- Article III standing. Federal courts require a concrete injury. After the Supreme Court’s tightening of that requirement, a privacy plaintiff who cannot point to a tangible consequence faces a threshold problem that many state courts do not impose in the same form.
- State causes of action. Claims built on state privacy statutes belong naturally in the courts that interpret them, and a state court is not obliged to apply federal pleading standards.
- Approval practice. Class settlement approval standards and the appetite for claims-made structures differ between systems, and counsel on both sides know where a particular deal shape is likely to be approved.
- Speed and predictability. A case that has already been mediated has a deal to document, and the parties will prefer a forum that can carry it to final approval efficiently.
The Nevada complaint pleaded alleged violations of the federal Electronic Communications Privacy Act alongside Nevada privacy law and common-law theories including negligence, invasion of privacy, breach of confidence and unjust enrichment. LifeMD denied wrongdoing throughout and denied that protected information was disclosed at all; the court decided none of it.
Claims-made with no cap is not a common fund
This is the distinction most consumers get backwards, and it changes what a settlement is worth to the individual.
- Common fund. A fixed sum is paid in and divided pro rata. Every additional valid claim reduces everyone else’s share. Publicity about the settlement is bad news for people who already filed.
- Claims-made, no aggregate cap. The defendant pays per approved claim. A claimant who elected $10 received $10 no matter how many others came forward. Publicity costs the defendant, not the claimant.
The LifeMD agreement was the second kind. It also means the frequently-quoted figure of approximately $1.1 million — which the company reported as its estimated settlement liability in a quarterly filing — was never a fund. It was an accrual: an estimate of what the deal would cost once take-up was projected. Reading it as a pot to be divided by 835,159 produces a per-person figure that has no relationship to what anyone received.
What a voucher option does to settlement value
Claimants could elect $10 in cash or a $25 voucher for LifeMD or RexMD products or services, valid two years. On its face the voucher is worth two and a half times the cash. In economic substance it is usually worth considerably less to the claimant and considerably less than $25 to the defendant.
- A voucher is redeemable only against the defendant’s own products, so its cost to the defendant is the marginal cost of supply, not the face value.
- Redemption is never complete. Vouchers expire, get forgotten, or go unused because the holder no longer wants the product — and a class built on a privacy grievance is not an obviously enthusiastic repeat-purchase population.
- Redemption can require a purchase larger than the voucher, converting a settlement benefit into a customer-acquisition event.
Coupon-style relief attracts scrutiny for exactly these reasons, and courts examine it more closely where it is the only benefit offered. Here it sat alongside a cash election, which is the structural answer to that objection: a class member who wanted money could take money.
The agreement also carried an injunctive term — LifeMD agreed to use a third-party consent service to strengthen consent management on its website for at least two years after the settlement became effective. Prospective relief of that kind is often where the practical value of a privacy settlement sits, because it changes what happens to the next visitor rather than compensating the last one.
Five opt-outs out of 835,159
The final approval order recorded no objections and five timely exclusions against a potential class of approximately 835,159 people. Rates in that range are entirely ordinary, and the reason is structural rather than an expression of satisfaction.
- Notice reaches a fraction of the class. Email notice depends on current addresses; published notice depends on someone reading it.
- Opting out has a cost and no benefit. It preserves an individual claim that almost nobody will actually pursue, and forfeits the settlement benefit in the meantime.
- Objecting requires effort in writing to the court and to both sets of counsel, on a deadline, over an amount most people would not cross the street for.
Which is why a low objection rate should not be read as class approval. It is a measure of how expensive participation is relative to $10.
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Fees and service awards, paid separately
The court awarded class counsel $750,000 in attorneys’ fees and expenses, and $2,500 to each of the two class representatives. The notice stated those amounts would be paid separately from class-member benefits.
That separation is what makes a claims-made structure coherent. In a common fund, fees come out of the same pot as the payouts and every dollar of fee is a dollar off the class recovery, which is why fee percentages are litigated so hard. Where fees are paid on top, the arithmetic is different — though a defendant negotiating a total outlay is still, in practice, trading one against the other.
The release is the product
The mechanism that makes any of this worth paying for is the release. Every class member who did not opt out gave up the released claims, whether or not they filed, whether or not they received anything, and whether or not they ever heard about the case. The court’s notice put it plainly: doing nothing means no benefit and the loss of the right to sue separately on the same claims.
This is why the class definition deserves more attention than the payment amount. The Nevada class covered U.S. residents who were or had been LifeMD or RexMD members, or who ordered or purchased products, and whose private information was allegedly disclosed through tracking tools on the websites. Everything turns on those words — and the certification was for settlement purposes only, which is a narrower judicial act than certifying a class for trial.
What a settlement does not reach
A release binds the people inside the class definition. It does not bind anyone outside it, and that gap is where the next matter tends to appear.
Attorneys are currently investigating potential cases against LifeMD for alleged privacy violations in California — specifically whether the intake questionnaires on LifeMD and its Rex MD and ShapiroMD brands passed a visitor’s own answers to third-party advertising networks before that visitor accepted the terms or created an account. The Nevada class was built from members and purchasers. This review is aimed at people who started a questionnaire, answered at least one question, and never accepted the terms, created an account or made a purchase — a group that was largely outside the released class by construction, and one for which no customer list exists.
It is limited to California residents who visited on or before June 14, 2026. No complaint has been filed, no class has been certified, and nothing has been proven; the criteria are published on the LifeMD data privacy investigation page. Whether it goes anywhere is unknown — but as a matter of class mechanics it is a textbook illustration that a release is only as wide as the definition it was drafted against. The settlement record itself is at LifeMD & RexMD Privacy Settlement Closed: Payment Status.
Questions people ask
Why does the federal docket show the LifeMD case was dismissed?
Because it was – voluntarily and without prejudice. Matthew Marden filed in the Southern District of New York on August 23, 2023. The plaintiffs voluntarily dismissed that action on November 1, 2024 and refiled the claims in the District Court of Clark County, Nevada on November 25, 2024. The Nevada case is the one that settled and was dismissed with prejudice after final approval.
What is the difference between dismissal with and without prejudice?
Without prejudice means the claims can be brought again; the dismissal ends the case but not the right of action. With prejudice means the claims are resolved and cannot be refiled. A class settlement normally ends in dismissal with prejudice, because finality for the defendant is what the payment buys.
What is a claims-made settlement?
One where the defendant pays per approved claim rather than funding a fixed pot in advance. The LifeMD settlement placed no aggregate cap on class-member benefits, so a claimant who chose the $10 cash option received $10 regardless of how many others filed. In a common fund the opposite is true: a larger claim pool shrinks every individual share.
How many people opted out of the LifeMD settlement?
Five. The final approval order recorded five timely exclusions and no objections, out of a potential class put at approximately 835,159 people. Opt-out and objection rates in the low single digits are ordinary in consumer class settlements.
Does a class settlement release claims for people who never filed?
Yes, for anyone within the class definition who did not opt out. Doing nothing means receiving no benefit and still giving up the released claims. That is the mechanism the defendant is paying for, and it is why the class definition matters more than the payment amount.
This article describes publicly filed court records and is general information about class action procedure, not legal advice. TortsAndActions is not a law firm and is not affiliated with any party described. The allegations in the underlying complaint were denied and never decided, and the settlement is not an admission of liability. Speak with a licensed attorney about your own situation.
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