A California judge has dismissed a class action lawsuit against Netflix. The suit claimed that Netflix deliberately misled investors with its reported churn numbers.

I wish I remembered more about class action lawsuits from my securities fraud class and knew more about the internal workings of this case. Instead I'll have to resort to general impressions. Many of these class action suits against technology companies, if not superficially opportunitistic, simply present one way to interpret an inherently volatile and ambiguous situation. Technology companies are subject to startling fluctuations in earnings and revenue. They often miss expectations. And, while there are plenty of legitimate securities fraud lawsuits out there, no investor should be surprised if the ride is a little bumpy. If you don't like the bumps, don't invest in high-growth technology companies.

This particular lawsuit focused on churn, or the amount of turnover Netflix experienced among its subscribers. The suit said that Netflix was too optimistic in its churn reporting. But in this excellent (and prescient) analysis from the Motley Fool, we learn that there isn't one accepted standard of computing churn. Netflix's method was novel, but not necessarily wrong. And since the article seems to understand how Netflix is computing its numbers, presumably anyone else could understand that as well.

There isn't any law saying that Netflix needs to use the most mathematically accurate way, under its particular circumstances, of computing churn. The law says that Netflix can't make material misrepresentations. Netflix adopted a way of doing things when no specific standard was in place and explained how it arrived at its numbers. If you look at previous Netflix earnings releases, you can see that Netflix in fact does explain how it computes its churn rate.

There is a good time and place for a worthwhile class action lawsuit. Obviously, however, something less has never stopped class action lawyers from making noise. This time, the California court had none of it.