A bit of background on why (IMO) it's good to see these small claims cases succeed for non-trivial amounts:
AT&T is essentially class action proof post-AT&T v. Concepcion. AT&T had always put mandatory arbitration and class action waiver provisions in its contracts but states (most notably CA) usually ignored them and allowed class actions to proceed. In Concepcion, the Supreme Court said that the Federal Arbitration Act (an act that basically says promoting arbitration is so desirable any contract that calls for arbitration must be honored) preempts state law that would ignore those provisions.
In other words, the formula for becoming class action proof is now 1) insert mandatory arbitration provision; 2) insert class action waiver; 3) dare consumers to sue you one at a time.
Virtually the only way I see to overcome Concepcion right now is mass, coordinated (but individual), small claims suits or arbitrations. If AT&T had to face several million suits where it was actually relatively easy to win $850, they'd be begging for the old class action system.
How do you come up with that number? According to http://www.edreform.com/Fast_Facts/K12_Facts/#ENROLLMENT, there are about 130,000 elementary schools in the US. Even if every single school in the nation used IXL, they'd only reach $25 MM in revenue. Given that IXL probably reaches some single-digit percentage of schools, $100 MM seems really high. Are parents buying this in droves?
I'm left unsure how they define "premature scale." If they simply mean "started paying more for customers than they're worth, and doing so on a massive scale," then, well, duh.
It would be more interesting to know what successful startups do at Stage 3. I doubt it's just wait longer.
It's really tough if you aren't one (probably akin to the often-mentioned difficulty non-technical folks have evaluating programmers).
But there are a few places to start. First, Martindale-Hubbell is a respected reviewer of legal talent and provides ratings.
Second, if your lawyer happens to be a "SuperLawyer" you're probably in good hands. SuperLawyers represent the top 5% of a given field as voted by their peers.
There's a pretty good round up of illustrative opinions here: http://www.uclpractitioner.com/2012/03/new-opinions-interpre...