- False Start! Objector Says "Not so fast" on Electronic Arts Touchdown Settlement
- August 9, 2013
- Law Firm: Proskauer Rose LLP - New York Office
After what has happened at Electronic Arts ("EA") over the last few years, maybe it is time for them to consider a better offensive line. Just as EA thought it was in the open field, the maker of popular video game series such as Madden NFL and NCAA Football is back in the news with another legal dispute. EA is no stranger to an all-out legal blitz. In our June 2009 newsletter, we covered the lawsuit brought by former Arizona State quarterback Sam Keller against the videogame giant over claims of unauthorized use of player images. EA also is involved in a similar dispute with Jim Brown over the inclusion of his likeness and statistics in a game, a story that we tracked in our November 2010 edition.
This past spring, a California federal judge granted final approval on a $27 million settlement in Pecover v. Electronic Arts Inc., a class action lawsuit claiming that EA had a monopoly over the market for interactive football video games through its allegedly anticompetitive licensing agreements with the National Football League ("NFL"), National Collegiate Athletic Association ("NCAA") and Arena Football League ("AFL"). In essence, the plaintiffs claimed that EA, through its exclusive arrangements with the major football associations, effectively cut off all competition in the football video gaming landscape and was afforded the opportunity to charge higher prices for its games.
Under the terms of the proposed settlement, EA agreed to not renegotiate an exclusive agreement with the NCAA or AFL for five years following the expiration of the current agreements. It also agreed to pay consumers a partial refund on the games in question, with the amounts varying depending on the generation of gaming console. This appeared to be the end of the four-year litigation, but the court called an audible.
Just before the play clock expired, the court modified the settlement by ordering three times the alleged damages to be paid to affected customers. This was a result of the court seeking to maximize the payouts after fewer class members than expected filed claims within the applicable period. Affected customers were confined to "All persons in the United States who purchased Electronic Arts' Madden NFL, NCAA Football, or Arena Football League brand interactive football software, excluding software for mobile devices...with a release date of January 1, 2005 to June 21, 2012." Older generation games will be paid out at $20.37 per unit, while newer games will be valued at $5.85 each. Moreover, the court extended the claims period by two months to attract more claimants. The decision to send this dispute into overtime will not affect any claimants who already have filed. Once again, the clock seemed to have run down on the litigation, but a challenge flag was thrown and the previously approved settlement is now under review.
After the fees were outlined to the court and agreed upon by the parties, an objection was filed disputing the allocation of attorney's fees and costs in this matter. While this was denied by the district court, the objector to the settlement appealed to the Ninth Circuit. As of this writing, there is currently no oral argument date set for the appeal. A favorable ruling for the appellant would only affect the cash allocation, not the pertinent terms of the settlement. Nevertheless, none of the disbursements can be made until this issue is resolved, leaving EA and class members stuck waiting for the replay official to come out from under the hood.