The Many Lawsuits of Take-Two

While Take-Two recently settled a lawsuit brought against them over the now infamous Hot Coffee of Grand Theft Auto: San Andreas this week, that doesn’t mean they’re in the clear. http://kotaku.com/5350482/take+two-reaches-20m-settlement-in-gta-hot-coffee-suit(new Image()).src = 'https://capi.connatix.com/tr/si?token=995c4c7d-194f-4077-b0a0-7ad466eb737c&cid=872d12ce-453b-4870-845f-955919887e1b'; cnx.cmd.push(function() { cnx({ playerId: "995c4c7d-194f-4077-b0a0-7ad466eb737c" }).render("79703296e5134c75a2db6e1b64762017"); }); The publisher has faced nearly a half-dozen other lawsuits dating back to 2005 over everything from alleged fiduciary mishandling to refusing to sell the company to Electronic Arts, to the company’s purported connection to the triple homicide of Alabama police officers in 2005. Here’s a break down and where all of the cases stand: Strickland et al. Personal Injury Action On June 7, 2003, Devin Moore grabbed a gun while being processed by the Fayette, Alabama police department, and shot two police officers and a dispatcher to death. When he was captured about four hours later he told police that “life is a video game, everybody has to die sometime.” He was convicted in 2005 and sentenced to death by lethal injection. In February 2005 attorneys for the three victims filed a suit against Take-Two, Sony Computer Entertainment America Inc., Sony Corporation of America, Wal-Mart, GameStop and Devin Moore, alleging under Alabama’s manufacturers’ liability and wrongful death statutes, that Grand Theft Auto resulted in “copycat violence” that caused the deaths of the three. The suit seeks damages against all of the defendants in excess of $600,000. On July 29, 2009, the court granted summary judgement to Take-Two. One of the plaintiffs filed an appeal on Aug. 10, 2009 which has not be ruled on yet. Consumer Class Action and City of Los Angeles Litigation-Grand Theft Auto: San Andreas In July 2005, Take-Two received four complaints for class actions, which were consolidated in the United States District Court for the Southern District of New York (the “SDNY Court”). In the complaints, the plaintiffs say they bought copies of Grand Theft Auto: San Andreas and accuse Take-Two of engaging in consumer deception and false advertising because publisher failed to disclose that San Andreas had hidden sex scenes in it. In January 2006, the City Attorney for the City of Los Angeles filed a complaint in the Superior Court of California, alleging violations of California law for the same reasons. That was later consolidated with the consumer class action. In December 2007, the court preliminarily approved a settlement of the consumer class action, but in July 2008 the court refused to certify the proposed settlement class. The plaintiffs filed an appeal April 15, 2009. The appeal is now pending. St. Clair Derivative Action In January 2006, the St. Clair Shores General Employees Retirement System filed a class and derivative action complaint in the court against Take-Two and some of their former officers and current and former directors. The suit alleged that the defendants breached their fiduciary duty by selling their stock while in possession of certain material non-public information and that the company failed to disclose material facts in their 2003, 2004 and 2005 proxy statements. The plaintiff seeks the return of all profits from the alleged insider trading conducted by the individual defendants who sold Take-Two stock, unspecified compensatory damages with interest and its costs in the action. In 2008, the court dismissed all claims, but didn’t rule out monetary damages, instead inviting briefs from the defendants. In October 2008, the defendants sought to have the remaining claims against them dismissed. The briefing on that was wrapped up in January 2009, but no decision has been made. Securities Class Action-Grand Theft Auto: San Andreas and Option Backdating In February and March 2006, four class action complaints were filed against Take-Two and former and current officers and directors over the hidden riches777 content in Grand Theft Auto: San Andreas and the backdating of stock options. In April 2008, the court dismissed, with leave to amend, all claims as to all defendants relating to Grand Theft Auto: San Andreas and certain claims against Take-Two’s former CEO, CFO and certain director defendants relating to the backdating of stock options. In September 2008, the lead plaintiff filed a third amended consolidated complaint seeking to reinstate these claims. On August 31, 2009, Take-Two entered into a memorandum of understanding with the lead plaintiffs to comprehensively settle all claims asserted by them against them, Rockstar Games and all of the current and former officers and directors named in the actions. Under the terms of the proposed settlement, Take-Two will pay $20,115,000 into a settlement fund for the benefit of class members, $15,200,000 of which will be paid by their insurance carriers and the balance of $4,915,000 was previously accrued for in their financial statements over several quarters ended April 30, 2009. In addition to the payment to the settlement fund, Take-Two also agreed to supplement the substantial changes that the publisher has already implemented in their corporate governance policies and practices. The proposed settlement is subject to the completion of final documentation and preliminary and final approval by the court. Derivative Action-Option Backdating In July and August 2006, shareholders Richard Lasky and Raeda Karadsheh filed actions against Take-Two over the company’s historical stock option granting practices, alleging violations of federal and state law, including breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment. On April 21, 2009, the court dismissed all claims against all named defendants except Ryan A. Brant, James David, Larry Muller, and Kelly G. Sumner, and assigning those remaining claims to the company as the sole party plaintiff. On June 15, 2009, the former shareholder plaintiffs applied for the entry of final judgment in order to permit the immediate appeal of the court’s April 21, 2009 order dismissing certain defendants and terminating the former shareholder plaintiffs from consolidated action. The shareholder plaintiffs’ request for the entry of judgment is pending before the Court. Stockholder Actions In March 2008, Patrick Solomon, a stockholder, filed a purported class action complaint against Take-Two and certain of their officers and directors alleging that they breached their fiduciary duties by, among other things, allegedly refusing to explore premium offers by Electronic Arts Inc.to buy the company. After certain voluntary actions were taken by the Company, the plaintiff agreed to withdraw his motion for preliminary g2g1bet injunctive relief, but on December 19, 2008, the plaintiff filed a supplement to his complaint repeating his allegations. On April 3, 2009, Take-Two entered into a settlement in principle of the plaintiff’s complaint and both supplements, subject to approval by the Delaware Court. The Court approved the settlement on June 18, 2009. The settlement provided, among other things, for additional disclosure which was contained in a supplement to the Company’s proxy statement. The settlement did not provide for a payment of monetary damages to the plaintiff or the purported class. The application by the plaintiff’s counsel for fees and expenses was granted by the court. Take-Two says that the suit was without merit, but that they settled to “save the time and expense of continued litigation.” In April 2008, St. Clair Shores General Employees Retirement System, a H25 stockholder, filed a purported derivative action against Take-Two’s directors and ZelnickMedia alleging the same things Solomon did. The suit also contained an additional complaint about the “poison pill” adopted by Take-Two’s board in March 2008, and an additional claim against ZelnickMedia for aiding and abetting the directors’ alleged breach of fiduciary duty. Because the action was duplicative, the plaintiff agreed to stay all proceedings in the case in favor of the Solomon case. The resolution of the Solomon matter resulted in the resolution of this matter, which was voluntarily dismissed by stipulated order on August 3, 2009, without the payment of any costs or expenses. Also in April 2008, Michael Maulano, an alleged stockholder, filed a purported class action in New York Supreme Court, New York County, against Take-Two . The resolution of the Solomon matter resulted in the resolution of this matter, which was voluntarily dismissed by stipulated order on July 16, 2009, without the payment of any costs or expenses. [Pic]