NEW YORK — A proposed settlement of a class action lawsuit brought by consumers who were offended by a video game that contained hidden sexually explicit scenes was rejected July 30 by a federal judge (In Re: Grand Theft Auto Video Game Consumer Litigation, No. 06 Md. 1739, S.D. N.Y.; 2008 U.S. Dist. LEXIS 58048).
(Opinion. Document #43-080807-023Z.)
U.S. Judge Shirley Wohl Kram of the Southern District of New York decertified the settlement class in a class action lawsuit against video gamer maker Take-Two Interactive Software Inc. Citing McLaughlin v. American Tobacco Company (522 F.3d 215 [2d Cir. 2008]), Judge Kram found that the plaintiffs have failed to satisfy the predominance requirement of Federal Rule of Civil Procedure 23(b)(3). The decision is a reversal of Judge Kram’s Dec. 4 order in which she conditionally certified the settlement class and preliminarily approved the proposed agreement.
Judge Kram held that each class member’s consumer protection claims are governed by the law of the state where the game Grand Theft Auto: San Andreas was purchased. The judge found that under the consumer protection law of some states, reliance is an element of consumer fraud. Judge Kram found that the settlement class is “rife with substantial individualized issues other than the reliance issues that required decertification in McLaughlin.”
Judge Kram held that because reliance is an element of consumer fraud in some states, the alleged uniformity of Take-Two’s fraudulent conduct is insufficient to justify a finding of predominance. The judge found the singularity and uniformity of the alleged fraud provide no reason to distinguish McLaughlin. In McLaughlin, the Second Circuit U.S. Court of Appeals decertified a nationwide light cigarette class on the grounds that individual issues predominate over common issues of fact based on the premise that many state consumer protection laws require reliance.
The proposed agreement provided that purchasers could either exchange the game for a version without the explicit scenes or could choose to receive a cash payment of up to $35. The payments would have been determined based on the number of class members who file claims. Take-Two said it had set aside $1.02 million to settle the case; however, the company said the proposed agreement could have cost up to $2.75 million. Class counsel’s fees would have been paid by Take-Two in addition to the money set aside to cover consumer claims.
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