EA may have a non-frivolous lawsuit to worry about

by: Dan - posted: 12/26/2010 10:06:00 PM

Over the last few weeks, there have been a couple of potential frivolous lawsuits filed against video game companies including Activision and Rockstar Games.

Unfortunately for Electronic Arts, they had a bad Tuesday last week leading up to Christmas.  In addition to the $400 million lawsuit over the Infinity Ward fiasco they got hit with, they also have something that may have more teeth to worry about.  On December 21st, a federal judge certified a class action lawsuit against EA that alleges that consumers have overpaid on sports titles including the Madden series since 2005 because EA violated antitrust and consumer protection laws due to their exclusive licenses they hold on NFL, NCAA and other sports leagues. Remember back in May when we said to keep an eye on the American Needle verdict (The NFL got hammered by the Supreme Court) and how it would impact the NFL licensing and the Madden franchise? Well, this looks like the first challenge based on that American Needle verdict.

The lead counsel is alleging that consumers should get refunds because EA was involved in “an illegal price-gouging scheme" because it “underscores how lucrative and exclusive agreements in the video game industry can come with an inflated price tag for consumers." While I agree that the whole exclusive license it BS, I do not agree with the allegations as stated, simply because there is one caveat that might save EA’s hide. EA really has not gouged customers off their sports titles, exclusives or not, because these titles have not been priced any higher than the typical video game for the console generation. It’s not like any Madden title was priced at $79.99 while the rest of the titles of this gen were at $59.99. Of course, the NFL 2K series was $10 cheaper last gen, but 2K Sports priced themselves at the $59.99 level with all of their sports titles this gen, which leads one to belive an NFL 2KXX title would also be priced at $59.99, if they were able to make one.

Now, if the lead counsel can prove that EA titles influenced (or set) the this generation’s game price points for the entire video game industry, then they may have found their smoking gun. But I have my doubts if they can make this stick. Regardless of how this works its way out, we should all love to see the exclusive rights garbage go out the window. Competition should bring better titles and more innovative gameplay to the masses.

Anyone interested in more info on the lawsuit can find all of the contact info in the release after the jump.

Federal Judge Certifies Class Action Lawsuit Against Electronic Arts, Says Hagens Berman

SAN FRANCISCO, Dec. 22, 2010 /PRNewswire/ -- A federal judge certified a national class-action lawsuit against Electronic Arts, Inc. (Nasdaq: ERTS) based on allegations that video game consumers overpaid for popular sports titles including Madden NFL.

The decision, ordered by U.S. District Court Judge Vaughn R. Walker on December 21, 2010, also appointed Hagens Berman to serve as co-counsel representing consumers nationwide who purchased National Football League (NFL), National Collegiate Athletic Association (NCAA), or Arena Football League branded video games produced and released by Electronic Arts after January 1, 2005. Eligible class members who would like more information about the class-action lawsuit may contact attorneys at maddenNFL@hbsslaw.com.

"Consumers now have a legal standing to demand that EA refund consumers millions of dollars it made from Madden NFL and other sports titles through what we contend was an illegal price-gouging scheme," said Steve Berman, managing partner of Hagens Berman. "We're gratified by the ruling, and believe it underscores how lucrative and exclusive agreements in the video game industry can come with an inflated price tag for consumers."

The lawsuit, initially filed by Hagens Berman on behalf of plaintiffs, claims that Delaware-company Electronic Arts violated antitrust and consumer protection laws by holding exclusive license agreements with NFL, NCAA, and Arena Football League. Through these agreements, Electronic Arts developed and published highly coveted sports titles that generated billions of dollars in sales while allegedly restricting competition, the lawsuit states.

"We believe EA forced consumers to pay an artificial premium on Madden NFL video games," said Berman. "We intend to prove that EA could inflate prices on their sports titles because these exclusive licenses restrained trade and competition for interactive sports software."

The lawsuit claims that the agreements may have inflated the price of certain Electronic Arts-produced sports titles including Madden NFL, by up to 70 percent. Madden NFL is Electronic Arts biggest sports franchise in the United States, and occupies four of the top 10 best selling games in the nation, industry reports claim.

The 67-page court order provided further explanation behind the judge's decision, and granted the plaintiffs' request to represent respective class members seeking punitive damages against Electronic Arts. The judge excluded consumers who purchased similar games sold for mobile devices from the class action.

The judge also declined the plaintiff's request for an injunctive relief, and will allow testimony from video game industry expert Jill Hamburger. Additional court documents are under seal.

Class members who wish to be notified of further development may contact attorneys at maddenNFL@hbsslaw.com or call (206) 623-7292 (206) 623-7292 . A class notice will be sent to class members in the next 60 days.

More information about this case is available at: http://www.hbsslaw.com/maddennfl.