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NY Times Probes Hot Coffee Legal Fees

| 25 Jun 2008 15:18
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An article in the New York Times is calling into question the outrageous legal fees being charged in the Hot Coffee lawsuit, and suggests the settlement could be scuttled as a result.

The settlement in the case, which was brought as a result of a modification to Grand Theft Auto: San Andreas that could reveal elements of a primitive and unused sex mini-game, amounted to a cash value maximum of $26,505, although a report on Overlawyered.com suggested the actual amount of the award would likely be less. Despite that, the plaintiff's lawyers are claiming the value of their representation at just over $1.3 million, or 3774 percent of the settlement amount.

The game has sold over 8.5 million copies in the United States alone since its 2004 release, yet only 2676 purchasers filed claims. "Am I disappointed? Sure," said lead lawyer Seth R. Lesser. "We can't guess as to why now, several years later, people care or don't care. The merits of the case were clear."

But the merits of the case apparently aren't so clear to Theodore H. Frank, director of the Legal Center for the Public Interest at the American Enterprise Institute and Overlawyered contributor. Commenting on the settlement, he said, "There are two possibilities. Possibility one is they have a meritorious lawsuit and they're selling out the class for attorney's fees. The other possibility is that, and frankly I think this is the more likely possibility, they brought a meritless lawsuit that had no business being brought to court at all."

Frank is attempting to have the settlement declared invalid, although Lesser recently filed documents claiming Frank has no basis to challenge the terms of the settlement because he did not take part in the suit itself. If the settlement, including attorney's fees, isn't approved by a federal judge, the case could still go to trial, which may very well lead to a clear victory for Take-Two and yet ironically could end up costing the company considerably more as a result of greatly increased legal costs.

"We certainly wish the case had never been brought and we certainly wish we could've litigated it on the merits and achieved a victory," said Jeffrey S. Jacobson of the legal firm Debevoise & Plimpton, which represented Take-Two Interactive and Rockstar Games in the case. But settling the case was much less expensive for the company than fighting it in the courts, he said, which could have added up to millions of dollars in costs.

The settlement is likely to stand, according to Mary J. Davis, a law professor at the University of Kentucky, who said it's unusual for judges to set aside such settlements. She said judges who review settlements like this are expected to ensure the agreements are reasonable, but are not supposed to impose their opinions on the terms of any deals. Regardless, she described such huge lawyer's fees in cases involving relatively tiny settlements as "sort of backwards," adding, "It doesn't typically go that way."

The best argument against the plaintiff's lawyers fees, meanwhile, may come directly from the defendant's lawyers themselves: While Lesser and his fellow attorneys are chasing down a $1.3 million payday, the legal team representing Take-Two Interactive was able to handle its end of the case for less than $30,000.

Via: GamePolitics

Disclosure(s): Strauss Zelnick, Chief Executive Officer and Chairman of the Board of Directors of Take-Two Interactive Software, Inc., is the head of ZelnickMedia, an investor in both Take-Two and Defy Media, LLC, our parent company. This article was published without approval or consent of ZelnickMedia or Take-Two.
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