The Litigation Horizon

1. The Litigation Horizon Richard J. Idell Idell & Seitel LLP Idell & Seitel LLP, 2008

2. Litigation Horizon Overview • Potential Plaintiff Theories • Products Liability • Negligence • Breach of Warranty • California Consumer Legal Remedies Act • Defensive Strategies • Class Action Lawsuits Idell & Seitel LLP, 2008

3. Products Liability: Plaintiff’s Prima Facie Case • Defendant manufactured, distributed or sold the product • The product had a manufacturing defect when it left defendant’s possession • Plaintiff’s use of the product was reasonably foreseeable • Plaintiff was harmed; and • The product’s defect was a substantial factor in causing plaintiff’s harm. See, e.g. Cronin v. J.B.E. Olson Corp. (1972) 8 Cal.3d 121, 134-35. Idell & Seitel LLP, 2008

4. Negligence: Prima Facie Case • Defendant had a legal duty to conform to a standard of conduct to protect the plaintiff; • The defendant failed to meet this standard; • The defendant’s failure was the proximate or legal cause of the resulting injury; • The plaintiff was damaged. See, e.g., Ladd v. Cty of San Mateo, 12 Cal.4th 913, 917 (1996) Idell & Seitel LLP, 2008

5. Breach of Implied Statutory Warranties • Implied warranty of merchantability. Cal. Civ. C. § 1792. • Implied warranty of fitness for a particular purpose. Cal. Civ. C. § 1792.1. • Implied warranties can only be disclaimed by conspicuous warning that product is sold “as-is.” Cal. Civ. C. § 1792.4 Idell & Seitel LLP, 2008

6. California Consumer Legal Remedies Act • California Civil Code Sections 1750 to 1784 • Prohibits deceptive practices in a transaction intended to result or which results in the sale or lease of goods to any consumer. Idell & Seitel LLP, 2008

7. California Consumer Legal Remedies Act • Required Notice Period • At least 30 days before filing suit, the consumer must give written notice to the defendant by registered or certified mail. • If prospective defendant agrees to an appropriate correction or other remedy within 30 days, plaintiff cannot sue. • This defense does not apply to class-actions under the CLRA, which will be discussed later. Idell & Seitel LLP, 2008

8. Defenses to Claims that Video Games Cause Epilepsy • Seizures were unrelated to video game play. • The manufacturer provided adequate warnings of triggering of seizure players who were predisposed to epileptic seizures. • Plaintiff failed to heed the warnings. Idell & Seitel LLP, 2008

9. General Defenses for Strict Product Liability Lawsuits • The defect was not the proximate cause of the injury. • The seller provided adequate warning. • Plaintiff misused the product. • Intervening third-party culpability. Idell & Seitel LLP, 2008

10. General Defenses for Negligence Lawsuits • Plaintiff’s comparative negligence • Plaintiff’s assumption of risk • Plaintiff’s failure to mitigate damages Idell & Seitel LLP, 2008

11. General Defense to Breach of Implied Warranty • Civil Code 1792.4 states that a “conspicuous” disclaimer, attached to product at the time of sale, must say: • Goods are being sold on an “as is” or “with all faults” basis; • Entire risk as to the quality and performance of the goods is with the buyer; • Should the goods prove defective following their purchase, the buyer and not the manufacturer assumes the cost of all necessary service or repair. Idell & Seitel LLP, 2008

12. Recent Consumer Cases Involving Epilepsy • Roccaforte v. Nintendo of America, 917 So. 2d 1143 (2005). • Parents sued Nintendo after their child suffered violent seizures while playing video games. • After a seven-day trial, jury found in favor of Nintendo. • Appeals court ordered new trial because of Nintendo’s discovery abuses. Idell & Seitel LLP, 2008

13. Spypro New York Litigation • In March 2007, several gaming web sites reported that a plaintiff sued Vivendi Games, Sierroa Entertainment and Sony after her infant had an epileptic seizure while playing a video game. • The suit was reportedly brought in Supreme Court of New York (state trial court). • No reported decision is available. Idell & Seitel LLP, 2008

14. Cases Regarding Violent Content of Video Games • James v. Meow, 300 F.3d 683 (6th Cir. 2002) • High school student shot several other students. Victims’ parents sued video game and movie companies, alleging that the content of video games and movies had desensitized the shooter to violence and “caused the murders.” Plaintiffs sued for negligence and products liability. Idell & Seitel LLP, 2008

15. James v. Meow, cont. • The court found: • Defendants did not owe a duty to third-party shooting victims. • Murderer’s actions were not reasonably foreseeable to defendants. • Products liability only applies to “tangible” products. The alleged defect – violent content – was intangible. Therefore, products liability did not apply. Idell & Seitel LLP, 2008

16. Cases Regarding Violent Content of Video Games • Sanders v. Acclaim Entertainment, Inc., 188 F.Supp. 2d 1264 (D.C. Colo 2002) • Plaintiffs sued video game makers, alleging that violent video games caused the Columbine shootings. • Court concluded: • Columbine shootings were not reasonably foreseeable. • Shooters’ criminal acts were a superceding cause of harm to plaintiffs. Idell & Seitel LLP, 2008

17. Sanders, cont. • Court distinguished between tangible and intangible properties. • Products liability only applies to tangible properties. • Video game contents are intangible, so there was no products liability cause of action. Idell & Seitel LLP, 2008

18. Cases Regarding Violent Content of Video Games • Wilson v. Midway Games, Inc., 198 F.Supp. 167 (D.C. Conn. 2002) • Plaintiff sued Midway for products liability, alleging that violent video games made her son’s friend stab her son. • As in prior cases, court distinguished between tangible and intangible properties. • It declined to apply products liability to intangible content, such as video game content. Idell & Seitel LLP, 2008

19. Video Software Dealers Assoc. v. Maleng, 325 F.Supp. 1180 (W.D. Wa. 2004) Video game manufacturers sued to enjoin enforcement of a federal law restricting dissemination of violent video games to children. Court found that video games were protected speech and that the law was unconstitutional because it was not narrowly tailored enough. Court enjoined enforcement of the law. Cases Regarding Violent Content of Video Games Idell & Seitel LLP, 2008

20. Class-Action Cases • Smith v. Microsoft Corp., 04:08-CV-00061 (S.D. Tex. 1/4/08) • Microsoft’s Xbox Live, an online gaming community, was down for several weeks in December 2007. • Plaintiff filed a class-action lawsuit for breach of contract, breach of warranty and negligent misrepresentation. • Class has not been certified. Idell & Seitel LLP, 2008

21. Class-Action Cases • In re. Grand Theft Auto Video Game Consumer Litigation, 1:06-MD-1739 (S.D.N.Y. 2006) • Plaintiffs sued for fraud on the basis that the game should have been rated “Adults Only.” • Apparently there was readily available code that would add sexually graphic content to the game. • The settlement agreement, in which defendants denied all liability, was filed on 11/19/07. Idell & Seitel LLP, 2008

22. Class-Action Cases • Nunez v. Microsoft, CV:07-2209 (S.D. Ca. 2007). • Class-action lawsuit alleges that Halo 3 video game, which was designed and sold for use on the Xbox console, makes the Xbox freeze or crash while the game is being played. • Sues for breach of implied warranty of merchantability and fitness for a particular purpose. • Class has not been certified. Idell & Seitel LLP, 2008

23. Class-Action Cases • Ray v. Microsoft Corp., 2:06-CV-01720 (W.D. Wash. 2006) • Plaintiff alleged that his Xbox 360 console was destroyed by a software update from Microsoft. • Filed a class-action complaint against Microsoft for breach of contract and negligence. • Microsoft moved for summary judgment, saying he had been wholly reimbursed for his Xbox. • The parties stipulated to a dismissal w/ prejudice. Idell & Seitel LLP, 2008

24. Prerequisites for Bringing Class Actions in Federal Court • Rule 23(a) requires: • The class must be so numerous that joinder is impractical. • There must be common questions of law or fact. • The claims or defenses of the class. representatives must be typical of the class. • The representatives must fairly and adequately protect the interests of the class. Idell & Seitel LLP, 2008

25. Grounds for Bringing Class Actions in Federal Court • Plaintiff must show either that: • There is a risk of prejudice from separate actions establishing incompatible standards of conduct; • Judgments in individual lawsuits would adversely affect the rights of other class members; • The party opposing the class has acted in a way applicable to the class generally; or • Common questions of law or fact “predominate” over those affecting individual members. Rule 23(b) Idell & Seitel LLP, 2008

26. Prerequisites for Class Action Under Cal. Civ. C. 382 • California Civil Code Section 382 establishes two requirements: • Existence of an ascertainable class • Depends on class definition, size of class, means of identifying the class • Well-defined community of interest in questions of law and fact involved in the case. • Predominant questions of law or fact; • Class representatives’ claims are typical of class • Class representatives can adequately represent the class. Idell & Seitel LLP, 2008

27. Prerequisites for Class Action Consumer Legal Remedies Act • Cal. Civ. C. § 1781(b) is the only way to bring a class-action under Consumer Legal Remedies Act. • Consumer must put the prospective defendant on notice prior to filing suit. • Total damages must be $1,000.00 or more. Idell & Seitel LLP, 2008

28. Prerequisites for Class Action Consumer Legal Remedies Act • The court must permit class certification if: • It is impracticable to bring all members of the claim before the court. • The questions of law or fact common to the class are substantially similar and predominate over individual questions. • Claims and defenses of the representative plaintiffs are typical of the class; and • Representative plaintiffs will fairly and adequately represent everyone’s interests. Idell & Seitel LLP, 2008