Updates From Around the Firm - Securities Newsletter November 2013

At Hagens Berman, we specialize in providing ongoing protection for investors whose portfolios have suffered losses from fraud by malfeasance of publicly traded corporations and their executives.

Securities litigation aligns with the firm’s larger mission of defending those who often find themselves voiceless against behemoth organizations. The work Hagens Berman does to support this mission goes far beyond securities, which is why we want to share with you a few recent victories in some of the other areas in which we work.

Jury Verdict Achieved for Video Game Designer From $5 Billion Madden NFL Franchise

In 1986, video game designer and developer Robin Antonick created Madden NFL, which would go on to become a best-selling game for Electronic Arts (EA). In the 27 years since, Madden NFL has turned into a massively popular—and profitable—series of games, with a new release each year. Yet Antonick, who had signed an agreement with EA that required the gaming giant to pay him royalties on any derivative works, wasn’t seeing his proper share of the $5 billion Madden NFL franchise.

Antonick turned to Hagens Berman and asked us to help him receive the compensation he had been promised. We took on the case because it aligned with our ongoing mission of protecting the public interest against the Goliaths of the world who would seek to take advantage of hardworking people such as Antonick. In the case of Madden NFL, we believed it was necessary for this large corporation to give proper due to the individual who contributed so much to the company’s success.

The lawsuit was filed in March of 2011 and, after two years of legal maneuvering by EA, finally went to trial this summer. Soon after, two major jury victories were handed down in June and July, respectively, both ruling in favor of Antonick. The first determined that the statute of limitations had not run out on Antonick’s complaint, which allowed the lawsuit to move forward to the next stage: determining whether Antonick should be awarded any royalties and damages for games released between 1990-1996.

In July, the jury found that several of EA’s games during that period were virtually identical to Antonick’s original version of Madden NFL Football. As a result, the verdict entitled the developer to a long-overdue $11 million, including interest.

There’s still more to come in this lawsuit, with a third jury soon to consider if Antonick should be awarded royalties for Madden NFL games from 1996-present. This could potentially lead to a much larger sum than July’s award, as Madden NFL games from this most recent period have raked in significantly greater profits than games from the first decade of the franchise.

Record $1.6 Billion Settlement Secured in Toyota Sudden Acceleration MDL

July 2013 also saw the final ruling in Hagens Berman’s class-action lawsuit against Toyota Motor Corporation, with a judge granting approval of a $1.6 billion settlement by the car manufacturer. This amounts to the largest settlement of this type in U.S. history, both in terms of dollars paid out and the number of vehicles involved.

The case was a complex one, and hard-fought over the past three years, as Hagens Berman sought to protect consumers who were at risk from sudden, unintended acceleration in some Toyota vehicles—or had faced financial losses from diminished turn-in values after consumer and media reports began pouring in, alleging the safety flaw.

The settlement is particularly extraordinary because every dollar goes to claimants, and it also includes a number of benefits for class members. Under its terms, Toyota will install a brake-override system in qualifying vehicles, and establish a $250 million fund from which to compensate current owners not eligible for a brake-override system.

In addition, the settlement includes a second $250 million fund to compensate Toyota owners who sold their cars between Sept. 1, 2009, and Dec. 31, 2010, for an alleged reduction in resale value. That can amount to anywhere from $125 to $10,000, depending on the level of depreciation—a significant financial recovery.

Millions in Taxpayer Funds Recovered After Whistleblower Represented by Hagens Berman Steps Forward

Under the False Claims Act, whistleblowers with insider information can file suit on the government’s behalf, in order to recover taxpayer funds lost due to fraud. Because whistleblowers can undergo extreme stress after coming forward—lawsuits can be protracted, and there is often backlash from those accused of wrongdoing—the False Claims Act also incentivizes informants by enabling them to receive a substantial portion of funds recovered.

This summer, Tacoma-based Sound Physicians agreed to pay a $14.5 million settlement to the U.S. government, four years after a suit was filed by Hagens Berman on behalf of Craig Thomas, alleging Medicare fraud.

While in his former position of Regional Vice President of Operations for Sound Physicians, Thomas uncovered information that brought up questions about the company’s financial conduct. In the lawsuit, he alleged audits by Sound showed that up to 90 percent of its physicians’ visits with patients were coded at more expensive levels than supported by patient records. This practice, known as upcoding, is a common type of Medicare fraud, and allegedly caused the government to overpay by tens of millions of dollars for services rendered by Sound.

Thomas claimed that he voiced his concerns with Sound executives, to no avail. He courageously turned to legal channels and, together with Hagens Berman, helped return millions of taxpayer dollars to the government.

Settlement Achieved for Student-Athletes Whose Likenesses Were Appropriated for Video Games

In September, a proposed settlement was reached in another case against Electronic Arts—this time regarding the likenesses of student-athletes in EA’s popular line of NCAAbranded video games. These games have raked in millions for the company, thanks in large part to the appropriation of student-athletes’ images. All the while, student-athletes themselves must agree to NCAA terms that they will not exploit their personal value for commercial gains.

In 2009, Hagens Berman filed a class-action lawsuit against both the NCAA and EA, claiming the companies illegally used college athletes’ names and likenesses in video games without permission or consent from the players. The suit also claimed that using a player’s name, picture or likeness violated contracts and licensing agreements in NCAA bylaws.

The case drew national attention after EA unsuccessfully argued that its games were protected under the First Amendment as artistic impression. A judge rejected the argument, and denied EA’s motion to dismiss the case. Now, after more than three years, a settlement by EA is awaiting approval by the court. The amount and other terms are confidential pending a court filing, but the settlement will now allow attorneys to focus on ongoing claims against the NCAA.