Judge Certifies Class-Action Football Game Pricing Lawsuit Against EA

[RAMSFAN21]

Class-Action Lawyer Says Supreme Court Ruling Helps Case Against EA Sports

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By Owen Good on May 26, 2010 at 10:30 AM
It will take months to sort out how a Supreme Court decision yesterday might affect exclusive licenses sports leagues grant to game makers. But the side suing EA Sports, alleging Madden is an illegal monopoly, believes it helps their case.

Some believe that the Supreme Court’s 8-0 ruling that the National Football League, for purposes of negotiating licenses, isn’t a single entity but instead 32 separate ones, is narrow enough that it covers only the apparel business (the plaintiff in the case once held a licence to make NFL caps.) After all, it makes little sense for 32 teams to have to individually negotiate their appearances in a video game, where the inclusion of an entire league is integral to the product’s value.

Stuart Paynter, the lead attorney in Pecover vs Electronic Arts, thinks it’s important not to lose sight of the difference between group licensing and an exclusive licence. “There are efficiencies in group licenses,” he said. “There are a lot of transactional costs to signing a licence with each team, and this applies in the apparel context as well. Where we can run into trouble under this new opinion is where someone’s offering an exclusive licence.”

Paynter is not an impartial analyst, of course. He’s representing the class of consumers suing Electronic Arts over its practice of securing exclusive licenses in its sports games, which Paynter alleges was a response to 2K Sports developing lower-priced competing products in the mid-2000s. Paynter also is co-counsel in former Nebraska and Arizona State quarterback Sam Keller’s lawsuit against EA, alleging his likeness was used without his permission in EA’s NCAA Football series while he was in college. Neither have yet gone to trial.

But he contends that American Needle vs NFL is very relevant to Madden – especially given how often that case’s lower court rulings were cited by EA in its filings in the Pecover matter. The Supreme Court’s decision overturned that ruling and sent the case back to be heard by a federal district court.

“A reversal of that decision kills Electronic Arts’ main legal defence,” Paynter said. “It has factual defences that it may still bring up in trial to a jury.” But should Electronic Arts need to appeal an unfavourable decision, it has lost a good chunk of its original argument, Paynter reasoned.

Interestingly, though, he pointed out one possible silver lining for Electronic Arts with yesterday’s ruling – although its hard to imagine the company using it.

“EA could have an antitrust claim against the NFL,” Paynter said. “EA kind of publicly stated that the NFL was the one that insisted on an exclusive licence to make one video game. And if so, EA could have a potential damages claim against the NFL, based on the difference between the huge licensing deal it signed, and the (less expensive) one it would have had if the NFL’s teams hadn’t gotten together and decided to agree to an exclusive group licence.”

But it would seem that EA’s claim of the NFL seeking a single licensee is helpful mostly in an argumentative sense, hardly something worth rupturing a very strong, 20-year publishing relationship with the league. EA also negotiated an exclusive licence with the NFL Players’ Association.

While a ruling that has the force of invalidating such exclusive group licenses would not by itself create competition, Paynter believes it would put the NFL in a mood to solicit other publishers to develop competing games. Electronic Arts would almost certainly negotiate a cheaper deal if it couldn’t secure a guaranteed, legally binding exclusive licence. The NFL would seek to make up the lost revenue by selling another, possibly to Take Two Interactive, whose NFL 2K5 was the last licensed football video game on a console other than Madden.

“Obviously EA would not be willing to pay as much, so economically it would not make sense for the NFL to have one licence,” Paynter said. “It’d be a business decision for Take Two at that point.”

[RAMSFAN21]

interseting tidbit


The union has the ability to try to block a lockout.

For months, the union has been warning the media and the fans against a lockout. The rhetoric from NFLPA executive director DeMaurice Smith regarding a lockout is looking more and more accurate, even if to some extent it has become a self-fulfilling prophecy.

During the 2010 regular season, however, the NFLPA embarked on a series of meetings with players from every team. Systematically, the union obtained advance approval to decertify in the face of a lockout.

Derided by the NFL as a decision to “go out of business,” decertification would prevent the league from locking out the players by converting the NFLPA from a legally-recognized union into a collection of individual, non-union workers. Some think that the NFL would challenge the maneuver as a sham, but such an approach would entail P.R. risks, since the NFL would be using the legal process in order to force a lockout on the players.

Still, the union inexplicably continues to warn against a lockout while ignoring the fact that the NFLPA has spent hundreds of hours and thousands of dollars to line up the ability to block a lockout via decertification. If the union fails to decertify, it will prove that the effort was a ruse aimed at making the NFL think that decertification would occur.

If decertfication happens, the league then would be compelled to craft across-the-board rules regarding free agency, the draft, and player salaries. The union would likely respond by filing an antitrust lawsuit, arguing that the league consists of 32 separate businesses that cannot work together to place common limits on its workers. (This is why the American Needle case was viewed as being critical to the labor situation, even though the facts center on marketing deals. If the league had secured a ruling from the Supreme Court that it is one business, an antitrust claim based on labor rules may have been doomed from the start.)

A league source with knowledge of the labor dynamics recently told us that the NFL could respond to decertification by simply applying in 2011 the rules that applied in 2010: no salary cap, no salary floor, six years to unrestricted free agency, no rookie wage scale (Andrew Luck just peed a little), one franchise tag per team, continuation of drug and steroids policies. The league would adopt this approach in the hopes that it would survive an antitrust challenge; though the NFL lost the American Needle case as it relates to whether the league is one business, the Supreme Court’s written ruling strongly suggests that a pro sports league may have a valid, legal reason to apply across-the-board labor rules.

With no salary cap and no salary floor, teams would be permitted to spend as little or as much on players as they choose — a dynamic that didn’t hurt franchises like the Chiefs, Buccaneers, or Jaguars in 2010, each of whom were far more successful than big-spending teams like the Cowboys and Redskins.

[Critical Kills]

I wonder if guys like Rams and LiquorLogic will be happy if you get your wish and the end result is like back in the 80's when you'd buy a game with the Cowboys, Raiders, Patriots and Colts in it and the rest of the teams are generic ala Midway Grizzlies and the like. Because that's what the end result of what these lawsuits could bring. Careful what you wish for..

[LiquorLogic]

Quote: Originally Posted by ODogg

I wonder if guys like Rams and LiquorLogic will be happy if you get your wish and the end result is like back in the 80's when you'd buy a game with the Cowboys, Raiders, Patriots and Colts in it and the rest of the teams are generic ala Midway Grizzlies and the like. Because that's what the end result of what these lawsuits could bring. Careful what you wish for..

Hey, in the 80's customization wasn't possible like it is now. Roster sharing over the internet wasn't possible, so to me, as long as we can make the NFL ourselves, that really wouldn't matter. As long as I get a quality football video game allows me to re-create the NFL, or provides it for me, I'm good. Now, I have no football game, that's up to date, to play.

Now, from a business stand point that would never work; people wouldn't buy a game that's missing NFL teams. You know that, I know that, and more importantly, EA and the NFL know that. They, the NFL and EA, won't let that happen. First, if you read the posts from RAMSFAN, you should know that's a more expensive way of negotiating. Someone has to negotiate those deals with every team; that's pretty costly. The NFL would just award a group license. As long as that group license isn't exclusive, and doesn't prohibit competition, the NFL is in the clear.

[EddieV]

Quote: Originally Posted by ODogg

I wonder if guys like Rams and LiquorLogic will be happy if you get your wish and the end result is like back in the 80's when you'd buy a game with the Cowboys, Raiders, Patriots and Colts in it and the rest of the teams are generic ala Midway Grizzlies and the like.

I've been playing football videogames since the 70s...what game from the 80s are you talking about? I've never seen a game that had some NFL teams and not others.

[Only1LT]

Quote: Originally Posted by EddieV

I've been playing football videogames since the 70s...what game from the 80s are you talking about? I've never seen a game that had some NFL teams and not others.

To my recollection, there weren't any Football games that had some real and some fake teams, but I could be mistaken. Games like Tecmo Bowl, only had a handful of NFL teams though.

There were games though that had some real and some fake players. That I remember.

[roadman]

NES Play Action Football only had 8 teams and Techmo Bowl had 4 teams.

Before 92, Joe Montana Football was a non-licensed football game.

[RAMSFAN21]

Quote: Originally Posted by ODogg

I wonder if guys like Rams and LiquorLogic will be happy if you get your wish and the end result is like back in the 80's when you'd buy a game with the Cowboys, Raiders, Patriots and Colts in it and the rest of the teams are generic ala Midway Grizzlies and the like. Because that's what the end result of what these lawsuits could bring. Careful what you wish for..

NO Odogg im just hoping competition enters the market again, so we can have DREADS and other features that have been ignored. What fun is a game that constantly takes away what we already had