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Judge Sends Sega Arcade Game Settlement Back for Reprogramming

Robert Carbone, Esq. | Deputy General Counsel, Attorney Relations

A federal Judge has rejected a proposed settlement between two subclasses of plaintiffs and Sega, the video game company, for deceptive practices in the design and marketing of its Key Master game. The settlement was rejected due to speculative basis for its monetary relief, uncertain methods for identifying and paying plaintiffs, and an unsupported attorney’s fees provision.

 

For those unfamiliar, Key Master is a modern variant of the claw crane game for winning prizes. Instead of a claw, there is a key that must be guided via joystick through a lock shaped hole. Behind each hole is a prize.

 

The complaint alleges that Sega’s arcade game falsely and deceptively misleads consumers because the game’s programming does not permit prizes to be awarded, even if the user wins the game, until a certain amount of money is deposited into the game. As can be seen from the video in the link above, many complain about the game seemingly sabotaging players’ otherwise winning maneuvers.

 

As reported by Law.com, the settlement stipulated for two subclasses of plaintiffs:

“One class is for people who successfully inserted the Key Arm in the Key Hole and received no prize and the second class is for people who failed to insert the Key Arm into the Key Hole and did not receive a prize or other compensation.”

The agreed upon settlement value for the first subclass was $275,000 while the second subclass would receive $375,000. Judge Richard Berman in U.S. District Court for the Southern District of New York, analyzing the proposed settlement, took issue with the plan to advertise the settlement via Internet banner ads, noting that there was no factual basis provided that such a method would be effective. He also held that there was insufficient factual record with regard to the size of the subclasses to make them sufficiently “precise, objective and presently ascertainable” as required for conditional class certification.

 

Finally, the Judge rejected the attorney’s fees award without mincing words:

“The proposed Settlement Agreement . . . provides for anticipated counsel fees of $850,000-which exceed the entire settlement fund of $650,000 by $200,000. No such legal fee has ever before been approved by this Court.”

In the end, the parties were requested to submit a pre-motion brief outlining the amended settlement terms after the next round of negotiations.

 

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