22582578
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
In re Grand Theft Auto Video Game
Consumer Litigation
No 1:06-md-1739 (SWK) (mhd)
SETTLEMENT AGREEMENT
This Settlement Agreement is made by and among individual and representative
Plaintiffs Brenda Stanhouse, Rose Goldfine, Robert Samario, Susan Carlson, Florence
Cohen, Cindy Casey and John Robinson (“Plaintiffsâ€), on behalf of themselves and, on the
terms set forth herein, the Settlement Class as defined herein, and Take-Two Interactive
Software, Inc. and its wholly-owned subsidiary Rockstar Games, Inc. (“Defendants,†and
Plaintiffs and Defendants being collectively referred to herein as the “Partiesâ€), by and
through their respective counsel and representatives, as of the 7th day of November 2007,
to settle and compromise the claims of Plaintiffs and the Settlement Class asserted in this
matter (the “Actionâ€) on the terms and conditions set forth below:
I. CLAIMS OF THE PARTIES
A. Defendants market and indirectly, including through retailers, sell, among
other things, the Grand Theft Auto series of video game titles. In or about October 2004,
Defendants released a game in this series entitled Grand Theft Auto: San Andreas for use
on the Sony “PlayStation 2â€TM video game console. In or about June 2005, Defendants
released versions of Grand Theft Auto: San Andreas playable on personal computers and
on Microsoft XboxTM video game consoles.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 1 of 29
2
22582578
B. Plaintiffs contend that the copies of Grand Theft Auto: San Andreas
manufactured and distributed before July 20, 2005, contained elements that, if modified
and combined by a player using third-party modification software and/or hardware, could
display the clothed animated male protagonist of the game engaging in simulated sexual
intercourse with nude animated women. These scenes have come to be referred to as the
“Hot Coffee†scenes.
C. Plaintiffs contend that Defendants defrauded Plaintiffs and violated
consumer fraud statutes by misleading consumers of Grand Theft Auto: San Andreas as to
the game discs’ content by including the Hot Coffee elements on the distributed discs and
by marketing the game under an “M†(Mature) rating, when, Plaintiffs allege, the disc
should have been rated as “AO†(Adults Only) because of the existence of the Hot Coffee
elements on the distributed game discs. Plaintiffs also contend that Defendants were
unjustly enriched because Defendants received consumers’ money that would not rightly
be Defendants because, had the game disc been rated properly as AO, Defendants would
not have been able to sell the game at all through mass retailers, who would not have
carried an AO game. Finally, Plaintiffs also contend that Defendants were negligent by
including the Hot Coffee elements in the distributed game, rather than removing the Hot
Coffee elements entirely.
D. Defendants do not dispute that the elements that were modified and
combined to display the Hot Coffee content were present on the Grand Theft Auto: San
Andreas game discs manufactured before July 20, 2005, but Defendants vigorously deny
each and every one of Plaintiffs’ allegations of improper conduct and deny having any
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 2 of 29
3
22582578
liability to the purported Plaintiff class. The Hot Coffee elements were (a) inaccessible to
users until a third-party developed and released software to modify, combine, and display
the elements and (b) only accessible to consumers that purposefully took steps to modify
their game with third party hardware and/or software. In order to display the Hot Coffee
content, a user who possessed the personal computer version of the game (about 1% of
total units sold) had to download and install a third-party modification, while a user of one
of the two console versions of the game (playable on Microsoft’s “Xbox†or Sony’s
“PlayStation 2†consoles), had to purchase and correctly program a third-party device that
attached to their console. (All of these methods of modifying the Grand Theft auto: San
Andreas game have become known collectively as the “Hot Coffee Mod.â€) Defendants
contend that (i) these “Hot Coffee†elements were not part of the intended game
experience; (ii) these elements were unused or had been disabled by programmers in a way
that prevented consumers from accessing them during unaltered gameplay of Grand Theft
Auto: San Andreas; (iii) the elements were discovered, and the Hot Coffee Mod created, by
a highly skilled computer programming professional without knowledge of or
authorization by Defendants; and (iv) the Hot Coffee elements could not be accessed by
any consumer without volitional acts by a consumer to purposefully alter the game with
third party software and/or hardware.
E. The individual actions, which were eventually transferred by the Judicial
Panel on Multidistrict Litigation to the United States District Court for the Southern
District of New York, which consolidated them into the Action, were brought by the
following plaintiffs against the Defendants:
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 3 of 29
4
22582578
1. Florence Cohen, commenced in the U.S. District Court for the
Southern District of New York, Case No. 05-cv-6734;
2. Robert Samario, commenced in the U.S. District Court for the
Southern District of New York, Case No. 05-cv-6767;
3. Susan Carlson, commenced in the U.S. District Court for the
Southern District of New York, Case No. 05-cv-6907;
4. Cindy Casey, commenced in the U.S. District Court for the Eastern
District of Pennsylvania, Case No. 05-cv-4268;
5. Brenda Stanhouse, commence in the U.S. District Court for the
Southern District of Illinois, Case No. 05-721
6. Rose Goldfine, commenced in the U.S. District Court for the
Southern District of New York, Case No. 06-cv-6537; and
7. John Robinson, commenced in the U.S. District Court for the
Eastern District of Pennsylvania, Case No. 06-cv-5263.
F. The Parties were assisted in reaching this Settlement Agreement by United
States Magistrate Judge Michael H. Dolinger of the United States District Court for the
Southern District of New York.
G. Plaintiffs, through their counsel, have conducted an investigation of the
facts and analyzed the relevant legal issues. Although Plaintiffs and their counsel believe
that the claims asserted in the Complaint have substantial merit, they also have examined
the benefits to be obtained under the proposed Settlement, including allowing consumers
with pre-July 20, 2005 copies of Grand Theft Auto: San Andreas, and who claim to have
been offended by the existence of the Hot Coffee elements on their game discs, to
exchange their present copies of the game for copies without the Hot Coffee elements and
also, under certain circumstances, to obtain cash benefits, and have considered the risks,
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 4 of 29
5
22582578
costs and delays associated with the continued prosecution of this litigation and the likely
appeals of any rulings in favor of either Plaintiffs or Defendants.
H. Defendants have conducted an investigation of the facts and analyzed the
relevant legal issues. Defendants deny all liability with respect to any and all facts or
claims alleged in the Complaint, and believe that their defenses both to Plaintiffs’ pending
motion for certification of a nationwide class and to the claims asserted in the Complaint
itself have substantial merit. Defendants also have weighed the potential risks, costs and
delays associated with continued litigation of the Action against the benefits of the
proposed Settlement.
I. Each of the Parties and counsel believes, in consideration of all the
circumstances and after substantial arms’ length settlement negotiations between counsel,
that its interests are best served by entering into the proposed Settlement set forth in this
Settlement Agreement, and that this proposed Settlement is fair, reasonable, adequate and
in the best interests of the Settlement Class.
NOW, THEREFORE, IT IS HEREBY AGREED by and between the Parties, that:
(a) the Action be settled and compromised as between Plaintiffs, on behalf of
themselves and all Settlement Class Members, and the Defendants, subject
to approval of the Court after a hearing (or hearings) as provided for in this
Settlement Agreement; and
(b) upon Court approval of the settlement and compromise of the Action, a
Final Order and Judgment, substantially in the form annexed hereto as
Exhibit A (the “Judgmentâ€) be entered: (1) dismissing the Action with
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 5 of 29
6
22582578
prejudice; and (2) barring and enjoining the prosecution by Settlement Class
Members of all Released Claims, as defined below, against the Defendants
with prejudice.
(c) All of the foregoing shall be subject to the following terms and conditions:
II. DEFINITIONS
In addition to the foregoing defined terms, for purposes of the Settlement
Agreement and all Exhibits thereto, the following terms shall have the meanings given to
them below:
A. “Class Period†means the period from August 1, 2004 through the date on
which the Court preliminarily approves this Settlement Agreement and directs Defendants
to provide notice of the proposed Settlement to the Settlement Class (the “Preliminary
Approval Dateâ€).
B. The “Effective Date†of the Settlement is the date on which the Judgment
becomes Final. “Final,†when used in connection with any court order or judgment, means
(a) if no appeal is taken from a court order or judgment, the date ten calendar days after the
time to appeal therefrom (including any potential extension of time) has expired; or (b) if
any appeal is taken from a court order or judgment, the date ten calendar days after all
appeals therefrom, including petitions for rehearing or reargument, petitions for rehearing
en banc, and petitions for certiorari or any other form of review, have been finally
disposed of, such that the time to appeal therefrom (including any potential extension of
time) has expired, in a manner resulting in an affirmance of the relevant order or judgment.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 6 of 29
7
22582578
C. A “GTA:SA First Edition Disc†is any original copy of Grand Theft Auto:
San Andreas manufactured before July 20, 2005 that contained the elements for the Hot
Coffee content.
D. “Plaintiffs’ Class Counsel†means the firms of Locks Law Firm, PLLC;
Bromberg Law Offices, P.C.; Burstein Law Firm, P.C.; Glancy Binkow & Goldberg, LLP;
Harke & Clasby LLP; Nestor & Constance; Reinhardt Wendorf & Blanchfield and
Williams Cuker & Berezofsky.
E. “Released Parties†means each and all of the Defendants and each and all of
the Defendants’ direct and indirect subsidiaries, affiliates, partners, joint ventures,
predecessors and successor corporations and business entities, and each and all of their past
and present officers, directors, servants, licensees, joint ventures, sureties, attorneys,
agents, consultants, advisors, contractors, employees, controlling or principal shareholders,
general or limited partners or partnerships, divisions, insurers, designated management
companies, and each and all of their successors or predecessors in interest, assigns, or legal
representatives, and any persons or entities that have designed, manufactured, supplied,
advertised, and marketed the Grand Theft Auto: San Andreas video game.
F. “Settlement Agreement†refers to this Settlement Agreement and
“Settlement†refers to the terms of the settlement described herein.
G. “Settlement Class†means the named Plaintiffs in the Action and all natural
persons or entities in the United States who purchased a GTA:SA First Edition Disc,
except for authorized resellers of the game, Defendants’ current or former employees, and
any persons or entities that have previously executed releases discharging Defendants from
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 7 of 29
8
22582578
liability concerning or encompassing any or all claims that are the subject of the
Complaint, between August 2004 and the date on which the Court preliminarily approves
this proposed settlement.
H. “Settlement Class Member†means any person who falls within the
definition of the Settlement Class and who does not validly and timely elect exclusion
from the Settlement Class under the conditions and procedures for exclusion as determined
by the Court and described in any Notice of Pendency and Settlement of Class Action
approved by the Court.
I. The “Eligibility Averments†are those that Settlement Class Members must
make, under penalty of perjury, in order to obtain benefits under this settlement. Those
averments are that the class member (a) bought a GTA:SA First Edition Disc prior to July
20, 2005; (b) was offended and upset by the ability of consumers to use third party
software and/or hardware to modify and alter the GTA:SA First Edition Disc to display the
Hot Coffee content; (c) would not have bought the GTA:SA First Edition Disc had they
known that consumers could so modify and alter the game content; and (d) upon learning
the game could be so modified and altered, would have returned it to the place of purchase
for a refund if he or she thought this possible.
J. The “Claims Deadline†shall be the date 120 days after which notice is
provided to Settlement Class Members, as provided below in Section V.B.
K. “Released Claims†means any and all claims, rights, damages, losses,
demands, obligations, actions, causes of action, suits, cross-claims, matters, issues, debts,
liens, contracts, liabilities, agreements, costs, or expenses, of any nature whatsoever,
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 8 of 29
9
22582578
ascertained or unascertained, suspected or unsuspected, existing or claimed to exist,
including Unknown Claims, of any and all Plaintiffs and/or Settlement Class Members
arising out of any purchase or use by them of the Grand Theft Auto: San Andreas video
game, to the extent that such claims: (a) arise out of the Action; (b) relate to any allegations
that were asserted in the Action; or (c) which could have been asserted in this Action based
upon the operative facts as alleged in the Complaint, or which might in the future be
asserted by any Plaintiff or Settlement Class Member against any of the Released Parties,
either of which would arise out of, or relate to in any manner, directly or indirectly, any
acts, facts, transactions, occurrences, conduct, representations or omissions alleged in the
Action. Released Claims also include claims for abuse of process, malicious prosecution
or any other claim arising out of, relating to, or in connection with the institution,
prosecution, assertion or resolution of the Action.
L. “Unknown Claims†means all claims arising out of facts relating to any
matter covered by the Released Claims which all persons or entities providing releases
under this Settlement Agreement, including all Settlement Class Members, do not know or
suspect to exist in their favor at the time of the release of the Released Parties and which, if
known by them, might have affected their decision to settle with Defendants and release
the Released Parties or to take any other action including, but not limited to, objecting or
not objecting to the Settlement. All persons or entities providing releases under this
Settlement Agreement may hereafter discover facts other than or different from those
which such persons now know or believe to be true with respect to the subject matter of the
Released Claims. Upon the Effective Date, each person or entity providing releases under
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 9 of 29
10
22582578
this Settlement Agreement, including all Settlement Class Members, shall be deemed to
have waived any and all rights that he, she, it or they may have under any statute,
regulation, administrative adjudication or common law principle that would otherwise limit
the effect of the foregoing releases to those claims actually known or suspected to exist at
the time of execution of this Settlement Agreement, including, but not limited to, the
provisions of Section 1542 of the California Civil Code, to the extent deemed applicable,
which provides as follows:
1542. “GENERAL RELEASE-CLAIMS EXTINGUISHED.
A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.â€
III. TERMS AND CONDITIONS OF THE SETTLEMENT BENEFITS
A. In exchange for the dismissal of the Action and for entry of the Judgment as
provided for in this Settlement Agreement, Defendants shall make available to Settlement
Class Members the benefits in this section (the “Settlement Benefitsâ€), in accordance with
the procedures set forth below.
B. Grand Theft Auto: San Andreas Exchange Program.
1. Any Settlement Class Member in possession of a copy of GTA:SA
First Edition Disc, who provides the Eligibility Averments, may
return the game disc to Defendants and receive in exchange a copy
of the Grand Theft Auto: San Andreas game disc without Hot Coffee
elements. The program described in this sub-section B shall be
referred to hereafter in this Settlement Agreement as the “Exchange
Program.â€
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 10 of 29
11
22582578
2. Defendants will establish a mechanism by which Settlement Class
Members may send in GTA:SA First Edition Discs for exchange,
and Defendants will replace them with copies of the Grand Theft
Auto: San Andreas game discs without Hot Coffee elements,
without Settlement Class Members having to incur or forward any
postage costs. Defendants may, for example, contract with United
Parcel Service or another carrier to print out prepaid mailing labels
that Settlement Class Members can use to return their GTA:SA First
Edition Discs. (The above example is illustrative only; Defendants
may choose other means to accomplish this requirement.)) In the
event a Settlement Class Member elects to return the game disc by a
means other than that established by Defendants, that Settlement
Class Member will be responsible for all associated postage and
mailing costs for returning his or her GTA:SA First Edition Disc.
3. The exchange contemplated herein is of the game disc only.
Settlement Class Members need not return the game packaging or
artwork to Defendants. Defendants will not provide game
packaging or artwork when fulfilling the exchange and will not
return to Settlement Class Members any game packaging or artwork
those Settlement Class Members elect to include when returning
game discs for exchange.
4. Settlement Class Members will not need to provide any proof of
purchase in order to receive this exchange.
5. Defendants will honor every properly-completed claim for an
exchange under this Exchange Program.
6. For purposes of calculating Defendants’ out-of-pocket costs, as
required by Paragraph III.E., below, each fulfillment of a claim
under the Exchange Program shall be deemed to cost Defendants
Fifteen Dollars ($15.00).
7. Fulfillments under the Exchange Program shall be made within eight
weeks of the Claims Deadline or, if the Claims Deadline occurs
before the Settlement becomes Final, then benefits will be provided
within eight weeks of the Settlement becoming Final.
C. Other Benefits
1. Settlement Class Members, may, if they meet the criteria specified
below, be eligible for cash benefits. Such persons will be referred to
hereafter as “Benefits-Eligible Settlement Class Members.†The
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 11 of 29
12
22582578
series of benefits described below will be referred to herein as the
“Benefit Program.â€
2. Any Settlement Class Member who submits a detailed receipt
clearly showing the purchase of Grand Theft Auto: San Andreas
prior to July 20, 2005, and who provides the Eligibility Averments,
may receive a cash payment of up to 75% of the purchase price
shown on the receipt, or Thirty-Five Dollars ($35.00), whichever is
less. This benefit will be available whether or not the Settlement
Class Member also participates in the Exchange Program. This
benefit may be pro-rated to a lesser amount as provided below.
3. Any Settlement Class Member who does not have a detailed proof
of purchase, but who participates in the Exchange Program, submits
a copy of a credit card statement or canceled check showing a
purchase at a seller of the game before July 20, 2005, provides the
Eligibility Averments, and also attests under penalty of perjury that
the game was purchased at the seller and on the date shown on the
submitted credit card statement or check, may receive a cash
payment of up to 35% of the asserted purchase price, or Seventeen
Dollars and Fifty Cents ($17.50), whichever is less. This benefit
may be pro-rated to a lesser amount as provided below.
4. Any Settlement Class Member who participates in the Exchange
Program, who does not have any proof of purchase of the game, but
who provides the Eligibility Averments, and also attests under
penalty of perjury to the place and approximate date of his or her
purchase, may receive a benefit of $10.00. This benefit may be pro
rated to a lesser amount as provided below.
5. Any Settlement Class Member who does not have any proof of
purchase of the game, or the game itself, but provides the Eligibility
Averments, and also attests under penalty of perjury to (a) the place
and approximate date of his or her purchase and (b) the approximate
date on which he or she discarded the disc, may receive a benefit of
$5.00. This benefit may be pro rated to a lesser amount as provided
below. Defendants may request that the claims process for this
benefit include a requirement that claimants state the manner by
which they discarded the disc. If they do so, plaintiffs will consider
that request but need not accept it.
6. Plaintiffs will request that the Court authorize incentive payments of
no more than Five Thousand Dollars ($5,000) to each of the four (4)
individual plaintiffs in this matter, Brenda Stanhouse, Rose
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 12 of 29
13
22582578
Goldfine, Robert Samario and Susan Carlson. Plaintiffs will request
that the Court authorize incentive payments of no more than One
Thousand Five Hundred Dollars ($1,500) to each of the other
individual class action plaintiffs in this matter, Florence Cohen,
Cindy Casey and John Robinson. These payments to the named
plaintiffs, if the Court directs Defendants to make them, will be
considered part of Defendants’ costs under the Benefit Program.
7. Payments under the Benefit Program will be made within eight
weeks of the Claims Deadline or, if the Claims Deadline occurs
before the Settlement becomes Final, then benefits will be provided
within eight weeks of the Settlement becoming Final.
D. A Settlement Class Member may claim only one of the above benefits
under the Benefit Program. Only one application for benefits under the Benefit Program
and/or the Exchange Program will be honored per person, household or address.
E. Defendants’ total out-of-pocket costs in fulfilling claims under the
Exchange Program and the Benefit Program, as those terms are defined below, shall not
exceed Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000.00), excluding
the Defendants’ costs of: (a) providing notice to Settlement Class Members; (b) paying
administrative/managerial fees to a professional settlement administration firm to
administer the Exchange Program and the Cash Benefit Program; and (c) paying an
attorneys’ fee and costs to counsel for the Settlement Class, should such payments be
ordered by the Court (together referred to herein as the “Defendants’ Costsâ€).
F. In the event that the costs of claims filed by the Claims Deadline under the
Exchange Program (valued at $15.00 each) and the cash requested in claims under the
Benefit Program collectively total more than Two Million Seven Hundred Fifty Thousand
Dollars ($2,750,000.00), the benefits actually paid to Benefits Eligible Settlement Class
Members under the Benefit Program will be reduced pro rata, such that the total amount of
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 13 of 29
14
22582578
the Exchange Program and the Benefit Program shall be exactly Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000.00). However, in the event that Class
Members submit more than 183,333 claims under the Exchange Program (such that the
costs of fulfilling all Exchange Program claims themselves exceed Two Million Seven
Hundred Fifty Thousand Dollars), the total benefits actually paid to Benefits Eligible
Settlement Class Members under the Benefit Program will be the lesser of Five Hundred
Thousand Dollars ($500,000) or the amount actually claimed by those Benefits Eligible
Settlement Class Members. For avoidance of doubt, this provision, combined with the
requirement that Defendants fulfill all claims under the Exchange Program, means that
Defendants’ out-of-pocket costs may exceed Two Million Seven Hundred Fifty Thousand
Dollars ($2,750,000.00). Should that occur, however, the total amount of cash
compensation Defendants shall pay to Benefits-Eligible Settlement Class Members will
not exceed Five Hundred Thousand Dollars ($500,000).
G. If it becomes necessary for benefits to be reduced as required above in
Paragraph III.E., the cash payments will be reduced pro rata weighted by the aggregate
claims received for each tier of Cash Benefits.
H. In the event that the value of claims under the Exchange Program and the
Benefit Program filed on or before the Claims Deadline collectively have a cost to
Defendants of less than One Million Twenty Five Thousand Dollars ($1,025,000)
(excluding the Defendants’ Costs, but including any amounts defendants have distributed
to charitable organizations pursuant to the settlement of any case or controversy that was or
has been consolidated or coordinated with this action by the Judicial Panel on Multidistrict
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 14 of 29
15
22582578
Litigation, then Defendants shall pay the difference between the collective value of claims
filed on or before the Claims Deadline and One Million Twenty Five Thousand Dollars
($1,025,000) to a charitable entity or entities to be agreed upon by the parties and subject
to court approval once the value of the charitable contribution has been determined.
Plaintiffs contend that this payment constitutes a cy pres remedy; Defendants do not
necessarily agree with that characterization.
IV. CERTIFICATION OF SETTLEMENT CLASS
A. For settlement purposes only, the Parties will jointly request, as part of the
Settlement Notice and Hearing Order, that the Court make preliminary findings and enter
an Order granting conditional certification of the Settlement Class subject to final findings
and ratification in the Judgment, and appointing Plaintiffs and Plaintiffs’ Class Counsel as
representatives of the Settlement Class.
B. Defendants do not consent to certification of the Settlement Class for any
purpose other than to effectuate the settlement of the Action. If this Settlement Agreement
is terminated pursuant to its terms, or if the Effective Date for any reason does not occur,
the order certifying the Settlement Class and all preliminary and/or final findings regarding
the Court’s provisional class certification order shall be automatically vacated upon notice
to the Court of the termination of the Settlement Agreement or the failure of the Effective
Date to occur, and the Action shall proceed as though the Settlement Class had never been
certified and such findings had never been made, without prejudice to the ability of any
Party thereafter to request, oppose or seek the granting of or denial of class certification on
any basis.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 15 of 29
16
22582578
V. ENTRY OF SETTLEMENT NOTICE AND HEARING ORDER AND
NOTICES TO THE SETTLEMENT CLASS
A. Promptly upon execution of the Settlement Agreement, the Plaintiffs in the
Action shall apply to the Court for entry of an Order, substantially in the form annexed
hereto as Exhibit B:
1. Finding that the requirements for conditional certification of the
Settlement Class have been satisfied, appointing Brenda Stanhouse,
Rose Goldfine, Robert Samario and Susan Carlson and Plaintiffs’
Class Counsel as representatives of the Settlement Class, and
preliminarily approving the Settlement as being within the range of
reasonableness such that notice thereof should be given to members
of the Settlement Class;
2. Approving the Notice of Pendency and Settlement of Class Action
(the “Full Settlement Noticeâ€), substantially in the form of Exhibit C
annexed hereto, which will contain instructions for Settlement Class
Members to obtain the Settlement Benefits, and a summary form of
that Settlement Notice, substantially in the form of Exhibit D,
annexed hereto (the “Summary Settlement Noticeâ€); and ordering
that the Full Settlement Notice and Summary Settlement Notice be
disseminated in the manner set forth below and in the Hearing
Order;
3. Providing that all members of the Settlement Class who do not, in
accordance with the terms of the Settlement Notice, file valid and
timely requests for exclusion from the Settlement Class be bound by
the Judgment dismissing the Action on the merits and with
prejudice;
4. Finding that the form and method of notice to be given in
accordance with the terms of this Settlement Agreement and the
Hearing Order constitute the best notice practicable under the
circumstances and constitute valid, due and sufficient notice to the
members of the Settlement Class, satisfying the requirements of the
Federal Rules of Civil Procedure, the Constitution of the United
States, and any other applicable law;
5. Providing that, pending final determination of whether the
Settlement should be approved, neither the Plaintiffs nor any
member of the Settlement Class, either directly, representatively or
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 16 of 29
17
22582578
in any other capacity, shall commence or prosecute any action or
proceeding in any court or tribunal asserting any of the Released
Claims against Defendants or any other of the Released Parties;
6. Scheduling a hearing or hearings (collectively, the “Fairness
Hearingâ€) to be held by the Court to consider and determine whether
the requirements for certification of the Settlement Class have been
met and whether the proposed settlement of the Action in
accordance with the terms set forth in this Settlement Agreement
should be approved as fair, reasonable and adequate, and whether
the Judgment approving the Settlement and dismissing the Action on
the merits and with prejudice against Plaintiffs and Settlement Class
Members should be entered;
7. Providing that the Fairness Hearing may, from time to time and
without further notice to the Settlement Class (except those
Settlement Class Members who file timely and valid objections), be
continued or adjourned by order of the Court;
8. Providing a procedure for members of the Settlement Class to
request exclusion from the Settlement Class and to file papers in
support of the Settlement with the Court;
9. Establishing the Claims Deadline as the date by which, if a
Settlement Class Member has not sought to receive one or more of
the Settlement Benefits available under this Settlement Agreement,
that Settlement Class Member shall forever be barred from
participating or receiving the Settlement Benefits set forth herein,
but shall in all other respects be subject to the provisions of this
Settlement Agreement, the releases contained in Section VIII, and
the Judgment;
10. Providing that any objections by any Settlement Class Member to:
(i) the certification of the Settlement Class and the proposed
Settlement, as described in the Full Settlement Notice, (ii) any
request by Plaintiffs’ Class Counsel for an award of attorneys’ fees
and reimbursement of expenses, and/or (iii) entry of the Judgment,
shall be heard and any papers submitted in support of said objections
shall be considered by the Court at the Fairness Hearing only if, on
or before a date (or dates) to be specified in the Hearing Order, such
objector files with the Court a notice of the objector’s intention to
appear, submits documentary proof that the objector is a Settlement
Class Member, states in writing the basis for such objections, and
serves copies of the foregoing and all other papers in support of such
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 17 of 29
18
22582578
objections upon counsel for the Parties identified in the Full
Settlement Notice so that such papers are actually received by the
date set by the Court;
11. Requiring notice to be provided to the authorities that are required to
be notified of prospective class action settlements under the Class
Action Fairness Act of 2005, as set forth in Section X.D; and
12. Establishing a date (or dates) by which the Parties shall file and
serve all papers in support of the application for final approval of the
Settlement and/or in response to any valid and timely objections
received by the designated counsel for the Parties identified in the
Full Settlement Notice.
B. The Settlement Class shall be given notice of the proposed Settlement
(collectively, the “Noticeâ€) as set forth below, subject to the approval of the Court:
1. Within five business days after the date on which the Court grants
preliminary approval to this Settlement Agreement (the “Preliminary
Approval Dateâ€), Defendants shall cause the Full Settlement Notice
to be sent by electronic mail, on or before a date to be set forth in the
Hearing Order, to individuals on Rockstar’s email mailing list.
2. Within five business days after the Preliminary Approval Date,
Defendants shall post a link to the Full Settlement Notice on the
www.take2games.com website and the settlement website. The Full
Settlement Notice will remain posted on these websites until the
Claims Deadline or until this Settlement Agreement is terminated by
its terms.
3. Defendants shall cause the Summary Settlement Notice to be
published, on or before a date to be set forth in the Hearing Order in
the publications, websites and, newswire, and in the frequency and
sizes set forth in the spreadsheet, attached hereto as Exhibit E.
4. Plaintiffs’ Class Counsel may continuously post the Summary
Settlement Notice and the Full Settlement Notice on their firm
websites, beginning two business days after the Preliminary
Approval Date and ending on the date of the Claims Deadline or the
date of the Fairness Hearing, whichever is later. Any costs
associated with this notice item shall be borne by Plaintiffs’ Class
Counsel and will not be reimbursed by Defendants.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 18 of 29
19
22582578
C. The publications specified above in Paragraph V.B.3. were recommended
by Judge Dolinger after hearing presentations from Plaintiffs and Defendants, and reflect
Judge Dolinger’s determination that publication in these periodicals, combined with the
other forms of notice set forth in this Section, constitute the best notice practicable under
the circumstances. Should the Court order this plan of Notice, Defendants will provide the
Notice as directed by the Court, and will pay all costs associated with the provision of
notice. The design and placement of advertisements under this program of Notice will be
handled by Rust Consulting, Inc. (hereafter the “Claims Administratorâ€), and its sister
firm, Kinsella/Novak Communications, LLC.
D. The Parties agree that if, for any reason, Notice is not or cannot be provided
within the dates specified in this Settlement Agreement or in the Hearing Order, the Parties
will confer in good faith and recommend to the Court that the Claims Deadline be
extended correspondingly.
VI. COSTS OF NOTICE AND ADMINISTRATION
A. Defendants agree to effectuate the dissemination of the Full Settlement
Notice and publication of the Summary Settlement Notice, and to pay all costs of doing so,
in accordance with the terms of this Settlement Agreement. In the event this Settlement
Agreement does not become final or the Effective Date does not occur for any reason,
Plaintiffs shall have no obligation to reimburse Defendants for any costs or expenses paid,
incurred or obligated for notice of this Settlement to the Settlement Class. In the event the
Settlement Agreement does not become final or the Effective Date does not occur as the
result of the Claims Administrator having failed to take some action required by this
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 19 of 29
20
22582578
Settlement Agreement or by an Order of the Court promulgated pursuant to it, or having
taken an action precluded by this Settlement Agreement or such Order, Plaintiffs’ Class
Counsel shall have the right to review any correspondence between Defendants’ counsel
and the Claims Administrator relating to that action by the Claims Administrator.
B. Defendants agree to be responsible for paying all costs incurred in
connection with providing the Settlement Benefits and otherwise complying with the
procedures set forth in the Judgment and this Settlement Agreement. All procedures
followed to provide the Notice to the Settlement Class shall be subject to approval by
Plaintiffs’ Class Counsel and subject to review for completeness and compliance by
Plaintiffs’ Class Counsel.
C. Plaintiffs’ Class Counsel will have the right to monitor the actions of the
Claims Administrator, including the fulfillment and payment of Settlement Benefits to
Settlement Class Members, and to receive copies of all correspondence between the
Claims Administrator and Settlement Class Members. Pursuant to the terms and
conditions included in this Settlement Agreement, Plaintiffs’ Class Counsel may act on
behalf of Settlement Class Members to assist in their receipt of the Settlement Benefits.
Defendants shall cooperate in such effort consistent with the provisions of this Settlement
Agreement.
D. Defendants shall have the responsibility to prepare and provide the notices
required by the Class Action Fairness Act of 2005, Pub. L. 109-2 (2005), including, but not
limited to, the notices to the United States Department of Justice and to the Attorneys
General of all states in which Settlement Class Members reside, as specified in 28 U.S.C.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 20 of 29
21
22582578
§ 1715. Plaintiffs’ Class Counsel will cooperate in the drafting of such notices and shall
provide Defendants with any and all information in its possession necessary for the
preparation of these notices.
VII. THE JUDGMENT
If, at or after the Fairness Hearing, the Settlement Agreement is approved by the
Court, Plaintiffs shall promptly submit to the Court the Judgment:
1. Ratifying the certification of the Settlement Class and approving the
Settlement, judging its terms to be fair, reasonable, adequate and in
the best interests of the Settlement Class Members, directing its
consummation in accordance with its terms, and reserving
continuing jurisdiction to implement, enforce, administer, effectuate,
interpret, monitor and ensure compliance with the provisions of this
Settlement Agreement and the Judgment;
2. Dismissing the Action on the merits, with prejudice and without
costs (except as otherwise provided herein), and releasing the
Released Claims; and
3. Permanently barring and enjoining Plaintiffs and Settlement Class
Members from asserting, commencing, prosecuting or continuing
any of the Released Claims.
VIII. RELEASES
A. In accordance with the provisions of the Judgment, for good and sufficient
consideration, the receipt of which is hereby acknowledged, on the Effective Date, each
Plaintiff and each Settlement Class Member shall be deemed to have, and by operation of
the Judgment shall have, fully, finally, and forever released, relinquished and discharged
each and all of the Released Claims against each and all of the Released Parties, in the
manner(s) set forth above.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 21 of 29
22
22582578
B. In accordance with the provisions of the Judgment, for good and sufficient
consideration, the receipt of which is hereby acknowledged, on the Effective Date, the
Defendants shall be deemed to have, and by operation of the Judgment shall have, fully,
finally and forever released, relinquished and discharged all of the Plaintiffs, Plaintiffs’
Class Counsel and all agents of and expert witnesses retained by Plaintiffs’ Class Counsel
from any claims (including Unknown Claims) for abuse of process, malicious prosecution
or any other claim arising out of, relating to, or in connection with the institution,
prosecution, assertion or resolution of the Action.
IX. PLAINTIFFS’ CLASS COUNSEL’S ATTORNEYS’ FEES
A. Defendants and counsel for the Settlement Class have agreed that Class
Counsel is entitled to an amount for attorneys’ fees and costs; however, the parties have
not reached agreement on an amount that Defendants would pay to Plaintiffs’ Class
Counsel in respect of attorneys’ fees and costs, if ordered to do so by the Court. The
Summary Settlement Notice and Full Settlement Notice will reflect the intent of Plaintiffs’
Class Counsel to seek a fee and reimbursement of expenses for a specified amount, and
that Defendants intend to seek a substantial reduction in Plaintiff’s Class Counsel’s
request Defendants reserve all rights in this regard, including rights, if any, under Federal
Rule of Civil Procedure 68.
B. Both Plaintiffs’ Class Counsel and Defendants also expressly reserve their
respective rights of appeal from any decision on fees that the Court may render. It is
understood between the Parties that if an appeal is filed by any of the Parties that
challenges only the amount of fees or costs awarded to Plaintiffs’ Class Counsel, the
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 22 of 29
23
22582578
Parties will not contend that the pendency of such an appeal prevents the Settlement from
becoming Final.
X. OTHER PROVISIONS
A. Upon execution of this Settlement Agreement, the Parties agree to
cooperate and use all reasonable efforts to achieve approval of the Settlement in
accordance with the terms of this Settlement Agreement, and to implement the Settlement
and comply with, confirm the bases for and effectuate the terms of this Settlement
Agreement. All Parties agree that they will not take any action to encourage any
individual, institution or governmental entity to object or seek modifications to this
Settlement Agreement or to opt out of the Settlement Class.
B. Whether the Effective Date does or does not occur, this Settlement
Agreement, all negotiations and papers related to it, and any proceedings in connection
with the Settlement: (1) are not and shall not be construed as evidence of an admission or
concession of wrongdoing or liability by Defendants or any other Released Party as to any
claim or allegation asserted in the Action; and (2) are not and shall not be construed as
evidence or an admission or concession by Plaintiffs that claims or allegations asserted in
the Action against Defendants lack merit.
C. Plaintiffs and Defendants agree that the terms of this Settlement Agreement
were not based solely on the amount of consideration to be paid, but were based on (1)
vigorous arm’s-length negotiations between counsel for the Parties; (2) the assessment of
Plaintiffs’ Class Counsel and Defendants’ counsel of the strengths and weaknesses of the
various claims asserted in the Action against Defendants, based on the various claims
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 23 of 29
24
22582578
asserted or which could be asserted; and (3) the expense and risks of ongoing litigation.
Moreover, the amount of damages that Plaintiffs could prove is a matter of serious and
genuine dispute, and the terms of the Settlement do not constitute a finding, admission or
concession with respect to the measure of damages that could be proved at trial. The
Parties further acknowledge that no determination has been made by the Court as to the
amount, if any, of damages suffered by members of the Settlement Class or of the proper
measure of any such damages, and that the determination of damages, like the
determination of liability, is a complicated and uncertain process, typically involving
conflicting expert opinions.
D. At all times during the course of this litigation, Defendants have denied and
continue to deny any liability to Plaintiffs and Settlement Class Members, and have denied
and continue to deny that Plaintiffs or any Settlement Class Members were damaged by
any alleged wrongful conduct, or that, even if damaged, any compensable damages could
be measured or recovered.
E. Within five (5) business days after the deadline established by the Court in
the Hearing Order for members of the Settlement Class to request exclusion from the
Settlement Class, Plaintiffs’ Class Counsel shall furnish to Defendants’ counsel a complete
list of all timely and valid requests for exclusion they have received (the “Opt-Out Listâ€).
F. Defendants shall have the option to withdraw from this Settlement
Agreement if the number of timely and valid requests for exclusion exceeds the amount
specified in the “Opt-Out Agreement†the parties have negotiated.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 24 of 29
25
22582578
G. This Settlement Agreement is conditioned upon the Judgment in the Action
becoming Final. If the Judgment is reversed or vacated, or if the Effective Date does not
occur for any other reason, the Defendants shall have the right to terminate this Settlement
Agreement. If the Judgment is modified in any manner that limits the scope of releases
given to the Released Parties as provided in Section VIII of this Settlement Agreement, or
if the Hearing Order imposes obligations on Defendants substantially different from those
stated above in Sections III-V, each of Plaintiffs and Defendants shall separately have the
right either to affirm this Settlement Agreement as modified, or to terminate this
Settlement Agreement by filing and serving a Withdrawal Notice.
H. The signatories to this Settlement Agreement agree to assist Defendants in
seeking and obtaining the dismissal of all other actions alleging Released Claims.
I. If the Effective Date does not occur or this Settlement Agreement is
otherwise terminated in accordance with its provisions, the Parties shall be restored to their
respective positions as of November 1, 2007, except that any extensions of time granted
since that date by one Party to the other shall continue to have force and effect, and neither
Party shall seek an order of default against any other Party for actions not taken while
approval of the Settlement was pending. The terms and provisions of the Settlement
Agreement shall at that time have no further force and effect with respect to the Parties
and, to the extent permitted by law, shall not be used in any action or proceeding for any
purpose. Any Judgment entered in accordance with the terms of the Settlement Agreement
shall be treated as vacated, nunc pro tunc.
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 25 of 29
26
22582578
J. The Parties agree that, to the fullest extent permitted by law, neither the
Settlement Agreement nor the fact of the Settlement, nor any act performed nor document
executed pursuant to or in furtherance of the Settlement Agreement or the Settlement, is or
may be deemed to be or may be used as an admission of, or evidence of: (1) the validity of
any claim of any Settlement Class Member, or (2) any wrongdoing, fault, omission, or
liability of the Defendants in any proceeding in any court, administrative agency or other
tribunal. Nothing in this paragraph shall preclude any Party from using the Settlement
Agreement, the Judgment, or any act performed or document executed pursuant thereto in
a proceeding to consummate, monitor or enforce the Settlement Agreement, the terms of
the Settlement or the Judgment.
K. All of the Exhibits to this Settlement Agreement are material and integral
parts hereof.
L. The undersigned signatories represent that they are fully authorized to
execute and enter into the terms and conditions of this Settlement Agreement on behalf of
the respective persons or entities for whom they have signed this Settlement Agreement.
M. This Settlement Agreement contains the entire agreement among the Parties
hereto and supersedes any prior agreements or understandings between them. All terms of
this Settlement Agreement are contractual and not mere recitals and shall be construed as if
drafted by all Parties. All provisions of this Settlement Agreement are and shall be binding
upon each of the Parties hereto, their agents, attorneys, employees, successors and assigns,
and upon all other persons claiming any interest in the subject matter hereto through any of
Case 1:06-md-01739-SWK Document 106-2 Filed 11/19/2007 Page 26 of 29
27
22582578
the Parties hereto, including Plaintiffs and any Settlement Class Member who does not
validly opt out of membership in the Settlement Class.
N. The Settlement Agreement may be amended or modified only by a written
instrument signed by or on behalf of all Parties hereto or their successors-in-interest.
O. The Settlement Agreement may be executed in one or more counterparts.
All executed counterparts and each of them shall be deemed to be one and the same
instrument. Counsel for the Parties to the Settlement Agreement shall exchange among
themselves copies of the original signed counterparts, and a complete set of original signed
counterparts shall be filed with the Court.
P. The Parties agree that the Court shall have exclusive and continuing
jurisdiction over the Parties for all purposes relating to the implementation, effectuation,
interpretation, administration, monitoring and enforcement of this Settlement Agreement
and all provisions thereof with respect to all Parties hereto and all beneficiaries hereof,
including all Plaintiffs, Plaintiffs’ Class Counsel, Defendants, Settlement Class Members
and Released Parties. Any and all disputes, requests or petitions regarding or arising out of
the enforcement, construction, administration or interpretation of the Settlement
Agreement, any provisions of the Settlement Agreement or the Judgment, must be made, if
at all, to this Court by motion to the Court.
Q. The terms and conditions of this Settlement Agreement shall be construed
and enforced in accordance with, and governed by, the laws of the State of New York,
without regard to any applicable choice of law or conflicts rules.
DATED: November 7, 2007
Popularity: 7% [?]
