Federal Class-Action Lawsuit Filed Against WATA Games

[Seth | 164]

The class-action complaint alleges RICO violations, Unfair Competition, False Advertising, Intentional Misrepresentation, Illegal Nondisclosure, and violations of the Consumers Legal Remedies Act.

https://retrostack.substack.com/p/breaking-news-wata-games-has-been?s=w

 

[Seth | 164]

Note: While my journalism is cited in the complaint, I had (and have) absolutely nothing to do with this lawsuit. I own 100+ WATA games and am an avid collector, but I have only used WATA as a service once (to clean a game), would not be eligible to be part of this class, would not join the lawsuit even were I eligible, and have already made clear my thoughts on the lawsuit (pre-lawsuit) at the link below.

https://retrostack.substack.com/p/breaking-news-a-federal-class-action?s=w

I mainly am just urging people to not pretend they know things they do not. While you do not have to believe an attorney when he says there may be legal liability in a given situation, it is better not to substitute your Big Important Feelings for their sober legal analysis unless and until you have talked to someone else who is an attorney and they have given you a very different view.

I took a lot of abuse from my fellow sealed-game collectors here for making an assessment as a legal professional that now an entire law firm has made: that there could be a case here (though they feel more strongly about it than I do, clearly, as they have filed a lawsuit and I have been dubious about the outcome here).

I think we should/hope we will use the folks on this site as resources—respecting their knowledge bases not just on games but other things, and listening to what they say even when it makes us unhappy—rather than making everything a war in which even sound advice and reason become enemies.

[AdamW | 713]

FWIW, I think Seth's dead on with these paragraphs from his post:

"Needless to say, we’re a long way from even asking this question. We don’t know if this lawsuit is really intended or will be filed; we don’t know if enough people will step forward to become members of any prospective certified class (and we must be mindful of the fact that most WATA customers, especially high-volume resellers of graded video games, will be loath to publicly be at odds with WATA in any way); we don’t know if a suit of this sort can survive summary judgment given the deliberate lack of any regulation of the collectibles industry that the United States Congress has now permitted for decades (to the massive financial detriment of individual investors); and finally, we don’t know that any such lawsuit, if it successfully certifies a class and survives a motion for summary judgment filed by Collectors Universe, won’t quickly be settled prior to any in-court litigation with an undisclosed out-of-court settlement.

Given that the amount any individual video game collector would be likely to receive from any such payout would be small—as it will be hard to establish compensatory damages beyond refunding some customers the monies they paid to WATA (which admittedly, for some WATA customers, will be in the many thousands of dollars)—the real question here is really whether this lawsuit is being filed so attorneys can get a fat chunk of any punitive damages awarded by a civil jury or established by an out-of-court settlement. Indeed, one imagines that the real angle for any law firm involved in this is seeking punitive damages more so than trying to calculate how much any single customer is “out” because of missed market opportunities (which is fuzzy math at best)."

Seth, does the fact this has been 'filed' now mean it'll definitely at least reach the point of summary judgment? Or does the law firm still need more class members to step forward for it to be worth their time to proceed?

[MrWunderful | 2,927]

[Gulag Joe | 582]

[Seth | 164]

30 minutes ago, AdamW said:

FWIW, I think Seth's dead on with these paragraphs from his post:

"Needless to say, we’re a long way from even asking this question. We don’t know if this lawsuit is really intended or will be filed; we don’t know if enough people will step forward to become members of any prospective certified class (and we must be mindful of the fact that most WATA customers, especially high-volume resellers of graded video games, will be loath to publicly be at odds with WATA in any way); we don’t know if a suit of this sort can survive summary judgment given the deliberate lack of any regulation of the collectibles industry that the United States Congress has now permitted for decades (to the massive financial detriment of individual investors); and finally, we don’t know that any such lawsuit, if it successfully certifies a class and survives a motion for summary judgment filed by Collectors Universe, won’t quickly be settled prior to any in-court litigation with an undisclosed out-of-court settlement.

Given that the amount any individual video game collector would be likely to receive from any such payout would be small—as it will be hard to establish compensatory damages beyond refunding some customers the monies they paid to WATA (which admittedly, for some WATA customers, will be in the many thousands of dollars)—the real question here is really whether this lawsuit is being filed so attorneys can get a fat chunk of any punitive damages awarded by a civil jury or established by an out-of-court settlement. Indeed, one imagines that the real angle for any law firm involved in this is seeking punitive damages more so than trying to calculate how much any single customer is “out” because of missed market opportunities (which is fuzzy math at best)."

Seth, does the fact this has been 'filed' now mean it'll definitely at least reach the point of summary judgment? Or does the law firm still need more class members to step forward for it to be worth their time to proceed?

While the plaintiffs seek to build and certify a class, the defendants will be preparing a motion for summary judgment unless they see some other issue (which I do not see at present) like a jurisdictional one, or something administrative like a service or SoL issue (even more unlikely, up to impossible under the circumstances). So yes, there will presumably be a hearing on a motion to dismiss at some point that seeks to attack the sufficiency of the complaint itself.

The problem is that at such a hearing the court must (by law) take the facts "in the light most favorable" to the plaintiffs; is solely determining whether the facts of the complaint, if all true (and if all implications derived from the facts are taken in the plaintiffs' favor) sufficiently state a prima facie (basic, rudimentary, but by-the-book) claim under the applicable laws; and can easily choose to dump some causes of action but not others—i.e., if any claim survives summary judgment, the suit survives.

I will be writing much more about the suit soon, and doing my level best to do so neutrally. My feeling is that CU should have just fired WATA leadership and changed the brand name upon purchasing WATA; there was little need for anything else to change, and it would have been hard to get punitive damages from CU if it had done everything to clean up the mess post-sale. But it did nothing, even though it seemed likely that it knew what had been going on (or was told during the sale process, or found out while doing due diligence for the purchase).

Again, I am a collector; I do not hate WATA as a company (I simply disapprove of the actions of certain individuals in the company, and only disapprove on the basis of my experience, training, education, and knowledge in several fields; Karl and I basically have the same view in this respect, and like me he is a collector also); and I would actually much prefer it if CU were to find a way to weather this successfully, perhaps through a settlement that includes firing any malfeasors and disassociating from Heritage Auctions. I am in no way an enemy of this hobby; I am part of it and respect it. We will see what happens.

Edited May 12, 2022 by Seth

[GetTheGreg | 105]

Im just hear to read comments from people who know far more than I do about how this actually works

[Gulag Joe | 582]

“At the time of the filing, the court announced that the estimated turnaround time to process the lawsuit is 45 business days.”

[a3quit4s | 4,096]

[Seth | 164]

1 hour ago, Gulag Joe said:

“At the time of the filing, the court announced that the estimated turnaround time to process the lawsuit is 45 business days.”

Yeah, so I know everyone already knows this (hence the joke above) but litigation takes a long, long, long time. Barring something unforeseen, this will be a background story with WATA somewhere between a matter of months and a matter of years. Which certainly raises the question of how the market reacts to the uncertainty, and I actually don't mean buyers and sellers—I would be surprised if there were any effect—but people with games they need graded deciding between VGA and WATA and/or waiting for CGC.

Do more high-end dealers decide to sit on their ungraded sealed games and wait for CGC? Grade with VGA with a plan to cross to CGC if the games don't sell before CGC opens (which seems to be taking forever and who knows when it will happen)? Stick with WATA when it could be in litigation for years and—more importantly—that brand name could be ditched by CU in mid-litigation or afterward, making all WATA-branded products something a high-end seller (or maybe even any seller) will have to "explain" if they go to sell a game years from now? Is there now going to be a sort of "WATA premium" in the sense of people thinking, "If I buy a WATA-graded game, I may have to pay for re-grading and should factor that into what I'm willing to pay now, and/or I may see less resale value well down the line than I think I would now because of the brand diminishment or dissolution of WATA, and/or are my buyers going to question the validity of WATA grades even more than they do now"?

I think those are some key questions. But obviously there are other ones, too! Anyway, all this gives CU good reason to try to settle if this survives summary judgment.

Edited May 12, 2022 by Seth

[Seth | 164]

@inasuma, re: SACK, I have actually been back for a while. Just not in this forum. And RETRO hasn't come up a single time where I've been posting on VGS—which I'm thrilled about. I've been collecting NES homebrews and that subcommunity is way, way friendlier than the High-Enders on Facebook. I don't even think you'd disagree with me on that.

@AdamW, I may be—no, I am—an idiot in a million ways, maybe a billion, and have some truly massive and embarrassing blindspots, but at least give this English PhD enough credit that you realize that if I start a sentence with "respectfully" and then call someone a series of names that include dick and turd... the self-contradiction was intentional. You may think I'm a prissy arrogant neuroatypical self-aggrandizing self-promoting loquacious punk-a** b*tch because of how I've self-indulgently let myself fly off the handle here sometimes, but you don't have to also think I'm stupid.

Anyway, back to invisibility in this subforum—not a ragequit, just going back where I feel more comfortable. Wanted to share this news; didn't realize everyone already knew. Be well.

Edited May 12, 2022 by Seth

[Code Monkey | 2,006]

4 hours ago, Gulag Joe said:

“At the time of the filing, the court announced that the estimated turnaround time to process the lawsuit is 45 business days.”

Turbo tier more like 2 years.

[Zach | 186]

We'll finally get to see if the "you're just jealous and hate graded games" defense will hold up in court 

[fcgamer | 4,722]

On 5/12/2022 at 10:20 AM, Seth said:

but at least give this English PhD enough credit that you realize that if I start a sentence with "respectfully" and then call someone a series of names that include dick and turd... the self-contradiction was intentional. You may think I'm a prissy arrogant neuroatypical self-aggrandizing self-promoting loquacious punk-a** b*tch because of how I've self-indulgently let myself fly off the handle here sometimes, but you don't have to also think I'm stupid.

Isn't that the truth though. I don't have the PhD bit, but I am an author and also studied English as my field, so I know how it is.

Every single word has been carefully selected and curated, hahaha.