According to Reuters, a United States District Court judge from the Northern District of California has rejected a Sony-approved settlement over a PlayStation credits class action lawsuit. The plaintiffs claimed that Sony overcharged for digital games distributed through its monopolized PlayStation Store, and Sony agreed to settle the lawsuit by allocating $7.8 million in PlayStation credits to millions of PlayStation Network users.
However, the judge denied the settlement for a variety of reasons, including the fact that ‘coupon settlements’ such as this one are ‘generally disfavored’.
The motion fails to include an estimated recovery had the proposed class prevailed on each claim, and it fails to provide any estimate of the discount applied to the claims. Importantly, though the motion acknowledges the potential damages were smaller than initially contemplated, the motion provides no estimated class recovery given that discovery. These shortcomings alone warrant denial of Cendejas’s motion for preliminary approval because it prevents the Court from meaningfully assessing the fairness of the proposed settlement. Any renewed motion for preliminary approval must include a chart setting forth the anticipated breakdown of the $7,850,000 settlement distribution, including amounts estimated for attorney’s fees, service awards, costs, administration expenses, and other amounts to be paid. From the resulting net settlement amount, Cendejas shall provide a ballpark estimate or range of amounts to be distributed to each Settlement Class Member.
Moreover, the Settlement calls for Class Members to receive compensation in the form of cash-value PlayStation Network (“PSN”) account credits. The Court views such PSN account credits as settlement coupons, which are generally disfavored. Any renewed motion for preliminary approval must address the propriety of such settlement coupons and whether the value and structure of this settlement remain defensible.
For its part, Sony had actually denied any wrongdoing, but added that it was settling to avoid the further expense and distraction of continued litigation. Following this ruling, it remains unclear whether users will actually see those PlayStation credits or not.
A similar lawsuit was filed in the United Kingdom, although the plaintiffs are asking for compensation orders of magnitude greater than the US one.
