gearbox case

8/11/2019 Gearbox Case

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GEARBOXS PARTIAL SUMM.J.MOTIONNO. 3:13-CV-01962 JD

ROBERT M. SCHWARTZ (S.B. #117166)[email protected]

VICTOR JIH (S.B. #186515)[email protected]

HARRISON A. WHITMAN (S.B. #261008)[email protected]

OMELVENY & MYERS LLP1999 Avenue of the Stars, Seventh FloorLos Angeles, California 90067-6035Telephone: (310) 553-6700

Attorneys for Defendant Gearbox Software, LLC

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

DAMION PERRINE, and JOHN LOCKE,individually and on behalf of a class ofsimilarly situated persons,

Plaintiffs,v.

SEGA OF AMERICA, INC., andGEARBOX SOFTWARE, L.L.C.,

Defendants.

Case No. 3:13-CV-01962 JD

NOTICE OF MOTION AND MOTION BYDEFENDANT GEARBOX FOR PARTIALSUMMARY JUDGMENT (CLAIMS 1-4);MEMORANDUM OF POINTS ANDAUTHORITIES

Hearing Date:Time:Courtroom:

Judge:

September 10, 20149:30 a.m.11

Hon. James Donato

Case3:13-cv-01962-JD Document66 Filed07/30/14 Page1 of 20


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TO PLAINTIFFS AND THEIR ATTORNEYS OF RECORD:

Please take notice that Defendant Gearbox Software, LLC (Gearbox) hereby moves the

Court for partial summary judgment, to be heard on September 10, 2014, at 9:30 a.m., in

Courtroom 11 of this Court, at 450 Golden Gate Avenue, San Francisco, California 94102. This

motion is brought pursuant to Rule 56 of the Federal Rules of Civil Procedure and on the grounds

that no genuine issue of fact exists on at least four of the six claims for relief plaintiffs allege in

their First Amended Complaint and that Gearbox is entitled to prevail on those four claims as a

matter of law. The claims and grounds on which this motion is based are as follows:

1. First Claim for Relief, for violation of the Consumer Legal Remedies Act (Cal.

Civ. Code 1750): Gearbox is entitled to prevail on this claim because:

a.

the subject matter of the lawsuit, video game software, is not a good or

service under the CLRA; and

b. plaintiffs have no viable remedy against Gearbox under this claim because

all available CLRA remedies (i.e., damages, injunction and restitution) are inapplicable to

Gearbox:

i. plaintiffs expressly disclaimed any right to recover damages under

this claim;

ii. plaintiffs are not entitled to pursue injunctive relief against Gearbox

because the allegedly wrongful conduct was confined to a specific

period of time before the products 2013 commercial release

(which, by definition, cannot recur); and

iii. plaintiffs are not entitled to pursue an award of restitution against a

party who, like Gearbox, received no money from plaintiffs, either

directly or indirectly.

2. Second and Third Claims for Relief, for violations of the Unfair Competition Law

(Cal. Bus. & Prof. Code 17200) and the False Advertising Law (Cal. Bus. & Prof. Code

17500): Gearbox is entitled to prevail on these claims because neither statute provides a viable

remedy against Gearbox:



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2 GEARBOXS PARTIAL SUMM.J.MOTIONNO. 3:13-CV-01962 JD

a. plaintiffs are not entitled to pursue injunctive relief against Gearbox

because the allegedly wrongful conduct was confined to a specific period of time before

the products 2013 commercial release (which, by definition, cannot recur); and

b. plaintiffs cannot pursue an award of restitution against a party who, like

Gearbox, received no money from plaintiffs, either directly or indirectly.

3. Fourth Claim for Relief, for breach of express warranty. Gearbox is entitled to

prevail on this claim because Gearbox did not sell or contract to sell the product.

This motion is based on this Notice of Motion and Motion, the Memorandum of Points

and Authorities filed herewith, the Declaration of Steve Gibson and the exhibits thereto, the

argument of counsel, the pleadings on file in this action, and any other matters properly

considered by the Court at the hearing on this motion.

Issues To Be Decided

1. Whether plaintiffs can obtain equitable restitution from Gearbox, a party who

never received any of plaintiffs money.

2. Whether plaintiffs can obtain an injunction against Gearbox for conduct that was

confined to a period of time that occurred in the past and cannot, by definition, recur.

3.

Whether video game software is a good or service under the Consumer Legal

Remedies Act.

4. Whether Gearbox sold or contracted to sell the video game at issue in this case.

Dated: July 30, 2014. ROBERT M. SCHWARTZVICTOR JIHHARRISON A. WHITMANOMELVENY & MYERS LLP

By: /s/ Robert M. SchwartzRobert M. Schwartz

Attorneys for Defendant Gearbox Software



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TABLE OF CONTENTS

Page

I. INTRODUCTION .............................................................................................................. 1

II. THE UNDISPUTED FACTS ............................................................................................. 4

A. Gearbox Was theDeveloper, Not the Manufacturer, Publisher or Seller ............... 4

B. Sega Hires Gearbox To Develop Code ForAliens: Colonial Marines................... 4

C. Sega Promotes, Markets and Sells the Game .......................................................... 5

D. Sega ReleasesAliens: Colonial Marines................................................................ 5

III. LEGAL STANDARD ......................................................................................................... 6

IV. GEARBOX IS ENTITLED TO PREVAIL ON PLAINTIFFS FIRST, SECOND,THIRD, AND FOURTH CLAIMS FOR RELIEF ............................................................. 6

A. Gearbox Is Entitled To Prevail On Plaintiffs Section 17200 and Section17500 Claims .......................................................................................................... 6

1. Plaintiffs Have No Right To Seek Restitution From Gearbox .................... 72. Plaintiffs Have No Right To Injunctive Relief ........................................... 7

B. Gearbox Is Entitled To Prevail On Plaintiffs CLRA Claim .................................. 8

1. The Subject Matter Of Plaintiffs Claim Falls Outside The CLRA ............ 8

2. Plaintiffs Have No CLRA Remedy ........................................................... 11

C. Gearbox Is Entitled To Prevail On Plaintiffs Express Warranty ClaimBecause Gearbox Did Not Sell The Game ............................................................ 12

V. CONCLUSION ................................................................................................................. 12



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ii GEARBOXS PARTIAL SUMM.J.MOTIONNO. 3:13-CV-01962 JD

TABLE OF AUTHORITIES

Page(s)

CASES

Berry v. Am. Express Publg, Inc.,147 Cal. App. 4th 224 (2007) .............................................................................................. 9-10

Campion v. Old Republic Home Prot. Co.,861 F. Supp. 2d 1139 (S.D. Cal. 2012) ..................................................................................... 8

Celotex Corp. v. Catrett,

477 U.S. 317 (1986) .................................................................................................................. 6

Fairbanks v. Super. Ct.,

46 Cal. 4th 56 (2009) ................................................................................................................ 9

Ferrington v. McAfee,Inc.,2010 WL 3910169 (N.D. Cal. Oct. 5, 2010) ....................................................................... 9, 10

Freeman v. ABC Legal Servs., Inc.,

877 F. Supp. 2d 919 (N.D. Cal. 2012) ................................................................................... 7-8

Gest v. Bradbury,443 F.3d 1177 (9th Cir. 2006) ................................................................................................... 7

Green v. Canidae Corp.,2009 WL 9421226 (C.D. Cal. June 9, 2009) .......................................................................... 12

Hauter v. Zogarts,14 Cal. 3d 104 (1975) ............................................................................................................. 12

In re Intel Laptop Battery Litig.,

2011 WL 7290487 (N.D. Cal. Apr. 7, 2011) ............................................................................ 8

In re iPhone 4S Consumer Litig.,

2013 WL 3829653 (N.D. Cal. July 23, 2013) ......................................................................... 11

In re iPhone Application Litig.,

2011 WL 4403963 (N.D. Cal. Sept. 20, 2011) ......................................................................... 9

In re Napster Copyright Litig.,

354 F. Supp. 2d 1113 (N.D. Cal. 2005) ................................................................................. 6-7

Korea SupplyCo. v. Lockheed Martin Corp.,

29 Cal. 4th 1134 (2003) ............................................................................................................ 7

Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992) .................................................................................................................. 8



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iii GEARBOXS PARTIAL SUMM.J.MOTIONNO. 3:13-CV-01962 JD

Madrid v. Perot Sys. Corp.,130 Cal. App. 4th 440 (2005) ................................................................................................... 7

Mason v. Natures Innovation, Inc.,

2013 WL 1969957 (S.D. Cal. May 13, 2013) ......................................................................... 11

Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574 (1986) .................................................................................................................. 6

McMahon v. Take-Two Interactive Software, Inc.,

2014 WL 324008 (C.D. Cal. Jan. 29, 2014) .................................................................... passim

Pelletier v. Pac. WebWorks, Inc.,

2012 WL 43281 (E.D. Cal. Jan. 9, 2012) .......................................................................... 10, 11

Perez v. Nidek Co., Ltd.,711 F.3d 1109 (9th Cir. 2013) ................................................................................................. 11

Rebel Oil Co., Inc. v. Atl. Richfield Co.,51 F.3d 1421 (9th Cir. 1995) ..................................................................................................... 6

S. Cal. Water Co. v. Aerojet-General Corp.,

2003 WL 25537163 (C.D. Cal. Apr. 1, 2003) .......................................................................... 7

Wang v. OCZ Tech. Grp., Inc.,

276 F.R.D. 618 (N.D. Cal. 2011) .............................................................................................. 8

STATUTES

Cal. Bus. & Prof. Code 17200 ................................................................................................. 3, 6

Cal. Bus. & Prof. Code 17203 ..................................................................................................... 6

Cal. Bus. & Prof. Code 17500 ................................................................................................. 3, 6

Cal. Bus. & Prof. Code 17535 ..................................................................................................... 6

Cal. Civ. Code 1770(a) ................................................................................................................ 8

Cal. Civ. Code 1780(a) .............................................................................................................. 11

Cal. Com. Code 2103(d) ............................................................................................................ 12

Cal. Com. Code 2313 ................................................................................................................. 12

Cal. Com. Code 2313(1) ............................................................................................................ 12



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iv GEARBOXS PARTIAL SUMM.J.MOTIONNO. 3:13-CV-01962 JD

OTHER AUTHORITIES

Fed. R. Civ. P. 56(a) ........................................................................................................................ 6

Fed. R. Civ. P. 56(e) ........................................................................................................................ 6



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I. INTRODUCTION

Defendant Gearbox Software moves the Court for partial summary judgment to eliminate

four unsustainable claims. Based on the few undisputed facts that are necessary to resolve those

claims in Gearboxs favorand in light of the narrow role that Gearbox played in the events

giving rise to this lawsuitGearbox demonstrates below that it is entitled to prevail as a matter of

law on the first four claims for relief pleaded in the First Amended Complaint (FAC). Those

are plaintiffs claims for violation of Californias Consumers Legal Remedies Act (First Claim),

Unfair Competition Law (Second Claim), Unfair Advertising Law (Third Claim), and a common

law claim for breach of express warranty (Fourth Claim). Simultaneously, Gearbox is moving to

strike the class allegations as to all claims, including those for plaintiffs claims for fraudulent

inducement (Fifth Claim) and negligent misrepresentation (Sixth Claim). Those claims are fatally

unsuited for class treatment.

As explained below, Gearbox never belonged in this lawsuit. Gearbox is a video game

software developer. It was neither the publisher nor seller of the video game at issue. For more

than a year, Gearbox has quietly abided the plaintiffs claims so that Sega, the games publisher

and the party responsible for the games marketing and sale, could assume the defense of this

lawsuit. Gearbox has honored its publishers request in spite of plaintiffs highly-publicized

and highly-misplacedclaims against Gearbox. At this point, however, Gearbox is obligated to

pursue its rightful departure from this case.

The relevant facts begin in 2006, when Sega decided to sell a video game based on the

Aliens motion pictures (later titledAliens: Colonial Marines). To achieve that objective, Sega

contracted with Gearbox, on a work-for-hire basis, to write software that would run the game.

SeeEx. A, 7.3.1 Under its contract with Gearbox, Sega vetted and approved all of the games

subject matter, content, game play mechanics, and technical specifications. Id. 2.1. Gearbox

successfully completed and delivered the software in accordance with Segas specifications and

approval. See Gibson Decl. 7.

1All exhibits cited herein are attached to the Declaration of Steve Gibson (Gibson Decl.).



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Plaintiffs allege (on only information and belief) that Gearbox shorted its efforts on

the game by diverting resources awayfrom the game and onto other Gearbox games. See Dkt. 26

22. This allegation, presumably intended to inflame aspiring class members, is not only untrue

but legally irrelevant. In reality, Gearbox did the oppositeof what has been alleged: When Segas

project needed additional resources, Gearbox voluntarilycontributed millions of dollars of its own

moneyon Segas behalf, not the other way around. Gibson Decl. 6.

Critical to this case, the contract between Sega and Gearbox confirms that Sega reserved

to itself all authorship and publishing rights and responsibilities. Gearbox had none. As the

games publisher, Sega reserved to itself the sole right to do such things as designing the

packaging for the game, replicating Segas desired content onto computer discs, and

importantlythe marketing and advertising of the game to Segas distributors, retailers, Internet

download sites and, finally, to Segas consumers. SeeEx. A, 6.1, 7.3. Notably, when the

game was sold, it was pursuant to Segas End User License Agreement, not Gearboxs. Indeed,

Gearbox does not own the product; Sega does. Id 1.1. At no time did Gearbox ever sell a

single unit of the game. Gibson Decl. 11. In a class action over these controlling issues, suing

Gearbox has been a legal non sequitur.

The core facts of this case are fatal to plaintiffs attempt to bootstrap liability on Gearbox.

Plaintiffs allege that the game failed to meet expectations that were allegedly formed by pre-

release marketing efforts. See, e.g., Dkt. 26 24-26. Plaintiffs ignore, however, that Segas

game demonstrations prominently identified the game as a work-in-progress during such

periods. Instead, plaintiffs offer the false premise that defendants somehow enjoyed the time and

resources to craft a multitude of game engines for the narrow purpose of marketing and selling

something that only the publisher could market and sell. That never happened. Gibson Decl. 5.

Plaintiffs have also falsely alleged an embargo claim, which misstates the record on

whether purchasers could have seen the retail content before its release. On this fundamental

point, Plaintiffs have obscured the irrefutable fact that the final, retail version of the game was

exhibited online, for extended periods of time, nearly two weeks before the games official

release. SeeGibson Decl. 10. During this broadcast, consumers (including all potential pre-



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orderers) were shown the retail version of the product and were free to share their thoughts and

observations about what they saw. Id. Thus, any consumer (or potential class member) who

wanted to know what the product looked like before buying itas plaintiffs insist they did

either saw the final version of the game or could have done so. In fact, the number of persons

who watched the actual game before it was released outnumbers all of the pre-orders. And many

of these viewers took advantage of the unfettered opportunity to write about what they saw. Such

pre-release availability and publicity stands in stark contrast to the embargo theory that

plaintiffs assert in their complaint.

The verifiable facts demonstrate that there is no legal case against Gearbox. To the

contrary, Gearbox is entitled to prevail on each of plaintiffs four primary claims, based on the

few undisputed facts and governing law:

Gearbox is entitled to prevail on plaintiffs Unfair Competition Law and False

Advertising Law claims (Cal. Bus. and Prof. Code 17200 & 17500) because plaintiffs possess

no remedy against defendants such as Gearbox for those claims. Those statutes authorize only

two remedies: restitution or injunction. Neither applies against Gearbox. Here, Gearbox did not

sell the game. Sega did. Moreover, the monies Gearbox received from Sega to developthe game

were unaffected by any subsequent sales. The payments Gearbox received would not have

changed if Sega had published a blockbuster or had failed to sell a single unit. To date, Gearbox

has received no money belonging to plaintiffs (or the proposed class) and plaintiffs are, by

definition, ineligible for restitution from Gearbox. As to an injunction, the alleged harmful

conduct consists of statements and information about the game that, by plaintiffs own admission,

were made before it became publicly available in February 2013. Once the game was

commercially released on that date, there was nothing left to enjoin.

Gearbox is entitled to prevail on plaintiffs Consumer Legal Remedies Claim

because video game software is not a good or service under the CLRA. Gearbox is also

entitled to prevail because plaintiffs have no viable remedy. Not only are plaintiffs not entitled to

restitution or an injunction (for the reasons applicable to their 17200 and 17500 claims), but in

their complaint, plaintiffs have expressly disclaimed any recovery of damages.



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Finally, Gearbox is entitled to prevail on plaintiffs express warranty claim

because Gearbox did not sell the game or distribute it to wholesalers, retailers, or anyone else.

II. THE UNDISPUTED FACTS.

A. Gearbox Was the Developer, Not the Manufacturer, Publisher or Seller.

Founded in 1999, Gearbox is an award-winning, independent video game developer of

some of the industrys most popular games. SeeGibson Decl. 1-2. For years, Gearbox has

worked to develop a loyal fan base and industry respect through dedication to its craft and the

pursuit of the highest quality video games. Id. 2.

As an independent developer, Gearbox is not affiliated with any one video game

publishing companyi.e., the companies that actually own, market and sell the games. Id. 1.

Gearboxs autonomy gives it the freedom to work with different publishers and on different

projects. Id.

B. Sega Hires Gearbox To Develop Code For Ali ens: Colonial Marines.

In 2006, Sega began discussing with Gearbox the possibility of having Gearbox develop a

game for Sega based on the popularAliensfranchise. Id. 3. Those discussions led Sega and

Gearbox to enter into a Development Agreement, under which Sega (as the games publisher)

hired Gearbox on a work for hire basis to develop the games software. Ex. A, 7.3. Per the

agreement, Sega approved the final content, game play mechanics, and technical specifications.

Id. 2.1.

The Development Agreement also established Sega as the author of the [game] for all

purposes and the exclusive owner of copyrights in the game. Id. 7.3. And, as the owner of

the video game, Sega reserved the absolute right to control and direct the marketing and the sales

of the game. The contract reads, in pertinent part: As between the Parties, all aspects of

marketing, distribution and/or other such exploitation of the Packaged Product shall be in Segas

absolutediscretion. Id. 6.1 (emphasis added).

For its part, Gearbox agreed to provide Sega with stated software deliverables (often

referred to as milestones) and, once Sega reviewed and approved the deliverables, Sega would



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pay Gearbox pre-set Milestone Payments. Section 8.1 of the contract memorialized those

parameters:

In exchange for Developers commitments and performance of its obligationsunder this Agreement, Sega agrees to provide Developer with MilestonePayments,provided that each respective Milestone Payment is expresslyconditioned upon Segas acceptance and approval of the MilestoneDeliverables. Id. 8.1 (emphasis added).

With that dynamic in place, Gearbox proceeded to develop the software for the game.

C. Sega Promotes, Markets and Sells the Game.

Beginning in mid-2011, Sega launched its marketing plan forAliens: Colonial Marines.

Gibson Decl. 8. In July 2011, Sega sponsored a live gameplay demonstration at the video game

industrys annual E3 convention in Los Angeles. To avoid any confusion about the unfinished

status of the project, the demonstration included a distinct work-in-progress disclaimer on the

screen. Id. At the subsequent E3 convention, Sega again sponsored live demonstrations that,

contrary to the allegations of the FAC, used codefrom the then-current version of the game. Id.

9. Between September 2012 and January 2013, Sega released Pre-Order Trailers, each of

which, again contrary to the FAC, contained in-game footagefrom the final version of the game.

Id. And, on February 2, 2013almost two weeks before the release ofAliens: Colonial

Marinesthe popular video game website IGN.com hosted a live gameplay event. Id. 10.

Those who attended the event played (or watched others play) the actual game for nearly two

hours, and were not restricted (i.e., embargoed) from publicly commenting on the game

content. Significantlyand, again, contrary to plaintiffs claimsthose who watched the event

on the Internet also watched actual game play footage. Id.

D. Sega Releases Al iens: Colonial Mar ines.

On February 12, 2013, Sega releasedAliens: Colonial Marines. Gearbox did not sell a

single unit of the game; only Sega and the retail third parties with whom Sega chose to do

business could and did so. Id. 11. The sales never triggered any further payments to Gearbox.

To be clear: Gearbox has not received a penny from any consumer who purchasedAlien:

Colonial Marines, regardless of the consumers dissatisfaction (or satisfaction) with the product.

Seeid. 12.



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Approximately two months after the video games release, plaintiff Perrine filed this

lawsuit against Sega and Gearbox. Dkt. 1. On July 5, 2013, plaintiff Perrine and plaintiff Locke

filed a First Amended Complaint against the same defendants. Dkt. 26.

III. LEGAL STANDARD

Summary judgment is appropriate when the pleadings, affidavits and other material

present no genuine issue of material fact and the moving party is entitled to judgment as a matter

of law. Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421, 1432 (9th Cir. 1995);see also

Fed. R. Civ. P. 56(a). The non-moving party can only create a genuine dispute on a material

issue by adducing admissible evidence on the issue which is sufficient for a reasonable jury to

find for the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986) (citing Fed. R. Civ. P. 56(e)); Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).

Here, plaintiffs can adduce no such evidence, and Gearbox is entitled to prevail on the first four

claims for relief pleaded in the FAC.

IV. GEARBOX IS ENTITLED TO PREVAIL ON PLAINTIFFS FIRST, SECOND,

THIRD, AND FOURTH CLAIMS FOR RELIEF.

A. Gearbox Is Entitled To Prevail On Plaintiffs Section 17200 and Section

17500 Claims.

Plaintiffs second claim for relief arises under California Business and Professions Code

section 17200 (the unfair competition law or UCL) and their third claim for relief arises

under section 17500 (the false advertising law or FAL). A private plaintiff may seek only

two remedies under the UCL and FAL: restitution and injunctive relief. SeeCal. Bus. & Prof.

Code 17203, 17535;McMahon v. Take-Two Interactive Software, Inc., 2014 WL 324008, at

*6 (C.D. Cal. Jan. 29, 2014) (recognizing that remedies under the UCL and FAL are limited to

injunctive relief and/or restitution). Gearbox is entitled to prevail on these two claims as a

matter of law because plaintiffs have no right to obtain restitution or injunctive relief against

Gearbox, who never received plaintiffs money and have nothing to enjoin. See, e.g.,In re

Napster Copyright Litig., 354 F. Supp. 2d 1113, 1126-27 (N.D. Cal. 2005) (dismissing UCL



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claim because claimant was not entitled to restitution or injunctive relief);Madrid v. Perot Sys.

Corp., 130 Cal. App. 4th 440, 467 (2005) (same).

1. Plaintiffs Have No Right To Seek Restitution From Gearbox.

Plaintiffs have no right to seek restitution from Gearbox unless Gearbox has their money.

SeeMadrid, 130 Cal. App. 4that 453 (restitution is limited to the return of property or funds in

which the plaintiff has an ownership interest). It is undisputed, however, that Gearbox did not

collect or receive any money from purchasers ofAliens: Colonial Marines. As noted above,

plaintiffs did not purchase the game from Gearbox. Plaintiffs, therefore, cannot establish that

Gearbox directly received their money from the sale of the game.

The undisputed evidence also shows that Gearbox did not indirectlyreceive any money

from plaintiffs purchase of the game. SeeGibson Decl. 12. As Segas work-for-hire

developer, Gearbox received only development payments from Sega and, even then, the payments

only occurred upon Segas approval of Gearboxs work, not sales. Ex. A, 8.1. The milestone

payments were pre-set in the agreement between Sega and Gearbox to account for development,

and the amounts were not tied in any way to the number of units sold, whether that number was

one million, one hundred, or zero. That development money represents the onlymoney Gearbox

received. SeeGibson Decl. 12.

Gearbox has not received a single penny tied to the sales or profits (if any) of the game.

Id. Because Gearbox never obtained any monies from plaintiffs, even indirectly, plaintiffs are not

entitled to restitution from an independent contractor that never received any of their money. See

Korea SupplyCo. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1147 (2003) (rejecting

nonrestitutionary disgorgement under UCL); S. Cal. Water Co. v. Aerojet-General Corp., 2003

WL 25537163, at *11 (C.D. Cal. Apr. 1, 2003) (same). Put simply: Gearbox cannot be subject to

restitution of money it never received.

2. Plaintiffs Have No Right To Injunctive Relief.

Injunctive relief is not available unless the plaintiff can demonstrate he is realistically

threatened by a repetition of the alleged violation. Gest v. Bradbury, 443 F.3d 1177, 1181

(9th Cir. 2006) (emphasis in original);see also Freeman v. ABC Legal Servs., Inc., 877 F. Supp.



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2d 919, 926 (N.D. Cal. 2012) (plaintiffs must show a real and immediate threat of repeated

injury in order to seek injunctive relief in federal court.) (citations omitted). In this case,

repetition is a factual impossibility.

It is undisputed thatAliens: Colonial Marines was released to the public on February 12,

2013. SeeDkt. 26 51. Plaintiffs complaint alleges harm from thepre-releasepromotion of a

game that stopped well over a year ago. Plaintiffs complaint acknowledges that, once the game

was released, no one could have purchased it in alleged reliance on any of the pre-release

advertising: The demonstrations of Aliens: Colonial Marines were used and promoted up

until the games actual retail release in February 2013. Id. 26 2 (emphasis added). That is

why the proposed class is limited to persons who purchased the game before its release. Id. 101

(Requesting a class of [a]ll persons in the United States who paid for a copy of the Aliens:

Colonial Marines video game either on or beforeFebruary 12, 2013.) (emphasis added).

Both the facts and the law doom plaintiffs request for injunctive relief: Allegations of

[p]ast exposure to illegal conduct does not in itself show a present case or controversy regarding

injunctive relief, and a plaintiff must demonstrate a continuing, present adverse effect[].

Lujan v. Defenders of Wildlife, 504 U.S. 555, 564 (1992) (citations omitted). Federal courts have

regularly rejected requests for injunctive relief in UCL and FAL claims when plaintiffs cannot

demonstrate a likelihood of future harm. E.g., Campion v. Old Republic Home Prot. Co., 861 F.

Supp. 2d 1139, 1150 (S.D. Cal. 2012) (rejecting plaintiffs request for injunctive relief under the

UCL because the plaintiff did not show he [was] realistically threatened by a repetition of the

alleged violation); Wang v. OCZ Tech. Grp., Inc., 276 F.R.D. 618, 626-27 (N.D. Cal. 2011)

(same);In re Intel Laptop Battery Litig., 2011 WL 7290487, at *2 (N.D. Cal. Apr. 7, 2011)

(same). By definition, these plaintiffs cannot seek or obtain an injunction against Gearbox.

B. Gearbox Is Entitled To Prevail On Plaintiffs CLRA Claim.

1. The Subject Matter Of Plaintiffs Claim Falls Outside The CLRA.

Plaintiffs first claim for relief, for violation of Californias Consumer Legal Remedies

Act (the CLRA), fails as a matter of law because the allegedly-wrongful conduct did not result

in the sale or lease of goods or services, as required by the statute. Cal. Civ. Code 1770(a)



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(emphasis added). Although the Court deferred resolution of this issue when defendants prior

counsel raised it at the pleading stage (seeDkt. 40), it is now ripe for resolution as it is

undisputable that the product at issue in this litigationAliens: Colonial Marinesis software.

Courts in this circuit have recognized that the sale of softwarehere, video game

softwaredoes not fall within the CLRAs definition of goods or services. See, e.g.,

McMahon, 2014 WL 324008, at *10 (software falls outside the goods and services covered

by the CLRA);In re iPhone Application Litig., 2011 WL 4403963, at *10 (N.D. Cal. Sept. 20,

2011) (same);Ferrington v. McAfee,Inc.,2010 WL 3910169, at *19 (N.D. Cal. Oct. 5, 2010)

(same). The recentMcMahoncase is directly on point, in Gearboxs favor.

InMcMahon, plaintiffs who disappointedly purchased the Grand Theft Auto V (GTA V)

video game software alleged similar claims, citing the publishers representations regarding an

online multiplayer feature. McMahon, 2014 WL 324008, at *1. Although GTA Vwas released in

September 2013, plaintiffs alleged that the online feature was not available until two weeks later,

and brought statutory claims for unfair competition and false advertising. Id. To satisfy the

unlawful prong of the UCL, plaintiffs alleged that the defendants misrepresentations

constituted a violation of the CLRA. Id. at *10.

Consistent with Gearboxs argument, the court flatly rejected plaintiffs argument as a

matter of law, ruling that video game software and online services fall outside the goods and

services covered by the CLRA, and [p]laintiffs cannot assert a CLRA violation based on

allegations arising from their purchase of GTAV and GTA Online. Id.

The court inFerringtonreached the same conclusion. There, plaintiffs sued McAfeea

provider of computer security softwarefor allegedly transferring plaintiffs billing information

to a third party upon plaintiffs purchase of McAfee software. SeeFerrington, 2010 WL

3910169, at *1. Dismissing plaintiffs CLRA claim, the court explained that a good under the

CLRA is defined as tangible chattels, and that definition, under California law, cannot be read

to include software. See at *19. The court agreed with defendants that software was comparable

to insurance and credit, both of which California courts previously determined to be intangible

chattel. Id. at *18 (citingFairbanks v. Super. Ct., 46 Cal. 4th 56 (2009) andBerry v. Am.



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Express Publg, Inc., 147 Cal. App. 4th 224 (2007)). Based in part of section 9102(a) of the

California Commercial Code, which includes software in its definition of general intangibles,

the court dismissed plaintiffs CLRA claim because the CLRAs express limitation of goods to

tangible chattels must be given meaning, and current California law suggests that these words

exclude software from the Acts coverage. Id. at *19 (Additionally, the Court finds that

software generally is not a service for the purposes of the CLRA).

On the issues central to plaintiffs case against Gearbox, the courts have spoken with

clarity, and in Gearboxs favor. It is undeniable that plaintiffs CLRA claim arises from the

purchase of a video game and alleged misrepresentations concerning the functionality of the

games software. See Dkt. 26 2, 3, 26 & 60. As such, plaintiffs case against Gearbox is every

bit as flawed as were theMcMahonplaintiffs now-dismissed claims.

Plaintiffs allege that the software they purchased contained a different software engine

(Dkt. 26 23-26, 48), the features of which were considered disappointing. But no matter what

plaintiffs thought of the software they received, it is stillsoftware. Ones alleged disappointment

over software does not convert it into non-software (or any other good that qualifies for relief

under the CLRA). And just as the recentMcMahon opinion explained, a software product

cannot, as a matter of law, form the basis for a CLRA claim.

Plaintiffs may point to Judge Whites reluctance in October 2013 to dismiss CLRA claims

at the pleading stage of the case. SeeDkt. 40. That decision has no bearing on whether this issue

can be resolved in Gearboxs favor here, at the summary judgment stage. Indeed, Judge White

noted that the Court may ultimately be persuaded that Aliens: Colonial Marinescannot be

considered agoodunder the CLRA, but at this stage of the proceedings plaintiffs alleged

sufficient facts to state a claim under the CLRA. Dkt. 40 at 7 (emphasis added). Further,

another district court in this circuit has since considered the CLRA in the context of a video game

and concluded that a video game does not constitute a good under the CLRA. SeeMcMahon,

2014 WL 324008, at *10. Plaintiffs authority at the motion to dismiss stagePelletier v. Pac.

WebWorks, Inc., 2012 WL 43281 (E.D. Cal. Jan. 9, 2012)is no longer applicable.



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Indeed, inPelletier, the court declined to dismiss a CLRA claim at the pleading stage

because plaintiff alleged that the product (which she never received) was an actual, physical

product and never alleged that the product was computer software. Id. at *5. Again, this

case is no longer at the pleading stage, and there can be no dispute that the subject matter of this

lawsuit is video game software.2 Courts recognize that software, regardless of its perceived

quality, is not a good under the CLRA. That is what plaintiffs purchased. Accordingly,

summary disposition for Gearbox is appropriate and timely.

2. Plaintiffs Have No CLRA Remedy.

Gearbox has a second, independent ground to prevail on plaintiffs CLRA claim, namely,

the absence of any viable remedy that can be lawfully sought from Gearbox. The CLRA

authorizes three potential remedies: damages, restitution, and injunctive relief. SeeCal. Civ.

Code 1780(a). None of these potential remedies can be lawfully sought against Gearbox.

In their complaint, plaintiffs request an injunction and expressly disclaim any recovery

of damages. See Dkt. 26 129 (For the sake of clarity, Plaintiffs explicitly disclaim any claim

for damages under the CLRA at this time.). For the same reasons discussed in Section IV.B,

above, (i.e., that plaintiffs cannot pursue an injunction and are not entitled to restitution from

Gearbox under the UCL and FAL), plaintiffs have no right to such remedies under the CLRA.

See Perez v. Nidek Co., Ltd., 711 F.3d 1109, 1114 (9th Cir. 2013) (affirming dismissal of CLRA

claim because class plaintiff was not entitled to injunctive reliefthe only remedy sought for the

alleged CLRA violation);Mason v. Natures Innovation, Inc., 2013 WL 1969957, at *5 (S.D. Cal

May 13, 2013) (dismissing claims for injunctive relief under the CLRA, UCL and FAL).

2Plaintiffs other case,In re iPhone 4S Consumer Litig., 2013 WL 3829653 (N.D. Cal. July 23,

2013), is also inapposite. Apple admitted that its phone was a good for purposes of the CLRA,but characterized the complaint as focusing on the phones Siri software and, on that basis, askedthe court to dismiss the claim. Id. at *13. The court disagreed with Apples characterization,explaining that Plaintiffs specifically plead in the CLRA claim that, among other things, Applerepresented that the iPhone 4Snot Sirihad characteristics and features that it did not, and thatthe iPhone 4Snot Siriwas of a particular standard, quality or grade, although it was not, thatApple advertised the iPhone 4Snot Siriwith intent not to sell as advertised. Id. Here, bycontrast,Aliens: Colonial Marineswas notsold as a component of an admitted good.



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C. Gearbox Is Entitled To Prevail On Plaintiffs Express Warranty Claim

Because Gearbox Did Not Sell The Game.

Plaintiffs fourth claim for relief, for breach of express warranty, fails because Gearbox is

not a seller of the product at issue. Under California law, a claim for breach of express

warranty is governed by California Commercial Code section 2313. Hauter v. Zogarts, 14 Cal.

3d 104, 115 (1975). Section 2313 describes three circumstances in which express warranties are

created. Cal. Com. Code 2313(1). Crucially, such a warrantyassuming it exists despite the

overriding language in Segas End User License Agreement (EULA), to which each purchase is

subjectcan exist only from the seller, who is defined as a person whosells or contracts to

sellgoods. Cal. Com. Code 2103(d);see also Green v. Canidae Corp., 2009 WL 9421226, at

*5 (C.D. Cal. June 9, 2009) (With respect to breach of express warranty, California Commercial

Code 2313 governs the ways in which asellercan create an express warranty.) (emphasis in

original). California courts have noted that the key issue under section 2313 is whether the the

sellersstatements actually became part of the ultimate bargain. Hauter, 14 Cal. 3d at 115.

It is undisputed that Gearbox did not sellAliens: Colonial Marines. See Gibson Decl.

11. By contract, Sega alone was responsible for publishing and sale of its game. In fact, under

the contract by which Sega hired Gearbox to write the software , Sega expressly retained for itself

the exclusive right to sell the game. SeeEx. A, 6.1.

The bargain in this case is the one that was struck between consumers and Sega (and via

Segas retailers), not Gearbox. Plaintiffs do not allege otherwise. Further, these transactions

were subject to Segas EULA, the terms and conditions of which were understandably mandated

by the games publisher, not Gearbox. Because Gearbox had no part in the bargains or sales at

issue, Gearbox cannot be subject to liability under Section 2313.

V. CONCLUSION

For the foregoing reasons, Gearbox respectfully requests that the Court grant Gearbox

partial summary judgment on plaintiffs First, Second, Third, and Fourth Claims for Relief.



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Dated: July 30, 2014. Respectfully submitted,

ROBERT M. SCHWARTZVICTOR JIHHARRISON A. WHITMANOMELVENY & MYERS LLP

By: /s/ Robert M. SchwartzRobert M. Schwartz

Attorneys for Defendant Gearbox Software



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GIBSON DECL.ISOPARTIAL SUMM.J.MOTIONNO. 3:13-CV-01962 JD










Plaintiffs,v.


Defendants.


DECLARATION OF STEVE GIBSON INSUPPORT OF DEFENDANT GEARBOXSMOTION FOR PARTIAL SUMMARYJUDGMENT (CLAIMS 1-4)

Hearing Date:Time:Courtroom:Judge:

September 10, 20149:30 a.m.11Hon. James Donato

Case3:13-cv-01962-JD Document66-1 Filed07/30/14 Page1 of 17


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1 GIBSON DECL.ISOSUMM.J.MOTIONNO. 3:13-CV-01962 JD

DECLARATION OF STEVE GIBSON

I, STEVE GIBSON, do hereby declare as follows:

I submit this declaration in support of Gearbox Softwares Motion for Partial Summary

Judgment (Claims 1-4). I am Vice President of Marketing for Gearbox Software, and I have

worked at Gearbox since 2009. The facts set forth herein are known to me of my own personal

and firsthand knowledge, and if called as a witness, I could and would testify competently

thereto.

Background

1. Gearbox began in 1999. Gearbox is an independent video game developer. By

independent, I mean that Gearbox is not owned by or affiliated with any one video game

publisheri.e., the company that replicates the game discs, markets and advertises the game, and

sells it to retailers, wholesalers, and others who sell it to the public. This gives Gearbox the

freedom to work with different publishers and on different projects.

2. Gearbox has created some of the industrys most popular games. For years,

Gearbox has worked to develop a loyal fan base and industry respect. We are dedicated to our

work and our fans, and to the development of the highest quality video games.

3.

In 2006, Gearbox and Sega began discussing the possibility of Sega engaging

Gearbox to develop the video game software for a game based on theAliens motion pictures

(Alien,Aliens,Alien 3, andAlien: Resurrection). Those discussions resulted in Sega and Gearbox

entering a Development Agreement in late 2006. True and correct copies of sections 1.1, 2.1, 6.1

7.3, 8.1, and 9.1 from the Development Agreement dated October 5, 2006 are attached hereto as

Exhibit A.

4. Under the Development Agreement, Sega reserved to itself absolute discretion

over the games marketing, advertising, and sale. Sega also was the owner of copyrights in the

game. On that latter point, the game was a work for hire by Gearbox for Sega, under a contract

in which Gearbox was hired to write the software in accordance with specifications

(milestones) that Sega approved.



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2 GIBSON DECL.ISOSUMM.J.MOTIONNO. 3:13-CV-01962 JD

5. With the agreement in place, Gearbox began developing the software for the game

which was eventually titledAliens: Colonial Marines (A:CM). To develop the software,

Gearbox utilized the Unreal game engine, licensed from Epic Games; this was the only game

engine Gearbox used in the design and development of the game. Contrary to what some believe,

the pre-release demonstrations were not made using different game engines.

6. During the development process, Gearbox supplemented Segas development

budget with its own money to help Sega finish its game; Gearboxs contributions toA:CM

totaled millions, none of which was ever repaid. Gearbox never received money from Segas

A:CMpurchasers, nor has Gearbox received a single royalty from any such sales by Sega.

7. Sega approved every milestone submission from Gearbox throughoutA:CMs

development. Gearbox eventually completed and delivered the software in accordance with

Segas specifications, which Sega vetted, approved and accepted.

Sega Promotes and Releases Al iens: Colonial M ari nes

8. Beginning in mid-2011, Sega launched its marketing plan forA:CM. In July 2011,

Sega sponsored a live gameplay demonstration at the video game industrys annual convention,

known as E3, in Los Angeles. The demonstration included a work-in-progress disclaimer on

screen.

9. At the next years E3 convention, the game was further along in development and

Sega again sponsored live demonstrations using existing code from the game. Between

September 2012 and January 2013, Sega released Pre-Order Trailers, each of which contained

in-game footage from the final version of the game.

10. On February 2, 2013, video game website IGN.com hosted a live event. Those

who attended the exhibition played the actual game, were not restricted from publicly

commenting on the game, and the entire event was viewable on the Internet. This exhibition of

retail content lasted nearly two hours, and occurred more than a week prior to A:CMs

commercial release.



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11.

On February 12 2013 Sega released

Alien: Colonial Marines

As a developer

2 Gearbox did not sell any units of the game; the development agreement assigned this function to

3 the game s publisher.

4 12.

The game s sales were insufficient to trigger any sales-based payments to Gearbox

5 and as a result Gearbox has not received any additional monies from Sega for the sale

of

the

6 game. Gearbox only received the milestone payments made

by

Sega during the game s

7 development. Those milestone payments were pre-set before any games were sold and the

8 milestone payments to Gearbox were not tied to the number of units of the game that Sega

9

ultimately sold.

10

I

declare under penalty of perjury under the law of the United States of America that the

11 foregoing is true and correct. Executed this 30th day

of

July 2014 at Plano Texas.

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3

GIBSON DECL. ISO SUMM J MOTION

NO. 3:13-CV-01962 JD



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[PROPOSED]ORDERNO. 3:13-CV-01962 JD










Plaintiffs,v.


Defendants.


[PROPOSED] ORDER GRANTINGDEFENDANT GEARBOX SOFTWARE,LLCS PARTIAL SUMMARY JUDGMENTMOTION (CLAIMS 1-4)

Hearing Date:Time:Courtroom:Judge:

September 10, 20149:30 a.m.11Hon. James Donato



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[PROPOSED]ORDERNO. 3:13-CV-01962 JD

On September 10, 2014, Defendant Gearbox Software, LLCs (Gearbox) Motion for

Partial Summary Judgment came on hearing before the Hon. James Donato. Gearbox moved for

summary judgment on plaintiffs first four claims for relief in their First Amended Complaint on

the grounds that no genuine issue of fact exists on plaintiffs claims and that Gearbox is entitled

to judgment as a matter of law.

The Court, having considered the points, authorities, evidence, and oral argument

presented by the parties, the files and pleadings in this case, HEREBY ORDERS that Gearboxs

Motion for Partial Summary Judgment is GRANTED in full. The facts established by Gearboxs

evidence show that plaintiffs cannot establish one or more elements of the following claims for

relief:

1.

First Claim for Relief, for violation of the of the Consumer Legal Remedies Act

(Cal. Civ. Code 1750) against Gearbox. Gearbox is entitled to prevail on this claim. First, the

subject of this lawsuit, the video gameAliens: Colonial Marines, is not a good or service under

the Consumer Legal Remedies Act. Second, plaintiffs do not possess a remedy that they can

pursue against Gearbox under the Consumer Legal Remedies Act because they disclaim damages

in their complaint, are not entitled to an injunction against Gearbox, and are not entitled to

restitution from Gearbox.

2. Second Claim for Relief, for violations of the Unfair Competition Law (Cal. Bus.

& Prof. Code 17200) against Gearbox. Gearbox is entitled to prevail on this claim. Plaintiffs

do not possess a remedy that they can pursue against Gearbox under the Unfair Competition Law

because plaintiffs are not entitled to an injunction against Gearbox and are not entitled to

restitution from Gearbox.

3. Third Claims for Relief, for the False Advertising Law (Cal. Bus. & Prof. Code

17500) against Gearbox. Gearbox is entitled to prevail on this claim. Plaintiffs do not possess a

remedy that they can pursue against Gearbox under the False Advertising Law because plaintiffs

are not entitled to an injunction against Gearbox and are not entitled to restitution from Gearbox.



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4. Fourth Claim for Relief, for breach of express warranty against Gearbox. Gearbox

is entitled to prevail on this claim. Gearbox did not sell or contract to sell the product at issue in

this lawsuit, the video game titledAliens: Colonial Marines.

Plaintiffs did not produce in their papers or at oral argument any authorities or evidence

contradicting the Courts ruling.

GOOD CAUSE APPEARING, Gearboxs Motion for Partial Summary Judgment is

hereby GRANTED in full.

Dated: _______________ ____________________________________

The Honorable James DonatoUnited States District Court Judge


gearbox case

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