Summary
Take-Two Interactive Software, Inc. (TTWO) filed an 8-K on August 5, 2008, reporting on two significant legal developments as of July 30-31, 2008. The company's Special Litigation Committee (SLC) successfully had all derivative claims dismissed in the _St. Clair Shores General Employees Retirement System v. Eibeler, et al._ lawsuit. The court found the SLC to be independent and acting in good faith, concluding that pursuing these claims was not in the best interest of the company or its stockholders. This dismissal is a positive outcome for the company, reducing legal liabilities and operational distractions. However, the court denied the SLC's motion to dismiss certain direct claims remaining in the same lawsuit, which allege omissions in proxy materials related to stock option plans. These claims, brought against former officers and directors and not the company itself, will continue. Additionally, a proposed settlement for the consumer class action lawsuit concerning "Grand Theft Auto: San Andreas" was not approved by the court on July 31, 2008. The court refused to certify the settlement class, impacting potential settlement costs. The company stated it will continue to defend vigorously if the plaintiffs choose to proceed with the litigation.
Key Highlights
- 1All derivative claims against Take-Two Interactive Software, Inc. in the _St. Clair Shores General Employees Retirement System v. Eibeler, et al._ lawsuit were dismissed by the U.S. District Court for the Southern District of New York.
- 2The court affirmed the independence and good faith of the Special Litigation Committee (SLC) in its investigation and recommendation to dismiss derivative claims.
- 3Remaining direct claims in the _St. Clair Shores_ lawsuit, alleging proxy material omissions related to stock option plans, were not dismissed and will proceed against former officers and directors.
- 4The company itself is not a defendant in the remaining direct claims of the _St. Clair Shores_ lawsuit.
- 5A proposed settlement for the 'Grand Theft Auto: San Andreas' consumer class action lawsuit was denied preliminary approval by the court due to the failure to certify the settlement class.
- 6The company will continue to vigorously defend itself in any ongoing litigation, including the direct claims and the 'Grand Theft Auto: San Andreas' case if it proceeds.
- 7The dismissal of derivative claims represents a significant reduction in potential legal exposure for the company.