EA Ducks Fraud Claims Over Botched Launch

     SAN FRANCISCO (CN) – Electronic Arts executives can’t be held liable for expressing corporate confidence about the launch of Battlefield 4, a judge ruled Thursday, dismissing an investor class action.
     Lead plaintiffs Ryan Kelly and Louis Mastro filed a class action suit against Electronic Arts and its officers and executives in 2013 for making false assurances to investors about the readiness of its action game “Battlefield 4.” The stockholders represented anyone who purchased Electronic Arts common stock between May 8, 2013 and Dec. 5, 2013.
     While EA has a history of developing successful video games for existing and next-generation gaming consoles, investors and gamers alike were aware of the company also has a history of botched game launches and failed attempts to transition its games to different consoles.
     Despite challenges in development, the atmosphere at EA remained positive. In a prelaunch interview, “BF4” executive producer Patrick Bach had also denied a possible release delay by stating “Luckily we’ve overcome those hurdles.”
     But customer complaints immediately followed Electronic Arts’ three-string rollout, beginning with the release of the game for existing consoles on Oct. 29, 2013. Common complaints included that the game would not start or gave crash error messages, and that it froze so often that customers said it was unplayable.
     It took more than three months for the company to fix BF4’s defects.
     Investors pointed to eight statements made by EA’s executives – all defendants in the action – about the technology and development of “BF4,” including one by CEO Andrew Wilson stating that they had achieved “a level of quality at launch that we didn’t get to last time and our teams are already starting to think about investment in new innovation for the future.”
     Following up on a ruling last year finding that executive boasting amounted to “corporate puffery” and not fraud, United States District Judge Susan Illston dismissed the action completely on Thursday “on the ground that the complaint fails to adequately allege a primary violation.”
     Illston faulted the class for consistently using the term “de-risk” – a term frequently used by EA executives – to describe EA’s alleged fraud, even after telling them it too was a “non-actionable and vague expression of corporate optimism and puffery.”
     “The allegations do not demonstrate that the term ‘de-risk’ has any precise meaning,” Illston wrote. “Moreover, the inference that defendants used the term to promise the elimination of technological risks is contradicted by the documents which plaintiffs incorporate into their complaint by reference and is therefore entitled to no presumption of truth. Given that plaintiffs rely on the materialization of technological defects to establish that the defendants lacked basis for their ‘de-risking’ statements, neither the added context nor the previously alleged facts pull defendants’ statements within the actionable exception to corporate puffery.”
     The judge also declined to link EA’s admissions of past launch failures – particularly the botched release of Frostbite 3 – to their pre-release enthusiasm for Battlefield 4.
     “The amended complaint lacks any specific factual allegations related to prior transition games or technology, except for vague references to prior ‘transition failures,'” Illston wrote. “Thus, an admission that Frostbite 3 had not been finished until the last minute does not directly contradict statements that Frostbite 3 represented an improvement over EA’s last transition software.”
     “The court continues to find that each of the defendants’ statements represents an inactionable vague statement of corporate puffery,” the judge concluded, dismissing the case without leave to amend.

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