April 8th, 2008 by Benjamin Duranske
According to minutes (.pdf) obtained from the court, a recent settlement conference in Debonneville v. Pierce — a lawsuit between two founders of virtual property company Internet Gaming Entertainment (IGE) — has resulted in a tentative settlement agreement.
At the settlement conference where the tentative agreement was reached, the Honorable Margaret A. Nagle ordered the parties to finalize the agreement and file a stipulation of dismissal by April 14. Although nothing has yet been filed, both parties have signed a Memorandum of Settlement, indicating that they are in agreement on all key terms. The details of the agreement are confidential and neither Pierce’s nor Debonneville’s attorneys responded to requests for comment.
The case, which was filed in the United States District Court for the Central District of California, caught the attention of the gaming press both because IGE is widely reviled by players and designers, and because Pierce and Debonneville accused each other of lengthy dirty-laundry lists of business, ethical, and personal failings.
For example, Debonneville’s Amended Complaint (.pdf) claims that Pierce failed to pay Spanish taxes, used corporate funds for personal expenses, falsely told Debonneville another IGE executive was blackmailing Pierce, and partnered with a third party, Jonathan Yantis, to exploit bugs in game software to make unauthorized duplicates of in-game items and currency to offer for sale via IGE. For his part, Pierce’s Counterclaims (.pdf) accuse Debonneville of overpaying certain clients for virtual goods with IGE’s money — including one of the lawyers who now represents Debonneville on this case — in order to secure favor and personal benefits. For the whole tawdry story, see VB’s earlier coverage.
It is not particularly surprising that the case appears to be ending in settlement. As VB noted last month, business disputes like this frequently settle at this stage — particularly when valuation is straightforward and both parties want to avoid negative publicity.
What does this mean? Probably that Pierce (or more realistically, IGE’s insurance company) is going to be writing a big check to Debonneville. It will be considerably less than the $40 million that the complaint implies he ought to get, but it won’t be nothing either. With motion practice leading up to trial, the cost of defense in a case like this could easily push into the millions, and that’s a lot of motivation to settle.
From a virtual law perspective, I’d been hoping against hope that these two charming gentlemen would continue knocking their heads together for another couple of months, and that the judge would accidentally say something meaningful about virtual property while trying to sort out their nonsense, but that doesn’t appear likely now.
You never know though; if the parties are unable to finalize their agreement (unlikely, but always a possibility when there’s as much bad blood as there appears to be here) a jury trial is still scheduled for May 20 in Los Angeles.
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