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Wednesday, December 22, 2021

Rosen Law Firm Got a Victory From CD Projekt

By LUDWIG VON KOOPA - I must admit that they got something resembling a result.

Remember Cyberpunk 2077? Quite frankly, I only remember its poor and glitchy launch on then-current generation consoles, which got publisher CD Projekt sued by ambulance-chasing lawyers for defrauding their investors, because the company made Cyberpunk 2077 out to be the best game ever that their company's future was tied to. CD Projekt knew that their game would be buggy... or they should've known.

As a result, the stock plummeted, and a whole squad of law firms sprang into action to join together for a class-action lawsuit on behalf of investors. One of those was the Rosen Law Firm. You might remember them because they file lawsuits all of the time, including against other gaming companies like Activision Blizzard. While I like to pick on them, they are just one of several of these parasitic law firms that scan the landscape for companies with noticeable stock drops... and then pounce. Their involvement tends to make the stock drop even further.

CD Projekt SA OTGLF stock price chart 2020 2021 Cyberpunk 2077 class action lawsuit settled
You can see on the chart the big fall as a result of Cyberpunk 2077's release...
...And then the continued falls thanks in part to these annoying lawyers. (Which is bad for investors who continue to hold!)
But they don't care about that part.


But what became of Rosen Law Firm's involvement?

I might not like the lawyers (and they don't like me since they never responded to my request for comment), but I did agree with the overall merits of the case in that CD Projekt acted very badly to their investors and the general public, and that bad behaviour was tantamount to fraud. And it seems like Rosen Law Firm (and the other law firms that joined up with it, though Kotaku name-dropped Rosen in particular... though I'm wondering if it's fake news) achieved an out-of-court victory: a negotiated settlement with a total value of 1,850,000 United States Dollars, to be paid out to the plaintiffs (read: the law firms, with some amount going to actual investors) in a way that hasn't specifically been disclosed yet, subject to approval by the US District Court for the Central District of California.

Also part of the terms is that CD Projekt doesn't have to admit to doing anything wrong. CD Projekt is happy not to further endure the time, money, and effort to properly defend themselves, so this settlement will do. While it might seem like a low amount of money for the plaintiffs, it's... actually a large chunk of profit for the company. According to CD Projekt's latest financial disclosure, they have a mere 740,754,000 Polish Zloty in cash and bank deposits as of September 30, 2021. That's only about 180,683,234 USD, so, hey, it's a little over 1% of their cash. Or to look at it differently, they only got ~3,986,108 USD in profit between July 1, 2021 and September 30, 2021. That's not a totally insignificant fine. Certainly more than nothing.

...It's just nowhere near the massive and enduring destruction to shareholder value that happened. Rosen, after all, likes talking about tens or even hundreds of millions in settlements. And they'll have to split this in at least four ways, since there are reportedly three other law firms. Not to mention the investors. Still, I guess I apologise for doubting their ability to win.

CD Projekt will continue to support Cyberpunk 2077 with more content and a PlayStation 5 and Xbox Series release coming soon in 2022. The game has sold almost 14 million copies by now. Clearly, the bad launch hasn't stopped the game's commercial success overall.



Ludwig very quickly discovered that he has great difficulty correctly spelling “Pyrrhic.” It doesn't help that he had no idea how it's pronounced. It's like Peer-ick. He decided to remove the article's references to Rosen Law Firm's victory as Pyrrhic after he wrote that the fine isn't as insignificant as it might look at first glance. Though it's entirely possible that the amount of money Rosen will get won't recoup their costs of working the case!

2 comments :

  1. I do wonder if Rosen Lawfirm will get enough money after they split it, especially after lawsuit costs are considered. I remember you saying that just cause someone decides to pay the person who’s suing and end the case, it doesn’t always mean that their guilty. Sometimes the legal costs are so much that they end important cases prematurely. It’s an unfortunate part of our system, although I’m sure it has some hidden benefits. I don’t like these sue happy companies either, but I’m very disappointed in CD projekt.

    In the immortal words of the immoral. “A delayed game is eventually good, but a rushed game is bad forever”

    ReplyDelete
    Replies
    1. I kinda hope they don't get enough money. :)

      Rosen Law still hasn't talked about their victory on their website, so I'm thinking they might not be totally happy about their payout.

      Delete

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