Chafee administration submits legislation to end 38 Studios lawsuit

The administration of Governor Lincoln Chafee submitted legislation to the Rhode Island General Assembly yesterday encouraging settlement of the ongoing lawsuit against now-defunct developer 38 Studios' founder Curt Schilling and others involved in the company.

According to The Providence Journal, the proposal addresses R.I. General Laws Chapter 42-64-40, which deals with "court-approved settlements." It states that "a person, corporation, or other entity who has resolved its liability to the Rhode Island Commerce Corporation in a judicially approved good faith settlement is not liable for claims for contribution or equitable indemnity regarding matters addressed in the settlement." A "good faith settlement" according to the bill, is one that "does not exhibit collusion, fraud, dishonesty, or other wrongful or tortious conduct intended to prejudice the non- settling tortfeasor(s), irrespective of the settling or non-settling tortfeasors' proportionate share of liability."

The proposal indicates that this only applies to the bond given to 38 Studios for its role in creating more jobs, the "Rhode Island Economic Development Corporation Job Creation Guaranty Program Taxable Revenue Bond (38 Studios, LLC Project) Series 2010." This is meant to encourage a settlement by eliminating the fear of defendants assuming responsibility from any co-defendants additional loss claims.

"The bill is specific only to the 38 Studios lawsuit and is done to encourage a settlement," House Judiciary Chairwoman Edith Ajello said in a statement. "The bill makes it clear that the credit to the non-settling defendants is limited to the amount of money paid by the settling defendants. It eliminates the uncertainty of determining what the percentage of fault is among all the defendants, which may not be determined for many years in the event of a jury trial."

The lawsuit, which names 14 defendants including Schilling and former state Economic Development Corporation employees and consultants, was filed by the Chafee administration in November 2012 to recuperate the state's multi-million dollar investment in 38 Studios. The studio had been given a $75 million loan guarantee through the R.I. Job Creation Guaranty Program when it opened in 2006. After 38 Studios filed for bankruptcy in June 2012, R.I. taxpayers were left to cover the debt from the collapsed studio.

During the final auction for 38 Studios' assets in December, auctioneers discovered an unannounced iOS game that had been in development at the studio, Rise of Nations: Tactics. The same month, the U.S. Securities and Exchange Commission subpoenaed the R.I. Commerce Corporation for information pertaining to the loan guarantee given to 38 Studios.