Sega to tentatively pay out $1.25M in Aliens suit while Gearbox fights on

Sega of America will pay out $1.25 million to settle a class-action suit brought against it and Gearbox Software that claimed the two companies falsely advertised Aliens: Colonial Marines by using faked demos of the game at E3 and other trade shows, under a settlement plan filed with the court today.

If approved, the settlement will clear Sega of America of any further litigation, but not Gearbox Software, which recently filed a request to have claims against it dropped.

In the motion for preliminary approval of class action settlement agreement, filed with the Northern District of California court on Monday, attorneys for plaintiff John Locke said they expect to request the court to grant approval of the suit on Sept. 17.

If approved by the court, Sega will pay $1.25 million into a settlement fund. Of that fund, $312,500 will be used to cover attorney fees for the plaintiffs, $200,000 will be used to cover the cost of adminstration, $2,500 will go to the plaintiff and the rest will be used to pay to those eligible customers who purchased the game. Payments to customers who fill out a three question claim form, purchased the game before Feb. 13, 2013 and are approved, will not exceed the amount paid for the game. The amount each customer receives back will be dependent on how many people submit claims. No money will be returned to Sega.

"In exchange for the relief described above, Sega — but not Gearbox — will receive a full release of all claims related to Aliens: Colonial Marines, including claims relating to the design, marketing, operation of, or warranties provided in connection with the game," according to the filing. "Quite importantly, the settlement only releases claims against Sega — not Gearbox — so the litigation will continue as to that defendant with the prospect of further recovery."

Specifically, according to the filing, the plaintiffs expect another chance to "recover" in this suit against Gearbox.

The settlement is not an admission of guilt, according to court papers. Despite agreeing to the settlement, Sega has denied and continues to deny any wrongdoing whatsoever. Company officials agreed to settle, according to the filing, because of the cost of fighting the suit and uncertainty inherent in any litigation.

Aliens: Colonial Marines was released on Feb. 12, 2013 to harsh criticism and low reviews. Some players and reviewers noted that the game's visuals didn't match what Sega and developer Gearbox showed off of the game prior to release at fan and press events.

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The suit, filed in April 2013 by Roger Damion Perrine and John Locke on behalf of a class, claimed that Gearbox and Sega falsely advertised Aliens: Colonial Marines by showing demos at trade shows like PAX and E3 that didn't end up being accurate representations of the final product.

These demos, which Gearbox co-founder Randy Pitchford called "actual gameplay," according to the filing, were criticized after the game's launch for featuring graphical fidelity, AI behavior and even entire levels not featured in the game. Our review of Aliens: Colonial Marines featured a gallery highlighting some of the differences between a 2012 video walkthrough of the title, and the same level in the final version of the game.

"Each of the 'actual gameplay' demonstrations purported to show consumers exactly what they would be buying: a cutting edge video game with very specific features and qualities," the claim reads. "Unfortunately for their fans, Defendants never told anyone — consumers, industry critics, reviewers, or reporters — that their 'actual gameplay' demonstration advertising campaign bore little resemblance to the retail product that would eventually be sold to a large community of unwitting purchasers."

In January, attorneys for those involved in the suit spent a day in mediation but couldn't reach an agreement. In March, the parties reached a basic compromise, but the judge overseeing the case rejected it in June saying there were some concerns about the terms.

In July, attorneys for Gearbox filed requests to be dropped from the case and refused to take part in any further negotiations, so they are not a part of this new settlement agreement. In that filing, Gearbox attorneys said the developer was a contractor and that it sunk millions of its own money into finishing the game.

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"Gearbox never belonged in this lawsuit," according to the motion. "Gearbox is a video game software developer. It was neither the publisher nor seller of the video game at issue. For more than a year, Gearbox has quietly abided the plaintiffs' claims so that Sega, the game's publisher and the party responsible for the game's marketing and sale, could assume the defense of this lawsuit. Gearbox has honored its publisher's request in spite of plaintiffs' highly-publicized-and highly-misplaced-claims against Gearbox. At this point, however, Gearbox is obligated to pursue its rightful departure from this case."

A day earlier, the plaintiffs filed a motion to remove Perrine from the suit, noting that Perrine is "presently incarcerated in Pennsylvania." The attorneys discovered his incarceration after hiring a private detective to find Perrine, according to the documents. According to Westmoreland County, Pennsylvania court records, Perrine is in jail awaiting trial on three charges including simple assault and terroristic threats with intent to terrorize another.

Under the terms of today's proposed agreement, class members may file a claim form with their name, email address, date and location where the game was purchased and amount paid on or before Feb. 12, 2013. Further details about filing a claim will be posted on a certain websites and in print in Guns & Ammo, ESPN and Rolling Stone magazines.

Separately today, attorneys for the plaintiff filed a request with the court asking for more time to respond to Gearbox's request to have the suit against them dropped.

We have reached out to officials with Sega, Gearbox and the plaintiff and will update this story if they respond.