New Class Actions Filed Regarding LCD Rear Projection HDTV’s Using “Optical Block” Technology

JamieKwapichDefendants in a consumer electronics class action often hope that agreeing to settle the suit will bring an end to litigation over a product or component. However, Sony’s settlement in 2008 of a class action regarding Optical Block technology used in its LCD Rear Projection HDTVs has been followed-up with the filing of new class actions regarding Optical Block against Sony and Hitachi in the Southern District of California. (fn1) The new suits claim that Optical Block contained a defect that eventually caused the TVs to display bright blue and red haze, spots and streaks which covered the programming on the screen. The complaints, which allege that the manufacturers were aware of the defect at the time of sale, request relief under the unfair competition, deceptive advertising and warranty laws of California and other states.

SANY0042In the New York action, after filing a motion to dismiss, Sony agreed to settle the action. In the settlement agreement, while Sony was not required to pay a specific sum to the plaintiffs, Sony agreed to: (i) extend the limited warranties on the affected units to permit repair or replacement of the Optical Block until June 30, 2009, (ii) refund prior expenses paid by customers to replace the Optical Block; (iii) refund money paid by customers for extended service plans; and (iv) refund money paid by certain customers who had previously exchanged affected units for other Sony TVs. (fn2)

5a-LCD close-upThe total cost of the settlement to Sony cannot be determined from the court documents. However, the settlement class contained approximately 175,000 members. In its Opinion and Order approving the settlement, the Court noted that Sony had indicated that it made fixes to eliminate problems with the Optical Block technology in 2006. The Court also noted that at a settlement hearing, Plaintiffs counsel stated “we do think that Sony has successfully remanufactured the component.” (fn3)

Plaintiffs’ counsel was awarded $1.6M in attorneys fees and costs. This resulted in a 21% premium over the value of plaintiffs’ counsels’ services if computed under the lodestar method (which computes attorneys fees on a hours x hourly rate basis). (fn4)

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Internet gaming: Bill Offering Protection for Internet Gambling Delayed, but Not Necessarily Dead

internet-gaming-rules-lives-660A bill (H.R. 2267) introduced by U.S. House Financial Services Committee Chairman Barney Frank to remove Federal obstacles to Internet gambling may be delayed, but don’t consider it beyond hope. This bill, which was introduced in May 2009, has already garnered significant House support. While reports indicate that consideration of the bill has been delayed, given the current fiscal crisis, it would only seem logical for Congress to look to Internet gaming as a source of much-needed revenues.

There has long been a debate as to whether Federal laws prohibit many forms of Internet gaming, such as on-line poker. The DOJ has historically taken the position, which has been accepted by some courts, that the Wire Act (18 U.S.C. § 1084) prohibits transmission of wagers over interstate wire communications facilities for all forms of on-line gaming. See e.g, People, ex rel. Vacco v. World Interactive Gaming Corp., 185 Misc.2d 852, 860 (N.Y. Sup. Ct., 1999).

On the other hand, the 5th Circuit and District Courts in other Circuits have held that the Wire Act only prohibits wire transmissions for sporting events, but not on-line gaming, such as poker. In re MasterCard. Intern. Inc, Internet Gaming Litigation, 132 F.Supp.2d 468 (E.D. La. 2001), aff’d 313 F.3d 257 (5th Cir. 2002); United States v. BetOnSports PLC, U.S.D.C., Eastern District of Missouri, Case No. 4:06CV01064 (Nov. 9, 2006).

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Of course, all States have laws regulating gaming, and some outlaw virtually all games of chance, including poker. So, in 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act (UIGEA). See 31 U.S.C. § 5361 et seq. The UIGEA did not directly outlaw Internet gaming, but prohibited any person “engaged in the business of betting or wagering” from “knowingly accept[ing] in connection with the participation of another person in unlawful Internet gambling” . . . credit, electronic funds transfers, checks and the proceeds of other financial transactions. Id. at § 5363.

Transactions constitute “unlawful Internet gambling,” only if prohibited by other Federal, State or Tribal law. However, the UIGEA prohibits online gambling transactions if an Internet bet is placed or received in a place where a State, Federal or Tribal law make such a transaction illegal. Id. at 5362(1). Given this breadth of scope, the UIGEA creates real risks for financial institutions who attempt to cooperate in on-line gambling anywhere in the U.S.

online-gamingCongressman Barney Frank has been opposed to the UIGEA for some time, and first introduced legislation to curtail some of its effects in 2007. In May 2009, Rep. Frank introduced H.R. 2267 in a further attempt to help legalize online gambling in the U.S. The Bill would give the U.S. Treasury Secretary regulatory powers over Internet gambling, and would permit the Secretary to issue licenses to Internet gambling facilities. Licensees would be permitted to accept bets from persons in the U.S., so long as they were physically located in a jurisdiction that permits Internet gambling at the time the bet was placed. The Bill would also provide immunity for any financial institution that processed transactions on behalf of licensees, for activities conducted under the Bill’s provisions.

0022190fd2dc1242046f0fThe effect of the Bill would be to permit on-line gambling companies to set up shop anywhere in the U.S. However, they would only be permitted to take bets in States and Tribal lands that specifically permitted Internet gambling. As such, under the bill, the legality of Internet gambling would ultimately depend on the law prevailing in the State or Tribal land where the bet was placed. But at least all Federal bars to on-line gaming would be eliminated.

This time around, Rep. Frank has been able to garner over 50, mostly Democratic, co-sponsors to his bill. Recent reportsindicate that H.R. 2267 is unlikely to be considered by Congress in 2009. However, legalization of Internet gaming, which is going on anyway despite current laws, has the potential to create serious revenues for State and Federal governments. A report from 2006 indicated that Internet gaming at that time amounted to $6 billion. Given the current fiscal crises, the potential windfall to State and Federal treasuries from taxing this activity may prove too tempting to pass up.