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Jan 29, 2006, 7:25 AM
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Los Angeles suesTake-Two for GTA
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The city of Los Angeles has sued Take-Two Interactive for selling pornographic video games to children with its best-selling game "Grand Theft Auto: San Andreas," which last year was found to have hidden sex scenes.
Shares of Take-Two plunged 13.7 percent to $14.69 on the Nasdaq -- a level unseen since 2003 -- after an analyst downgraded its shares to "sell" from "neutral," citing a variety of financial, operational and management risks.
Los Angeles City Attorney Rockard Delgadillo, in the suit filed on Thursday, accused the game publisher of failing to disclose the pornographic content to get the game onto shelves of major retailers that do not carry games rated "Adults Only 18+."
Delgadillo said the company further deceived consumers by first claiming that hackers had modified the original version of the games, then announcing a week later that the sex scenes were written into the original game code.
The lawsuit demands that Take-Two and Rockstar Games, the subsidiary behind "Grand Theft Auto," one of the best-selling in video game franchises history, stop marketing the games to children, pay fines and return $10 million in profits.
The lawsuit charged that Take-Two knowingly deceived the video game ratings board and flouted California law to market the game as suitable for teens, the lawsuit alleged.
The city also claims that Take-Two "marketed the 'Grand Theft Auto' series in a fashion that encourages the creation of, which has added to the counter-culture image of the games, enhancing their popularity and hence their profitability."
The lawsuit asks that Take-Two be ordered to disgorge the profits from the estimated 200,000 copies of the game it sold for about $10 million in California, and that it alert customers who purchased "Grand Theft Auto: San Andreas" before the ratings change about the sex scenes.
It also demands a $2,500 fine for each untrue or misleading statement the company purportedly made about the games.
Delgadillo appears to have a good case if he can prove that the scenes
were embedded in the game and that the company misled the ratings board
and the public, said attorney Stephen Smith, a partner at Greenberg
Glusker in Los Angeles.
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