12:16pm PT by Eriq Gardner
'Grand Theft Auto' Producer Launches $150 Million Royalties Lawsuit
The video game business has a new profit participation lawsuit to obsess over. This one entails the massive success of the Grand Theft Auto franchise from Take-Two Interactive Software and Rockstar North.
Take-Two made it to court first on Monday seeking a declaratory judgment in New York federal court that it owes former Rockstar North president Leslie Benzies nothing from a 2009 Royalty Plan. The company is also asserting that Benzies breached a contract by claiming entitlement to royalties. On Tuesday, the Scotland-born Benzies filed his own complaint in New York Supreme Court with much greater detail about the separation between him and the English duo of Sam and Dan Houser. The latter lawsuit claims the Houser brothers "had allocated at least $93,000,000 in profit-sharing payments to themselves, with another $523,000,000 in profits still unaccounted for," and officially seeks at least $150 million in damages.
After the forum gets sorted out, the parties will fight over the meaning of a 2009 Royalty Plan.
According to Benzies, after he became the creative force behind GTA 3 (which sold 25 million units) as well as its mega-successful sequels, he was invited to become a partner in the business. He says he was close to the Housers and was even named the godfather to one of Sam's sons.
"Though titled a 'Royalty Plan,' the agreement was actually designed to distribute to the Rockstar Principals their shares of company profits," states his lawsuit.
The Housers hardly give him that. According to the Take-Two suit, the Royalty Plan "is a comprehensive bonus plan pursuant to which Rockstar Games rewarded and incentivized" the three top executives. It adds, "Under the Royalty Plan, decisions regarding pre-termination bonus allocations are made by majority vote of the members of an Allocation Committee. The Royalty Plan further precludes the persons covered by it from making any claim against Take-Two, Rockstar or any other party on account of his or its eligibility or ineligibility to receive royalties or his allocable share of any royalties."
Benzies is not deterred, stating in the lawsuit that agreements made "were intended to induce deep trust" and the principals had "co-equal financial rights," with further talk about the company's ownership structure and alleged duties of loyalty.
What disrupted his alleged entitlement to profit sharing was what happened in 2014. According to Benzies' complaint, it was suggested that he take some "personal time," and since there were no urgent game deliverables, Benzies abided to devote himself to "family matters." His sabbatical was formalized by a signed letter, and it was supposedly drafted "to ensure that Mr. Benzies viewed the sabbatical as mutually beneficial time away from the office."
Benzies says it soon became clear this was actually an "expulsion," that Sam Houser cut off communications, fired his key support staff, remotely disabled his Blackberry and so forth. It was at this time that the Housers allegedly awarded themselves a profit distribution share. At some point, Benzies is said to have got a simple message from an executive vice president at Rockstar: “Sam thinks you’ve had enough.”
Unsurprisingly, Take-Two tells a different version — that yes, there was a sabbatical, but that after the committee decided not to award him royalties in December 2014, Benzies sent a letter the following March demanding royalties and following it up with a letter providing notice of termination for Good Reason.
"Plaintiffs deny that Benzies either had Good Reason for his termination or that he was constructively discharged," states the company's own lawsuit. "Rather, Benzies resigned without Good Reason and Plaintiffs have paid Benzies all amounts required under his Employment Agreement and other related agreements."
Take-Two, represented by attorneys at Kelly Drye, believes it has fulfilled its obligation to Benzies.
Benzies says not so fast.
"Mr. Benzies attempted to return," states his lawsuit drafted by attorneys at Locke Lord. "He found his access credentials denied. The building guard recognized him and allowed access. Mr. Benzies proceeded to Rockstar North’s offices, and was met by the office manager who ordered Mr. Benzies to leave. Mr. Benzies left."
He says only then was the notice of termination sent.
Here's Benzies' version against Take-Two's with much further discussion about the communications between the sides in advance of the lawsuit and even some word about the meaningfulness of whose credits get listed last on video games.