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Star Citizen Lawsuit – Refusal to Engage in Settlement Talks

Welcome to some more Star Citizen, again with some lawsuit updates on the Crytek v Star Citizen CI case, CI suggest that Crytek have not necessarily been sincere in their settlement talks & have been delaying and unprepared. Now CI opposing Crytek’s request for an extension of time to respond to the proposed $2.2 million bond.

You Can Follow Along with the Case Here

CI’s attorneys have responded to Crytek’s attorneys request for an extension in time to respond to a proposed $2.2 million holding bond that would be taken from Crytek and potentially used to pay CI’s court & legal fees should Crytek lose which is quite possible. Previously Crytek had said it’s because they were in settlement talks with CI and assumed that both them and CI would want an extension to continue these talks.

It appears however that CI have responded in a different way. I’ll summarize where possible but will read a lot of this word for word from CIGs Opposition to Crytek’s Application:

CIG opposes Crytek’s pending application. Crytek shows no “emergency,” let alone one not of its own creation, that warrants the requested relief. Crytek has enigmatically avoided the “meaningful settlement talks” it promised that induced CIG to agree to the last lengthy extension. Crytek squandered the time without engaging in meaningful settlement talks or preparing its opposition. Crytek then waited until the last business day before its opposition was due, on the Friday afternoon before Memorial Day weekend, to file its application.

This would mean I believe (if the extension is not given) that the court would consider the $2.2 million bond without protest from Crytek. CI’s Attorney goes on to paint a picture of Crytek attempting to stall, delay & not act in a way conducive to a settlement.

Crytek filed the original action on December 12, 2017. CIG moved successfully to dismiss several of the most material claims asserted in Crytek’s first and second amended complaints.

On March 29 2019, CIG filed the bond motion, seeking an order requiring Crytek, a foreign plaintiff, to deposit an undertaking to secure the award of attorney’s fees and costs that CIG expects to obtain as the prevailing party in this action. CIG filed the motion largely due to concerns that Crytek’s deteriorating financial condition will render Crytek judgment proof.

On April 4, the parties stipulated to Crytek’s request to postpone the hearing to June 28,, making Crytek’s opposition due May 28, 2019 and CIG’s reply due June 7, 2019. While CIG had pushed Crytek to agree to a tighter schedule, Crytek induced CIG to agree to the more relaxed schedule by promising that Crytek would use the extra time to engage in “meaningful settlement talks,” which would include Crytek making a definitive settlement proposal.

It was not until May 15, 40 days after CIG filed the bond motion and less than two weeks before the opposition deadline—that Crytek’s CEO at last made himself available for a settlement call with CIG’s Co-Founder and General Counsel. Crytek, however, talked only in generalities and refused to make a concrete settlement demand. Instead, he insisted that the parties agree to meet in person in a few weeks to continue their discussions.

A week after the call and just seven days before Crytek’s opposition was due, Crytek’s counsel emailed CIG’s counsel to confirm the parties’ plan to meet in person and to propose a 45-day extension of the briefing schedule. CIG’s counsel promptly responded that “we would be happy to work out a reasonable adjustment to the schedule,” but only if Crytek first honored its commitment by making “a definitive counter showing even the potential for settlement discussions. “Crytek’s counsel did not reply. Instead, on May 24, 2019, Crytek sent CI an email threatening that, unless CIG agreed to an extension, settlement discussion was over. In response, they reiterated that CIG would be happy to extend the deadline but not without a settlement position from Crytek.

On May 24, 2019, Crytek filed the pending ex parte application for a two-and-a half week extension of its opposition deadline. The application arrived at 4:17 p.m. on the Friday before Memorial Day weekend, the last business day before the deadline. Judge Gee promptly entered an order continuing Crytek’s opposition deadline to June 7, and CIG’s reply deadline to June 14. The Court gave CIG until close of business on May 28, 2019 to oppose Crytek’s ex parte application.

CI’s attorneys go onto say that Crytek has not met the high burden for ex parte relief.

Basically the application made was an ex parte one meaning it can be made without the other party being present, straight to the court.

However CI argue that Crytek fails to explain why it did not use the 60 days preceding the deadline to prepare its opposition papers. Crytek certainly was not using the time to prepare for or engage in the “meaningful settlement talks” that Crytek had promised. It took Crytek 40 days for its CEO to make himself available for an initial settlement call, and on that call the CEO was not prepared to discuss anything concrete. Crytek abused the first extension and the Court should not reward its lack of diligence by granting Crytek even more time.

Any “crisis” is entirely of Crytek’s own making. Crytek argues that it “moved promptly and expeditiously for the extension.”. In fact, Crytek waited until May 21, 2019-53 days after CIG filed the bond motion and just a week before Crytek’s opposition was due—to ask CIG whether it would agree to a second extension. When CIG said it would do so only if Crytek makes a definitive proposal, Crytek then waited another three days to file the application. There was nothing prompt or expeditious about Crytek’s request. Crytek claims that it “understood, based on the parties’ ongoing discussions, that Defendants would agree to this extension to facilitate settlement talks.” Id. But Crytek does not and cannot state what CIG said or did that left Crytek with that impression. Indeed, CIG made clear, in writing, that it was not willing to delay adjudication of the bond motion unless Crytek made a settlement demand.

There is a risk that Crytek will leave CIG holding the bag for its costs and attorney’s fees increases each day that passes without a security bond. Further delaying adjudication of the bond motion, especially given Crytek’s demonstrated refusal to engage in meaningful settlement talks, will indeed prejudice CIG.

CIG request that the Court should deny Crytek’s application. The bond motion should proceed on the schedule set forth in the Court’s May 24, 2019 order.

So it appears that CI are twisting the knife as it were when it comes to this bond, which is a great form of leverage in any settlement AND we can clearly see that it’s still CI saying that they are asking Crytek for a Settlement position, something which appears that they have been unwilling to give for some reason.

It appears we will find out more potentially between the 14th and June 28th where the court will likely of decided what to do about the bond motion.