RI Judge Allows Bulk of 38 Studios Lawsuit to Move Ahead

Aug 28, 2013

Rhode Island’s lawsuit over failed video game company 38 Studios will move forward. Superior Court judge Michael Silverstein dismissed some of the counts, but allows key parts of the state’s lawsuit to move ahead.

(Read the judge's 98-page decision here.)

When video game maker 38 Studios went belly up after receiving a $75 million state loan guaranty, it left taxpayers in the lurch for roughly $100 million.

This desk trophy commemorating the 38 Studios $75 million loan was auctioned off after the company went bankrupt.
Credit file / RIPR

The state sued former company executives, former officials with the state’s Economic Development Corporation, former Red Sox pitcher Curt Schilling, and a collection of lawyers and financial institutions.  The 14 defendants tried to get the lawsuit dismissed, but Judge Silverstein went through each count with a scalpel, dismissing some of the counts,  or some of the defendants, but allowing key parts of the lawsuit to move forward. This includes counts of negligent misrepresentation, fraud and legal malpractice.

The state claims 38 Studios knew that the $75 million dollars wasn’t enough to keep the company afloat. While company lawyers claim Schilling hid nothing from the state.

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