PAPER CUTS: Pokemoney -- The First Lawsuit
William Hill-Dixon is eight years old and in the third grade. He has an avid interest in medieval warfare, practices kung fu, speaks fluent Chinese, tap dances, plays soccer, and knows everything there is to know about World War II aircraft. But none of these accomplishments meet the new standard for grade school cool. Last year William couldn't hang out at the good table in the lunchroom, because he didn't speak the right language. So this year, he's focussed on becoming fluent in a new dialect, the mother tongue of the pocket monsters, the Pokemon.Pokemon, for the uninitiated, or those lucky enough to have kids over the age of 11, is a cartoon series carried on the WB, and the number one rated TV show for younger viewers. Drawn in a rudimentary style outgrown by Disney animators in the 30's, Pokemon introduces the Japanese cultural virtues of aspiration, achievement, teamwork, and capturing monsters to train them to wage war.The cartoon is just the spearhead of an assault aimed squarely at grade schoolers. Retailers nationwide have sent Beanie Babies to the storeroom, and Pooh, Scooby-Do, Furby and Teletubby fuzzy slippers have been summarily cleared from the shelves, to make way for the retina scarring Pikachu Pokemons. The other required accoutrements include videos, GameBoys, Nintendo games, backpacks, lunchboxes, fruit roll-ups, and an avalanche of over 1000 other licensed tchotchkes flying to the cash registers anywhere toys are hawked. Worldwide to date, Pokemon merchandise has netted in excess of $6 billion.With the opening November 10 of "Pokemon: The First Movie", an ominously titled harbinger of worse to come, Burger King will offer 57 Pokemon toys to go with your Whopper and fries. Pokemon is by far the hottest gimmick to hit the toy market since the last big thing. With one tiny exception. The trading cards.Pokemon trading cards are a direct strike on children's piggy banks and parents' wallets, maybe the most overwhelming Japanese attack since Pearl Harbor. Kids pay $4. for 11 cards, $10. for 60, in Jungle, Fossil and Regular edition packs, sold throughout the United States. Original Japanese Gym packs, featuring holographic trainers and holgraphic Pokemons, available only in selected electronics stores, go for as much as $200. per pack of 100 cards.Most of the trading cards are available everywhere, but others, like the rare and unpronounceable first edition Gyarados, Hitmonchan, and Clefairy, are in very short supply, creating a kind of shell game in which the manufacturers tempt kids to spend more and more money in search of these elusive "collectors items". Certain scarce Japanese cards have now attained a street value of $150. Disgruntled parents, referring to the obsessive nature of the hunt for these cards, have taken to calling them "paper crack".Pokemon trading cards, like Special Edition Barbies, and limited production Beanie Babies, become collectible by artifice. The relative availability of these items is dictated by the manufacturer. A particular item has no inherent value except that imposed by the maker upon the marketplace. By limiting the production of certain "chase" or "premium" trading cards in order to spur demand, the manufacturer willfully raises the price of worthless pieces of paper for the express purpose of fleecing the very young and very gullible consumer.Now, enraged parents are striking back. On September 17, four mothers filed class action suit in United States Federal District Court, San Diego, on behalf of their own children and a class of millions of others alleged to have been defrauded by the makers of Pokemon trading cards. The defendants, parent company Nintendo, 4Kids Entertainment, and Wizards of the Coast, are charged under the RICO statutes (Racketeer Influenced and Corrupt Organizations Act), and the California Unfair Competititon Law, with conducting an "illegal gambling enterprise through their manufacturing, marketing, distribution and sale of Pokemon trading card packages".The complaint alleges that the defendants have conspired in a criminal enterprise which includes "the three elements of unlawful gambling, as uniformly reflected in state and federal law". These are "consideration, chance and prize. Consideration refers to the price paid by the gambler to gamble; Chance refers to the odds of winning and losing; And prize refers to the receipt of items of some value by winners"."Any activity, commercial or otherwise, with those elements, constitutes unlawful gambling. In order to attempt to make sweepstakes, prize award promotions, or similar activities, legal, promoters will often seek to eliminate one of the three elements" by methods such as free mail-in offers. "However defendants have not eliminated any of the three elements of illegal gambling." Cards must be purchased in order to win valuable premium cards. There is no alternative free method of obtaining those cards. The element of chance is reflected in the random insertion of premium cards into the packs. Last, the marketing of Pokemon cards involves prizes because "the premium cards have, and are perceived to have value, and obtaining a chase or premium card is a prize".The complaint states that in 1999, 4Kids, licenser of Pokemon trading cards and video games, and producer of the television series, will net revenues in excess of $50 million. Wizards of the Coast, which manufactures, distributes, and sells the trading cards under a licensing agreement with 4Kids, will net revenues of $225 million this year. Over the same time period, Nintendo's net revenues from its sales of Pokemon trading cards and related products in the United States, including the video game and the television series, are expected to exceed $1 billion.Plaintiffs are seeking compensatory and treble damages from the defendants, as well as restitution and/or "disgorgement" of the defendants' improper gains from their misconduct, plus imposition of an asset freeze and the establishment of a trust of the frozen assets for the benefit of plaintiffs and the members of the Class".A trial by jury has been requested, and if there's any justice in the world, it will be composed of twelve angry 8 year olds. I'd like to think that one of them will be my friend William, who, when asked to describe Pokemon, responded ruefully: "Something some guy thought up to make money". Exactly right.