ZIDWARE CASE RESOLVED

Eleven years after he first announced his plans to build his Magic Girl design and began taking pre-orders, the lawsuit against John Popadiuk and his company, Zidware, by a group of buyers of that and subsequent titles has been settled.

It was in July 2011 when John declared his intention to design and build “a 1990s inspired custom pinball machine full of flipper flash, digital fun, innovative play and magnetic creative wonder!”

To fund the development and manufacturing he began taking pre-orders for Magic Girl, with an initial $500 non-refundable deposit followed by payment of half the $15,995 cost within seven days, with further payments due according to a pre-defined schedule.

We recounted much of the history of that game in our article about the finishing of Magic Girl by a team in the Netherlands, but John’s failure to deliver a working Magic Girl – or indeed either of the other three titles which were subsequently announced and offered for sale – before running out of money left a large group of pre-order buyers with neither their games nor any realistic prospect of a refund.

What had begun as a very public project, gradually became increasingly secretive as buyers had to sign non-disclosure agreements and the flow of information from John regarding progress on the designs began to dry up – not only to the public but also the buyers.  Request for information started to be ignored, as were requests for refunds.

In an apparent attempt to mollify at least the Magic Girl buyers, John teamed up with start-up pinball manufacturer, American Pinball, to build a small run of Magic Girl machines according to the design as it then stood, using the parts he had already assembled.  He didn’t have funds to pay American Pinball for their contract manufacturing work, but instead supplied them with a playfield design and artwork for their first in-house title, Houdini: Master Mystery.

John told a number of buyers that once the Magic Girl games were being manufactured and either delivered to their original buyers or sold, he would be in a better position to offer refunds to those who no longer wanted their games.

As a result of the American Pinball deal, approximately twenty-five Magic Girl machines were built and delivered to the original buyers, although what they actually got was totally unplayable due to having incorrectly installed or missing mechanisms, disconnected or faulty switch wiring and many obvious design deficiencies.  It was a pretty box of flashing lights but certainly not the game buyers were expecting or had been promised.

The designs for Retro Atomic Zombie Adventureland, Alice in Wonderland and a fourth title, Space Mission X, were even less progressed than Magic Girl and far from production-ready.

Once the small run of Magic Girl machines had been built, John and American Pinball parted ways. After a couple of private previews at pinball shows, his concept for the Houdini playfield was scrapped and the game subsequently redesigned by Joe Balcer.

That left those who had pre-ordered games two, three and four with no prospect of ever receiving their games from John or getting their pre-order money returned by Zidware, while those who had ordered Magic Girl only received an unplayable and incomplete game.

Although the Zidware cupboard appeared bare, those individual purchasers began investigating what legal recourse they might have. More than thirty buyers came together in a private Facebook group to share their experiences and see if, by working together, they could wield more leverage than working individually.

One member of the group had already approached a lawyer, Zane Smith, to explore whether legal action was a realistic prospect.  While some members continued to hold on to the hope that John would eventually fulfil his promise to deliver the games, nineteen buyers signed up with Zane to become plaintiffs in a lawsuit against Zidware and the company’s directors, John and his wife, Michelle. The suit was filed in 2015.

Zane told Pinball News, “John never offered any significant settlement or offers of refunds. He always made promises of refunds but when it came down to getting actual dollars, he always pleaded that he did not have any assets to pay any of the deposits back.”

The lawsuit was further complicated when John signed to work for Deeproot Pinball in early 2017, bringing his designs for Magic Girl, Retro Atomic Zombie Adventureland and Alice in Wonderland to Robert Mueller’s new company.  All three were announced as upcoming titles for Deeproot Pinball when the business was publicly launched.

Robert Mueller promised to make sure every Zidware customer was either repaid in full for their unfulfilled pre-order or offered a Deeproot Pinball title once they were available. A small number of pre-order buyers did indeed get their Zidware payments back, while others decided they had paid for a game and that’s what they intended to get, opting to wait to receive a Deeproot machine instead.

However, while that refund offer was originally available to those involved in the lawsuit against John, Michelle and Zidware, the group didn’t trust Robert to stick to his word to repay them in full. They also felt any repayment would take many months and could significantly compromise their ability to resume their legal action if the promised refunds never materialised. Consequently, they rejected it in favour of continuing with their litigation. Robert, in turn, publicly announced he had withdrawn the offer.

It took until April 2018 before the lawsuit finally came to court. 

Zane told us, “After a weeklong trial we obtained a judgment against him [John] individually as well as a judgment against Zidware the company for $139,280.  The trial revealed that John used the game deposits paid by my clients to pay his own individual personal bills like a salary, house payments, and groceries. This evidence provided the judge with the basis to find him individually liable for the claims, even though the contracts were with Zidware.”

The suit against Michelle Popadiuk was dismissed after it became clear she was not involved in the day-to-day operations of Zidware and couldn’t be held responsible for the claims and promises made by her husband.

When trying to find out what assets John and Zidware might own which could be liquidated to help pay the judgement, John’s employment at Deeproot Pinball brought some new issues to light.

Zane explained, “We sent a citation to discover assets to Deeproot and they sent over multiple motions to strike and dismiss the citations against Deeproot saying that because they are a Texas company we could not obtain financial information that they had about John’s assets in an Illinois courtroom. After it appeared that we were going to be successful in getting the information regarding those assets, John filed for bankruptcy.”

Without the funds to pay the settlement or any of their other outstanding debts, John and Zidware both entered bankruptcy.  This immediately put efforts to recover any funds which might exist on hold, pending a bankruptcy hearing.

Although the claimants had won their judgement and had held John legally responsible for the spending of their pre-order payments and his failure to deliver the games, at the time it appeared a pyrrhic victory.

One potential asset was the intellectual property relating to the four games in development by Zidware.  Again though, John’s relationship with Deeproot Pinball complicated matters.

Although there was no written agreement at the time, John’s appointment at Deeproot Pinball included an implied transfer of intellectual property and rights related to his game designs to the company.

As Zane explained, this was only formally agreed once the court’s judgement had been made. “It was only after the lawsuit and after the judgment had been entered that John revealed to the court that he had assigned his intellectual property and trademark rights to Deeproot. There was a written agreement between John and Deeproot that was dated after the litigation had been completed and the judgment entered, however the argument by John and his lawyers was that even though the document was dated after the judgment date, it represented an oral agreement entered into before the judgment date.”

If you were wondering how John could afford lawyers to represent him in court, Deeproot Pinball had a hand in that too.

Zane told us, “At his post judgment citation hearing, John testified that he never paid for any of the lawyers who defended him throughout the entire trial.  He seemed to suggest that he had assigned over his IP rights to Deeproot in exchange for Deeproot providing him an attorney to not only defend our case but to also help him avoid any post judgment collection proceedings.”

As we know, Deeproot Pinball subsequently collapsed and the company’s physical and intellectual property assets became part of the bankruptcy sale which is still ongoing.  That failure also meant those pre-order buyers who opted to receive a Deeproot machine rather than a refund ended up with nothing.

For the nineteen litigants who had won their judgement, Deeproot’s collapse also meant the end of any potential settlement from the company on behalf of John or Zidware.

However, a glimmer of hope that there could be some kind of restitution emerged when John’s financial records were examined in detail.

Zane explained, “We conducted a fairly extensive post judgment citation proceeding against John and his wife and it did not appear that he had any assets whatsoever to pay the judgment.  It was only after we poured over his checking account that we discovered that he was paying storage unit fees. Further investigation revealed that he had two storage units in Elgin, Illinois full of parts and pieces from his Zidware business.”

What happened to all the development and sample games, the test fixtures, the huge number of playfield drawings, the cabinet and backbox artwork and all the samples from John’s studio once it closed had always been something of a mystery.

It had been assumed everything moved to Deeproot Pinball’s San Antonio offices to help with the new game builds, but the Deeproot’s versions of the Zidware titles were very different designs with completely new artwork.  In fact, nearly all the Zidware assets still existed and were housed in these storage units.

What was in the units and what value it held was still unknown but, in the absence of any other forms of payment, Zane said the group of litigants agreed to accept the items and not object to John’s discharge from bankruptcy.

He told us, “The assets in the two storage units from John’s studio and the limited assignment of intellectual property related to those assets are the only assets that we could find available to satisfy the judgment.”

With rental fees for the storage units overdue and the prospect of everything within them being dumped, Zane moved the contents to two units in a different storage facility in Northfield, Illinois.

It was there that Pinball News met Zane, as he showed us all the former Zidware assets now owned by his group of pre-order clients.

Zane labelled and took photographs of each item as he transferred them from Elgin to Northfield, although some items were mixed boxes of assorted drawings, sketches or parts which were not individually documented.

There’s no doubt this unique collection forms an important piece of pinball history, documenting the hugely creative but ultimately doomed processes involved in the design and development of several infamous titles.

The group now hopes to sell these physical assets, preferably as a single collection but alternatively as smaller bundles or as individual items if a buyer for the whole can’t be found.  The proceeds would then be used to pay back at least some of the money lost by group members, allowing a line to be drawn under the whole Zidware story.

Zane said, “The best-case scenario would be if an individual purchaser would buy all of the stored assets in one purchase and either keep the assets or resell them at their pleasure. This would accomplish two things. First, it would provide some payments to the plaintiffs in this case who have been waiting over seven years to retrieve some amount of money that John stole from them. Second, it would close the door on this very sad chapter on the pinball industry.”

The status and ownership of certain former Zidware intellectual property is somewhat more complicated.  Elements of the IP such as the titles, copyright and right to use the designs to build games appears to have ended up at Deeproot Pinball under the agreement between John and Robert.  This then formed part of Deeproot’s recent bankruptcy auction where it was recently sold to Turner Pinball.

For now though, it is the physical assets which are being made available.

Zane and the group understand they are unlikely to recover all the money they spent on game pre-orders and the subsequent legal action, but are hoping to reclaim at least half.

As Zane told us, “As of today, the original judgment with post judgment interest is well over $200,000.  If we could get between $100,000 to $150,000 for the items in the storage units, I would recommend that to my clients.”

Anyone interested in purchasing the former Zidware assets should e-mail [email protected] for more details.