Justice Laub and Daniel Kanes had what they were sure would be TV dynamite: televised drone races. The Southern California tech enthusiasts lined up a TV production deal in 2015 and a $250,000 investment from New York entrepreneur Nicholas Horbaczewski.
Today the Drone Racing League is indeed a big hit. Its events are broadcast on ESPN and Sky Sports. The league raised a $20 million investment in June. Horbaczewski is being lauded for building DRL from the ground up.
But Laub and Kanes say they’ve received nothing, according to a federal court complaint filed last week in Los Angeles. The two say they had a deal with Horbaczewski, who hadn’t flown a drone or seen a race before meeting them, that called for each to be 33 percent owner of the company.
Instead, Horbaczewski absorbed their ideas for making drone racing compelling TV while secretly cutting them out of the company, they allege. “The truth was that Horbaczewski intended to steal plaintiffs’ ideas and the entire DRL for himself,” Laub and Kanes’ attorneys at Bartko Zankel Bunzel & Miller write in the Sept. 27 complaint. DRL is now worth as much as $100 million, they allege.
Horbaczewski and DRL haven’t formally answered yet, but in a notice of removal to federal court their attorneys at Morrison & Foerster say the oral and written contracts decribed by Laub simply don’t exist. “Mr. Laub has no right to any interest in DRL, and he only asserted his meritless claims after the public announcement of a large private investment in DRL,” MoFo partner Kenneth Kuwayti wrote.
A company spokesperson said the league “vehemently denies the claims made. However, we do not comment on pending litigation.”
Horbaczewski and DRL have also sued Laub in New York state court for a declaration that Laub is not an owner. According to the complaint, as Horbaczewski built DRL, Laub tentatively agreed to work as an independent contractor for a 1 percent stake that would vest over four years. But Laub never performed any work for the company and months later Horbaczewski withdrew the offer.
The written contract alleged by Laub and Kanes does sound pretty vague. They point to a March 2015 business plan that says “at this time we are thinking 33 percent Dan, 33 percent Justice and 33 percent Nick” as the capital structure.
But the two plaintiffs, who are represented by Bartko partners Patrick Ryan and Stephen Steinberg, tell a story with at least surface appeal for potential jurors.
The plaintiffs allege they pitched their idea to Blank Paige Productions in 2015 and began seeking investors. Los Angeles VC Matthew Mazzeo referred them to Horbaczewski, at the time a sales executive at a company that staged obstacle course races.
Over the next couple of months Laub and Kanes shared their ideas for the league, which they described as “Nascar for the gaming generation.” It was they who had the idea to use neon lights for the drones and race course features, and to capture video from multiple perspectives and then edit it together for presentation as a “live” event, they allege.
Horbaczewski liked the idea and along with investing $250,000 agreed to work as CEO and business developer. Laub and Kanes would focus on race logistics, drone community outreach, location scouting and fan interaction. Horbaczewski requested their bios and head shots for use in investor pitches, they allege.
Kanes even offered to pitch in his own $250,000 in seed money. “But Horbaczewski refused and insisted that plaintiffs had already done their part by bringing Horbaczewski into the venture and providing all of their ideas,” according to the complaint.
In the meantime, Blank Paige had come back with a one-year offer to develop the show. On Horbaczewsi’s advice, “plaintiffs rejected the lucrative offer, and assigned their rights in the TV show to the new company that they were starting with Horbaczewski.”
But shortly thereafter, Horbaczewski incorporated DRL in Delaware without documenting Laub’s or Kanes’ ownership or issuing them any shares. By the end of the year he cut off contact with them, according to the complaint.
The plaintiffs call it “a cynical plot to steal their ideas for a televised drone racing league, claim all the credit for himself, and cheat them out of their rightful ownership of two-thirds of the Drone Racing League.”