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Orrick, Herrington & Sutcliffe, which helped win an $88.5 million jury verdict for MGA Entertainment Inc. in a dispute over the rights to the highly profitable Bratz doll line, has asked for permission to fire its client in a related dispute on the ground that the company owes more than $1.2 million in attorney fees. The firm filed a motion to withdraw from the second case on May 27, several days after its lawyers argued in California that MGA should be awarded $129 million in attorney fees after winning the verdict against Mattel Inc., maker of the Barbie doll. Mattel’s attorneys disputed that amount. U.S. District Judge David Carter, who is hearing the Mattel matter in Santa Ana, Calif., has not yet ruled on the fees. One Mattel attorney, Susan Estrich, a partner at Los Angeles-based Quinn Emanuel Urquhart & Sullivan, filed a declaration in the case on June 1, citing Orrick’s withdrawal motion in the second case, which is pending in New York federal court. In an interview, Estrich said Orrick’s move is relevant to the Mattel case because MGA’s request for fees could turn into a “windfall” for the company if it’s not paying its lawyers. “After arguing that the lawyers have worked hard, haven’t been compensated, deserve to be paid, we find out the same day that that argument is inconsistent with what’s happening on the MGA side, where the lawyers aren’t getting paid, have no plans to get paid, are told they won’t get paid, and plan to withdraw from this case as soon as they can,” she said. In an attached declaration, Orrick partner Annette Hurst, who works in San Francisco and was co-lead trial counsel in the Mattel matter, wrote that she advised MGA General Counsel Jeanine Pisoni on May 12 that Orrick would move to withdraw from the New York case due to MGA’s failure to meet its financial obligations. She wrote that MGA has paid the firm for only two months of work since the case was filed in October 2009. That case was brought by a New York artist who sued MGA and Mattel for copyright infringement after discovering from press reports that doll designer Carter Bryant, in testimony in the California case, said he drew inspiration for the Bratz doll from figures of “trendy or fashionable young women with a sassy attitude” depicted in several Steve Madden shoe advertisements, according to the complaint. The artist, Bernard Belair, claims to own the copyright to several of the images in those ads, which appeared during the late 1990s in several magazines, including Seventeen. Orrick, which began representing MGA in the Mattel matter in May 2009, agreed to handle the New York case subject to “stringent conditions regarding payment,” according to Hurst’s declaration. At the time, the firm, which charged “normal hourly rates,” understood that MGA’s insurers would pay the bills but that, regardless of insurance coverage, MGA would pay outstanding invoices. By fall 2010, MGA had not made a single payment, she wrote. When Orrick suggested withdrawing from the case, MGA negotiated a monthly payment schedule. MGA paid for two months — November and December — but has not stuck to the schedule and now owes more than $1.2 million, Hurst wrote. Orrick’s relationship with MGA will continue to sour, she wrote, because Pisoni had confirmed that Orrick would not serve as lead counsel in the New York matter should it go to trial. Orrick does not plan to handle an anticipated appeal of the Mattel matter, Hurst wrote. “It is likely that Orrick will become adverse to MGA at that time, as it seeks to recover its fees from the Mattel action through arbitration,” Lisa Simpson, an Orrick partner in New York who is handling the Belair case, wrote in a memo accompanying the withdrawal motion. Hurst noted that Mattel’s likely appeal would delay payment in that matter for at least several years. Regardless, MGA has not indicated it will use the proceeds from the judgment in that case to pay Orrick’s fees in the New York lawsuit, nor has MGA said it would pay fees owed in any matter other than through its insurers. MGA owes several additional firms, including O’Melveny & Myers; Skadden, Arps, Slate, Meagher & Flom; and Keller Rackauckas. MGA is in litigation with its insurers and O’Melveny, which sued last year to recover $10.2 million in fees. Hurst and Simpson did not return calls for comment. MGA issued the following written statement: “Given that Orrick is currently MGA’s counsel of record in both the Belair and Mattel actions, MGA believes that it should limit its comments on this matter to submissions made to the court.” In 2008, Mattel obtained a $100 million verdict during the first trial between the toy companies, which took place in Riverside, Calif. Last year, the U.S. Court of Appeals for the 9th Circuit reversed the verdict, ruling that the trial judge had abused his discretion in giving Mattel the rights to the dolls. Following a retrial, a federal jury on April 21 rejected Mattel’s claims that MGA infringed its copyright by hiring away Bryant, who Mattel alleged came up with the idea for the Bratz doll while in its employ. The jury concluded that Mattel did not own the rights to the first four models of the Bratz dolls or to two newer versions. The jury concluded that Mattel had stolen trade secrets by planting spies at industry trade secrets. Jurors found for Mattel on one issue: They awarded $10,000 after finding that MGA and its chief executive officer, Isaac Larian, had intentionally interfered with the contract between Mattel and Bryant. Carter has taken the fees request in the Mattel matter under submission. MGA also is seeking $177 million in punitive damages on its trade secrets victory. Contact Amanda Bronstad at [email protected].

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