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A Los Angeles judge appeared likely to impose discovery sanctions against MGA Entertainment Inc. in an increasingly contentious billing dispute with its former law firm, O’Melveny & Myers.

During a hearing on Sept. 21, Los Angeles County, Calif., Superior Court Judge Elizabeth White told a room full of lawyers that she was getting frustrated about MGA’s "very serious breaches of discovery obligations" in the case, in which O’Melveny has alleged that its former client owes $10.2 million in unpaid bills for its work in a high-profile case against Mattel Inc. over ownership of the Bratz dolls.

The case has lingered for more than a year as both sides have fought over discovery.

In a tentative order, White said she approved of the "possibility of terminating sanctions for MGA’s further failure to comply with its discovery productions." She also wrote that O’Melveny could move for monetary sanctions.

"I feel powerless," White said, emphasizing that she ordered MGA 13 months ago to produce documents. "You’re big parties. You’re expensive lawyers. I’m low on the totem pole in comparison to the dollars before me. It’s really, really frustrating."

Representing MGA was a fresh set of lawyers from Irvine, Calif. Edmond Connor, managing partner of Connor, Fletcher & Williams; two other partners from his firm, Michael Williams and Douglas Hedenkamp; and Jennifer Keller of Keller Rackauckas, who successfully represented the Bratz doll manufacturer in the Mattel case.

MGA hired the lawyers on Sept. 14, replacing James Rosen of Rosen Saba in Beverly Hills, Calif.

"We will not disappoint you," Connor told the judge. "We will do what this court wants. We will produce the documents."

But within minutes, both sides erupted in disagreement over what should be produced. White grew frustrated that, even with new lawyers in the case, nobody was discussing potential settlement.

"Every time you come in it’s at least four lawyers," she said. "It’s ‘cha-ching.’ "

O’Melveny, which represented MGA from 2004 to 2007 in the Mattel case, filed its suit last year. MGA fired back with cross claims alleging that O’Melveny botched the transition to its successor firm, Skadden, Arps, Slate, Meagher & Flom, just before the first trial against Mattel began. In 2008, a federal jury awarded Mattel $100 million, but the U.S. Court of Appeals for the 9th Circuit overturned that verdict.

MGA dropped the malpractice claims on Aug. 26 after O’Melveny moved for sanctions.

During the hearing, White said she would sign an order soon that limits MGA’s arguments to the billing dispute, thus wiping out affirmative defenses accusing O’Melveny of negligence or other claims that might be construed as malpractice.

She told both sides to go to the jury room and come up with a list of the documents that still haven’t been produced. The lawyers emerged minutes later, left the courtroom, and returned later in the morning. Following the hearing, lawyers in the case said the parties had not agreed on the list.

On April 21, a federal jury awarded MGA $88.5 million in damages after finding that Mattel had stolen trade secrets by planting spies at industry trade shows. The jury rejected Mattel’s claims that it owned the copyright to the Bratz dolls but awarded the company $10,000 in damages after finding that MGA and its chief executive officer, Issac Larian, had interfered with Mattel’s contract with the Bratz doll designer, Carter Bryant, who had left Mattel for MGA.

U.S. District Judge David Carter in Santa Ana, Calif., reduced the verdict to $85 million to correct a mathematical error but on Aug. 4 issued a $310 million judgment for MGA, which includes $109 million in attorney fees. Mattel has said it plans to appeal the judgment.

Amanda Bronstad can be contacted at [email protected].

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