Orrick, Herrington & Sutcliffe has settled a dispute with former client MGA Entertainment Inc. over work associated with a copyright lawsuit against Mattel Inc. over the Bratz doll.
No dollar amount was placed on the settlement, which was disclosed in a July 3 notice to U.S. District Judge David Carter, who is overseeing MGA’s case against Mattel, maker of Barbie. In a January 25 filing, Orrick had indicated that an arbitrator had granted a partial award earlier that month of $23 million, which amounted to a lien on the judgment.
Lisa Jacobs, a partner at Shartsis Friese in San Francisco, which represents Orrick, confirmed that the firm had settled its dispute with MGA. “The terms of the settlement are entirely confidential,” she said.
MGA attorney Edmond Connor, managing partner of Connor, Fletcher & Williams in Irvine, did not respond to a request for comment. Jeanine Pisoni, senior vice president and general counsel for MGA, issued a emailed statement: “The matter has been resolved on mutually agreeable terms.”
The settlement came as Carter deliberated over whether MGA was entitled to amend its complaint against Mattel to include allegations that it stole trade secrets by having masquerading employees show up at trade fairs. In 2011, a federal jury awarded MGA $88.5 million on those allegations. Carter later increased the award to $310 million, including a corrected verdict of $85 million plus an additional $85 million in exemplary damages and $140 million in attorney fees and costs.
On January 24, the U.S. Court of Appeals for the Ninth Circuit reversed the trade secrets portion of the judgment, concluding that those claims should not have been allowed into the copyright case automatically as “compulsory” counterclaims.
On February 27, MGA attorney Jennifer Keller of Irvine’s Keller Rackauckas Umberg Zipser moved to amend the complaint so that a jury could decide whether the statute of limitations barred the company from bringing trade-secrets claims. Michael Zeller, of Quinn Emanuel Urquhart & Sullivan filed a response for Mattel on March 11 opposing that request, arguing that it would violate the Ninth Circuit’s order.
Carter, who heard arguments on the issue on April 1, has not issued a final ruling.
Carter also is deliberating about who gets access to $137 million in attorney fees and costs upheld by the Ninth Circuit. Most of those fees dealt with MGA’s defense against Mattel’s failed claims of copyright infringement.
On remand, MGA, its insurers, and Orrick renewed their fight over the fees. Mattel brought a motion to enjoin those parties from enforcing the judgment and collecting on a $315 million bond it had posted pending its appeal. Mattel insisted that it could pay the fee award upheld by the Ninth Circuit but feared the multiple parties could force it to pay more than the $137 million.
During a February 26 hearing, Carter asked both sides to submit additional briefing on whether the money should be placed in an equitable constructive trust set up by the court in light of the disputes.
Supporting the trust were Mattel and MGA’s insurers, which argued in June 12 briefs that the entire $137 million fee award should be set aside in the trust. They argued that, including Orrick’s $23 million partial award, the total amount MGA owes third parties is $161 million – more than the actual fee award.
MGA opposed the trust.
In MGA’s case against Orrick, Connor had challenged the firm’s initial arbitration award in court documents filed in Orange County Superior Court, where his client had filed its lawsuit against the San Francisco firm. Orrick sought to confirm the award.
On April 23, Orange County Superior Court Judge William Monroe dismissed Orrick’s petition to confirm the partial award “because the Panel has not determined any, much less all, of the issues that are necessary to the resolution of the essential dispute between MGA Petitioners and Respondent Orrick.”
Amanda Bronstad is a reporter with The National Law Journal, a Recorder affiliate.