Michael Ovitz can’t seem to stay out of a courtroom these days.
Supermarket magnate Ron Burkle sued Ovitz on Thursday, claiming the former agent has refused to honor his financial obligations to a joint venture the two started in 1998.
The Burkle suit comes while the entertainment community is awaiting a decision in another high-profile case involving Ovitz. A shareholder derivative suit challenged the $140 million severance paid to Ovitz after his disastrous 14-month tenure as Disney president. A two-month trial in Delaware Chancery Court, during which Ovitz testified for several days, ended in December and a decision is expected sometime this spring.
Burkle, a billionaire and the founder and managing partner of Yucaipa Cos., alleges in his breach of contract and fraud suit, filed in L.A. Superior Court, that Ovitz came to him in the late 1990s, after having failed miserably at Disney, and begged him to become his partner in certain Internet ventures. Under an oral agreement, Ovitz and his investment vehicle CKE were to offer Burkle the opportunity to acquire 10% of all potential business ventures and 50% of all Internet projects Ovitz found. In the Internet projects, Ovitz and Burkle were to contribute equally, so they shared the investment burden.
At Ovitz’s urging, Burkle invested in two Internet ventures, Checkout.com and TalkCity.com. Although Ovitz publicly took credit for the deal, he refused to invest his share, and Burkle was forced to cover it, according to the lawsuit.
Burkle alleges that he contributed approximately $29 million to Checkout.Com and Ovitz is responsible for $14.5 million. He also claims that Ovitz owes him approximately $2 million on TalkCity.com.
Burkle also alleges that Ovitz promised to give him an option to purchase a 10% stake in Ovitz’s management company, AMG. When Ovitz sold the failed venture to the Firm in 2002 (for $12 million according to the complaint) he didn’t even notify Burkle.
Finally, Burkle alleges that Ovitz deprived him of a chance to invest in Google, by intentionally hiding the investment opportunity.
The lawsuit, which does not specify damages, appears to seek millions of dollars in unpaid investments and lost investment opportunities.
Burkle said through his attorney, well-known litigator Patty Glaser: “Every day I wake up knowing I’m not Michael Ovitz, and every day Michael Ovitz wakes up still knowing he’s Michael Ovitz.”
Glaser also is co-counsel in Burkle’s high-profile divorce.
Well-known litigator Marshall B. Grossman of Alschuler Grossman Stein & Kahan is representing Ovitz.
Grossman said, “The complaint is more suitable as garbage-can liner than it is as a legal complaint. It is laced with false statements and diatribe more becoming of a circus sideshow than that of a serious legal document. The complaint will be dealt with in an appropriate manner, which will lead to its dismissal and a successful suit for malicious prosecution against those responsible for its filing.”
Grossman said Ovitz had prepared a lawsuit accusing Burkle of causing $1.8 million to be wrongfully withheld from Ovitz, which was his share of an investment made in a Burkle-controlled company. Grossman said Burkle capitulated by agreeing to pay the money and filed the lawsuit as retribution.
In addition to the specific allegations, the lawsuit takes numerous swipes at Ovitz. It quotes language from the shareholder suit describing him as a cancer on the Disney organization. In one claim, Burkle alleges that Ovitz arranged for Richard Wolpert, the head of Disney’s Internet division to be hired by Checkout. com in violation of Ovitz’s employment agreement with Disney.
‘Intended for the media’
James Ellis, a spokesman for Ovitz, said “Mr. Burkle’s statements about Mr. Ovitz’s tenure at Disney and afterwards are not only inaccurate, but gratuitous and appear clearly intended for the media more than the court.”
Although Burkle and Ovitz have long been linked in the public mind because they allegedly joined forces on the failed bid to bring the National Football League to Los Angeles, the complaint describes Ovitz as a casual friend. He and Burkle discussed such things as Ovitz’s recommendations for local doctors and other informal matters.
One Burkle-Ovitz connection not mentioned in the complaint is private investigator Anthony Pellicano. According to an article in Vanity Fair last year, Ovitz hired the disgraced private investigator to the stars to tap Burkle’s phones. When Burkle found out, he confronted Pellicano and told him that Ovitz was trying to renege on a business deal. Pellicano reportedly refused to work for Ovitz, saying, “When somebody owes somebody money, they should pay them.”