Arbitration frees producer from $4 mil judgment

Cathy Schulman has won another victory in her long-running legal dispute with Michael Ovitz. According to sources, Schulman won a confidential arbitration that completely takes her off the hook for the nearly $4 million judgment she once faced.

Schulman, a producer of the 2005 Oscar winner “Crash” and now the president of Mandalay Pictures, will not collect anything on her own wrongful termination claims against Ovitz. In the current arbitration, Schulman was represented by celebrity attorney Mark Geragos.

A rep of Schulman declined to discuss the case. A call to Ovitz’s inhouse counsel was not returned Thursday evening.

The long legal saga dates back to Schulman’s tenure as president of Artists Picture Group, the production arm of AMG, Ovitz’s ill-fated management company.

Schulman sued Ovitz in 2002, claiming she was wrongfully terminated after disclosing to financing partner StudioCanal that funds earmarked for a joint venture had been diverted to other projects. Ovitz moved the matter into arbitration, where he claimed that Schulman had violated a settlement agreement, continued to interfere in APG projects and was the source of a spate of negative articles claiming StudioCanal pulled out of its joint venture with APG because of accounting irregularities.

In the original arbitration, arbitrator Campbell Lucas sided with Ovitz, awarding him $1.5 million in compensatory damages plus $1.9 million in attorneys’ fees and another $200,000 in costs. In an unusual move, Schulman filed to vacate the award in 2004 on the grounds that the arbitrator had a conflict of interest. Siding with Schulman, L.A. Superior Court Judge Ralph Dau tossed the award. In 2005, the California Court of Appeal affirmed Dau’s decision, holding that the arbitration award was properly vacated for failure to disclose a conflict of interest.

After Schulman’s 2005 win, Ovitz’s inhouse counsel James Ellis said they would arbitrate the matter again. And they did, resulting in the current win for Schulman.

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