Al Jazeera pushed back on Al Gore and Joel Hyatt’s lawsuit over the sale of Current TV, contending that their claims that Al Jazeera engaged in fraud in withholding tens of millions in payments are “blatantly false and potentially misleading as to the true nature of this commercial dispute.”
Rather, Al Jazeera argues that Gore and Hyatt gave “inaccurate” assurances that Current TV was not in breach of contracts, forcing Al Jazeera to file claims against an escrow account holding funds to cover indemnification.
“Rather than indemnifying Al Jazeera as they were required to do, Gore and Hyatt have resorted to a preemptive lawsuit and lawyer-driven public relations maneuvers,” Al Jazeera said in a statement.
Gore and Hyatt filed suit on Friday against Al Jazeera, suggesting that the news channel was seeking a price discount from their purchase of Current TV in January 2013, reportedly for $500 million. Current TV was transformed into Al Jazeera America, but Gore and Hyatt say that the channel has withheld funds from an escrow account. The lawsuit was sealed at the request of Al Jazeera, according to David Boies, Gore and Hyatt’s attorney.
Al Jazeera, however, says that the escrow account was set up as a “standard business practice” to cover any claims of breach of contract while Gore and Hyatt ran the channel.
“If Al Jazeera received claims of contract breach from third parties, it was to notify the escrow agent, who would keep money in the escrow account to cover that amount,” Al Jazeera said in the statement. “If Al Jazeera became liable to pay damages or settle its contract dispute with a third party, it would receive reimbursement for these amounts, and its attorney’s fees and costs, from the escrow fund. Any unused escrow money was to be paid to the sellers.”
Al Jazeera said that as it turned out, they did receive claims of contract breach, and so it then demanded indemnification.
“Al Jazeera is not seeking a ‘discount’ from the hundreds of millions of dollars it has already paid to the Gore-Hyatt group,” Al Jazeera said. “The money in the escrow fund is intended to indemnify Al Jazeera, and Al Jazeera’s indemnification claims are more than the amount held in escrow. The sellers themselves agreed that if Al Jazeera’s right to indemnification exceeded the escrow fund, the sellers would not receive anything from it.”
Al Jazeera did not identify who claimed breach of contract, although it indicated that it would submit a formal response to the lawsuit, which was filed in a Delaware court. One of the highest profile cases filed against Current TV was from Keith Olbermann, who sued the channel for $50 million. It was settled in March 2013, shortly after the sale was announced.
Andrew L. Deutsch, partner at DLA Piper, which represents Al Jazeera, said, “The response will provide a clear explanation of Al Jazeera’s position and its right to indemnification from escrow funds. Al Jazeera welcomes the opportunity to resolve this commercial dispute before an impartial tribunal.”
Update: Boies said in a statement, “If it thinks this is an ordinary commercial dispute, then Al Jazeera America should be willing to allow the entire complaint to be made public.”