Friday, June 03, 2011, 6/03/2011 12:05:00 PM

MGA/Bratz's Law Firm Seeks to Withdraw In Related Case

By Todd is reporting that Orrick, Herrington & Sutcliffe, which helped win an $88.5 million jury verdict for MGA Entertainment Inc. in a dispute over the rights to the highly profitable Bratz doll line, has asked for permission to fire its client in a related dispute on the ground that the company owes more than $1.2 million in attorney fees.

The firm filed a motion to withdraw from the second case on May 27, several days after its lawyers argued in California that MGA should be awarded $129 million in attorney fees after winning the verdict against Mattel Inc., maker of the Barbie doll. Mattel's attorneys disputed that amount. U.S. District Judge David Carter, who is hearing the Mattel matter in Santa Ana, Calif., has not yet ruled on the fees.

In an attached declaration, Orrick partner Annette Hurst, who works in San Francisco and was co-lead trial counsel in the Mattel matter, wrote that she advised MGA General Counsel Jeanine Pisoni on May 12 that Orrick would move to withdraw from the New York case due to MGA's failure to meet its financial obligations. She wrote that MGA has paid the firm for only two months of work since the case was filed in October 2009.

That case was brought by a New York artist who sued MGA and Mattel for copyright infringement after discovering from press reports that doll designer Carter Bryant, in testimony in the California case, said he drew inspiration for the Bratz doll from figures of "trendy or fashionable young women with a sassy attitude" depicted in several Steve Madden shoe advertisements, according to the complaint. The artist, Bernard Belair, claims to own the copyright to several of the images in those ads, which appeared during the late 1990s in several magazines, including Seventeen.

Orrick, which began representing MGA in the Mattel matter in May 2009, agreed to handle the New York case subject to "stringent conditions regarding payment," according to Hurst's declaration. At the time, the firm, which charged "normal hourly rates," understood that MGA's insurers would pay the bills but that, regardless of insurance coverage, MGA would pay outstanding invoices. By fall 2010, MGA had not made a single payment, she wrote.

When Orrick suggested withdrawing from the case, MGA negotiated a monthly payment schedule. MGA paid for two months — November and December — but has not stuck to the schedule and now owes more than $1.2 million, Hurst wrote.

Orrick's relationship with MGA will continue to sour, she wrote, because Pisoni had confirmed that Orrick would not serve as lead counsel in the New York matter should it go to trial. Orrick does not plan to handle an anticipated appeal of the Mattel matter, Hurst wrote. "It is likely that Orrick will become adverse to MGA at that time, as it seeks to recover its fees from the Mattel action through arbitration," Lisa Simpson, an Orrick partner in New York who is handling the Belair case, wrote in a memo accompanying the withdrawal motion.

Hurst noted that Mattel's likely appeal would delay payment in that matter for at least several years. Regardless, MGA has not indicated it will use the proceeds from the judgment in that case to pay Orrick's fees in the New York lawsuit, nor has MGA said it would pay fees owed in any matter other than through its insurers. MGA owes several additional firms, including O'Melveny & Myers; Skadden, Arps, Slate, Meagher & Flom; and Keller Rackauckas. MGA is in litigation with its insurers and O'Melveny, which sued last year to recover $10.2 million in fees.


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