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Orrick wins $23 million award vs MGA, Bratz maker sues to vacate

2/5/2013 COMMENTS (0)

Are there any winners in the epic nine-year copyright and trade secrets fight between Mattel, which makes Barbie dolls, and MGA, which makes Bratz? Once upon a time, MGA's dolls dethroned Barbie in the hearts and minds of little girls, but that was before not one but two trials in federal court in California; successive jury verdicts that held MGA liable to Mattel and then Mattel liable to MGA; and a pair of rulings by the 9th Circuit Court of Appeals that wiped out each of the verdicts in turn. Most recently, the appeals court last month tossed MGA's $165 million trade secrets judgment against Mattel, concluding that MGA should not have been permitted to present trade secrets counterclaims to the jury because those claims were not sufficiently related to Mattel's original IP accusations against MGA. The appellate court, which previously threw aside a $100 million verdict for Mattel in 2010, ended January's opinion on a wishful note. "While this may not be the last word on the subject," wrote Chief Judge Alex Kozinski, "perhaps Mattel and MGA can take a lesson from their target demographic: Play nice."

Fat chance.

On Monday, MGA filed the latest salvo in the doll wars, albeit not against Mattel. Instead (and not for the first time), MGA is fighting with its own erstwhile counsel. In a complaint in California Superior Court, the dollmaker accuses its onetime lawyers at Orrick, Herrington & Sutcliffe of breaching the confidentiality provisions of their arbitration agreement. The complaint is heavily (and I mean really heavily) redacted, but MGA claims that JAMS arbitrators exceeded their power when they awarded Orrick a $23 million prejudgment lien against MGA; and, furthermore, that Orrick had no business filing a notice of the lien before U.S. District Judge David Carter of Los Angeles, who oversaw the second trial between MGA and Mattel. MGA wants the supposedly unprecedented judgment, which was awarded before the arbitration was complete, to be vacated. It also wants a declaration that its arbitration agreement with Orrick is no longer in effect because of Orrick's alleged breach.

The bad blood between Orrick and MGA goes back to early 2011. The Bratz maker first hired Orrick in 2009 to work on its 9th Circuit appeal of Mattel's 2008 jury verdict against MGA. After the firm won the appeal, Orrick lawyers served as co-counsel for MGA at the second trial, which resulted in an $80 million verdict and another $85 million in enhanced damages for MGA on its trade secrets counterclaims against Mattel. But according to a brief Orrick filed in September 2011, MGA began balking at the firm's bills in March 2011. By the time Orrick formally moved to withdraw as counsel, it claimed to be owed about $4 million. That number, the firm said, would balloon to $20 million in October 2011.

MGA, meanwhile, had in hand an award from Judge Carter of $105 million in attorneys' fees. In August 2011, the judge ruled that Mattel was responsible for paying MGA's defense costs in the copyright litigation because the jury rejected Mattel's claims. The 9th Circuit upheld that attorneys' fee award for MGA last month, despite tossing MGA's trade secrets judgment. The appeals court rejected Mattel's argument that it shouldn't have to pay defense fees because its claim was objectively reasonable.

Will MGA ever collect those fees from Mattel? Will Orrick ever get a share of the money? Who knows. In the doll litigation soap opera, the only certainty seems to be uncertainty.

MGA's counsel in the arbitration and the case against Mattel is Connor, Fletcher & Williams. Edmond Connor declined to comment, citing the confidentiality agreement. Orrick is represented by Shartsis Friese. Neither Arthur Shartsis nor Orrick partner Thomas McConville responded to phone messages.

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