(The Hollywood Reporter) — Michael Ovitz’s legal woes continued Feb. 24 when he was sued by financier Ronald Burkle over a 7-year-old Internet business and other ventures.
Burkle’s case — filed in Los Angeles Superior Court against Ovitz and his company, CKE Associates LLC — seeks unspecified damages for breach of contract, fraud and civil conspiracy.
“Ovitz’s and CKE’s blatant misrepresentations have literally cost Mr. Burkle millions of dollars … after Ovitz’s flat-out refusal to honor his word, live up to his and CKE’s financial commitments and perform the deal as promised,” according to the complaint filed by attorney Patricia Glaser.
Ovitz’s attorney, James Ellis, said the lawsuit’s claims were “baseless and false.”
“The lawsuit was filed in retaliation for Mr. Ovitz having come forward with facts which revealed that Mr. Burkle and his affiliates had breached their fiduciary duties and engaged in other unlawful activities,” Ellis said in a statement.
Burkle’s case states that Ovitz, having “failed miserably” at Disney in the mid-’90s, sought Burkle’s investment in some Internet commerce ventures.
In 1998, the two men purportedly made an oral agreement whereby Burkle could acquire 10% of any business venture and 50% of all Internet-related projects contemplated by Ovitz and/or CKE.
In the lawsuit, Burkle claims that Ovitz falsely promised to equally fund these investments but did not provide his share. As a result, Burkle said he had to cover Ovitz’s 50% investment in CheckOut.com and TalkCity.com.
Burkle further claims that he was not given an opportunity to take a 10% stake in Ovitz’s subsequent venture, Artists Management Group LLC.
Burkle also claims that he discovered only last year that Ovitz wrongfully deprived him of an opportunity to invest in the search engine Google, claiming that the investment was “intentionally hid” from Burkle. Google, best known for its Internet search engine, went public in August and raised $1.67 billion, leaving the Mountain View, Calif.-based company with a starting market capitalization of $24 billion.
Burkle is the founder and managing partner of the Yucaipa Cos., a private investment firm that created the largest U.S. supermarket company by merging the Kroger Co. with Fred Meyer Inc., where Burkle had served as chairman. Yucaipa also is the controlling shareholder of Alliance Entertainment Corp., a distributor of music, videos, DVDs and electronic games.
