Heavyweight Investor Suit Spotlights Ex-Underling

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A recent lawsuit may provide a window into the origin of a dispute between former Hollywood superagent Michael Ovitz and billionaire investor Ron Burkle.

The latest shot in their three-year battle is a Los Angeles Superior Court suit filed in May by Ovitz against his former prot & #233;g & #233; Peter Levin. Ovitz claims Levin violated a confidentiality agreement when Levin told Burkle about Ovitz’s investments. Burkle apparently used that information against Ovitz.

“Peter was one of the reasons why Burkle filed suit against Ovitz,” said Eric George, a partner at Dreier Stein Kahan Browne Woods George LLP, who represents Ovitz.

Burkle and Ovitz agreed to collaborate on financial matters in 1998, an arrangement that was based on their friendship. They wanted to parlay their business savvy into a mutually beneficial situation by offering each other the opportunity to profit from the other’s ventures.

But the plan went awry when Burkle felt Ovitz wasn’t putting in his share of the dough. Ovitz had been jettisoned from his lucrative post at the Walt Disney Co. in 1996 when his relationship with Disney chief Michael Eisner turned sour.

Ovitz claims that Levin gave Burkle information about investments by his consulting firm, Lynx Technology Group, and another of his companies, CKE Associates LLC, that led Burkle to sue him.

The alleged leak came at a time when Burkle and Ovitz were already quarreling over an investment that CKE made in Burkle’s investment vehicle, Multi-Accounts LLC.


Breach of agreement

Burkle sued Ovitz over the investments in February 2005, alleging Ovitz breached an oral agreement that called for the two investors to offer each other stakes in potential business ventures.

Ovitz claims he will be spending millions of dollars in attorney fees as a result of Levin’s alleged leak to Burkle.

Burkle’s lawyer, Russell Sauer, wouldn’t discuss the suit.

“I haven’t made an effort to draw conclusions, and if it is related and how,” Sauer said.

Levin sits on the boards of numerous companies. The Business Journal tried to contact him through those channels, but without success.

Levin began his career in the mailroom of Creative Artists Agency, which Ovitz co-founded, before joining the agency’s corporate advisory group. He then followed Ovitz to Disney, working at the corporate and strategic planning group. He eventually became managing director of Ovitz’s investing and consulting firm, Lynx.

In that position he had access to CKE’s financial information and often negotiated investment agreements on behalf of the company.

Levin left CKE in 2001. Ovitz claims that Levin then met with Burkle and told him about an investment CKE made in Oingo, a Santa Monica-based search engine company that was purchased by Google for $102 million in April 2003.

Ovitz also alleges that Levin told Burkle about an investment in search engine AskJeeves.com, now Ask.com.

According to legal documents, Burkle was angry because he believed their agreement required that Ovitz inform him of the investments and give him the opportunity to profit.

“Levin is somebody who initiated communications with Burkle and said, ‘I have stuff to tell you about Ovitz,’ ” said George, the Ovitz lawyer.

Levin is still involved in technology and entertainment-based companies, and currently sits on the board of Double Fusion, an advertising company; Razz.com, an Internet media site; and the Arena Football League.


Deals broken?

Burkle made his fortune in supermarket chains and is famous for his high-rolling lifestyle, which includes a legendary airplane, and his support of the Democratic Party, which led to a friendship with Bill Clinton.

Ovitz ran CAA from 1975 to 1995, when he left to become president of Disney. Eisner fired him, claming he failed to make the transition from superagent to corporate executive. The $140 million severance package was unsuccessfully challenged by shareholders.

Ovitz and Burkle met when Burkle moved to Los Angeles in the early 1990s.

According to the lawsuits, Burkle claims that in May 1998, the pair agreed to offer each other 10 percent of each other’s potential ventures, and 50 percent of all potential Internet-related or online technology projects.

After the initial agreement, Burkle claims he invested over $30 million in two Internet companies, CheckOut.com and TalkCity.com. He alleges that Ovitz should have reimbursed him half of the money Burkle invested.

But when the bottom fell out of the tech market, the investments decreased in value.

In March, a Los Angeles County Superior Court judge ruled in Ovitz’s favor, saying Ovitz and Burkle had never formed a legal partnership and, as a result, Ovitz didn’t owe any money.

In her oral ruling, Superior Court Judge Soussan Bruguera said, “this is basically a friendship gone wrong” and what Burkle “really contemplated was a partnership based in friendship and a friendship more than a partnership.”

As the battle continues, Ovitz’s lawyers are returning to court July 14 in an effort to recover millions of dollars in attorney fees, and to end a dispute between Burkle and Ovitz over an investment the two made in GameSpy Industries, a video game software company.

Burkle’s lawyers are preparing to appeal the March ruling that shot down his case.

“We intend to appeal the ruling, but it is difficult to fully form your arguments on appeal unless you understand the reasons for the decision by the trial court,” Sauer said.

Sauer, a partner in the Los Angeles office of Latham & Watkins LLP, has only been involved since the March ruling favoring Ovitz. He took over from Christensen Glaser Fink Jacobs Weil & Shapiro LLP.

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