Burkle, Ovitz Trade Barbs Over Websites
A long-simmering feud between two former friends and investment partners spilled out into the open Thursday when Los Angeles billionaire Ron Burkle sued former Hollywood power broker Michael Ovitz.
The lawsuit, filed in Los Angeles Superior Court, claims that Ovitz reneged on a promise to share the financial risks in two ill-fated Internet companies.
Ovitz “literally cost Mr. Burkle millions of dollars” by leaving him holding the bag when CheckOut.com and Talk City.com went sour, the suit says.
Burkle claims in the suit that he was enticed into pumping $29 million into CheckOut and $4 million into Talk City.com. Ovitz, the suit says, should have shouldered half those amounts.
Ovitz’s lawyer, James Ellis, denied the claims in the suit. He accused Burkle of going to court out of spite because of the outcome of another business deal with Ovitz that isn’t mentioned in the filing. Ellis wouldn’t provide details.
Burkle’s lawyer, Patricia Glaser, called Ellis’ contention “nonsense.”
The two men became friendly in the 1990s and once even joined on a failed bid to land a National Football League franchise in Los Angeles. But their friendship unraveled and they now intensely dislike one another, according to people who know them. Underscoring that, Burkle said in a statement Thursday: “Every day I wake up, knowing I’m still Ron Burkle, not Michael Ovitz, and every day Michael Ovitz wakes up knowing he’s still Michael Ovitz.”
Burkle, who Forbes estimates is worth $2.3 billion, is a former supermarket mogul who runs the Los Angeles-based private equity firm Yucaipa Cos.
Ovitz was once dubbed the most powerful executive in Hollywood, when he ran Creative Artists Agency. Ovitz joined Walt Disney Co. as president in 1995, and was fired a little more than a year later.
After Ovitz left Disney, the suit alleges, he relentlessly pursued Burkle.
“Desperate to restore his credibility, Ovitz turned to Mr. Burkle, a well-respected, self-made businessman to become his partner.... Always willing to entertain new investment opportunities and with Mr. Ovitz’s relentless pressure and false promises, Mr. Burkle entered into an oral agreement with Ovitz,” the suit says.
The suit claims that Ovitz breached a promise to give Burkle an option to purchase 10% of Artists Management Group management company, which the suit says Ovitz sold for $12 million in May 2002.
Ovitz also failed to alert Burkle to an investment opportunity, the suit says, when Ovitz was negotiating to make what could have been a lucrative stake in Web search engine Google before it had a public stock offering.
Ovitz was recently embroiled in a shareholder lawsuit filed in Delaware against Disney directors alleging that they allowed Ovitz to receive an excessive severance payment estimated at $140 million. A judge has yet to rule on that case.
