Judge Vacates Ovitz’s Award

Onetime super-agent Michael Ovitz received a legal setback Wednesday when a Superior Court judge threw out an arbitrator’s decision that would have compelled a former employee to pay him $3.6 million in damages and legal fees.

Cathy Schulman and Ovitz have been engaged in a legal battle for the last year and a half. It began as an employment dispute between Ovitz’s Artists Production Group and Schulman, APG’s former president.

Arbitrator Campbell Lucas ruled in Ovitz’s favor this summer, determining that Schulman had interfered with Ovitz’s business dealings. Among other things, the arbitrator found that Schulman had stolen confidential documents and planted false stories in the media.

Ovitz’s attorneys petitioned the court in July to confirm the arbitrator’s award. Schulman’s representatives then filed a petition to have the award vacated, claiming bias on the part of Lucas.

In vacating the decision, Los Angeles Superior Court Judge Ralph Dau found that Lucas had failed to adequately disclose to Schulman and her attorneys that he had agreed to arbitrate an unrelated case for Ovitz’s legal team while still hearing the Schulman-Ovitz case.

“Cathy Schulman is delighted with today’s ruling, and she is looking forward to moving ahead with her career,” said her lawyer Randy Sunshine of Liner, Yankelevitz, Sunshine & Regenstreif.

APG has a number of options, including appealing Dau’s decision and arbitrating the case again.

“The judge acknowledged that his decision was appropriate for appellate review, and we look forward to the day when that occurs,” said James Ellis, in-house counsel for APG.

“It is important to recognize ... that this decision has nothing to do with the underlying merits of the arbitration’s decision which completely vindicated APG and dismissed Ms. Schulman’s claims as groundless and vexatious. APG is obviously disappointed at the judge’s decision and feels that it was made in error. It is unfortunate that an arbitration award duly issued by a meticulously fair and impartial jurist was vacated on a technicality. We agree with the judge’s characterization of this as a ‘horrendous result’ given the time and expenses incurred over the past 18 months.”

The ruling comes as Ovitz heads into a round of legal proceedings tied to his tenure at Walt Disney Co. Shareholders have filed suit claiming Ovitz’s termination clause, which netted him $109.3 million, squandered company assets. Ovitz and Disney board members say the suit is baseless.