Kotick & Friends Lose $1.5 Million Lawsuit

What happens when you take on one of the most powerful lawyers in Los Angeles? You get your teeth knocked in. That's exactly what has happened to Activision CEO Bobby Kotick, who recently lost a lawsuit against Patricia Glaser - described by California Lawyer magazine as "one of the fiercest litigators in Los Angeles” - over $1 million in unpaid legal fees. For the record, Activision was not named, nor was it ever a part of the two lawsuits mentioned in this story.

According to court records and a story on LA Times Blog, the basis of the lawsuit finds its roots in a 2007 sexual harassment and wrongful termination lawsuit filed by former flight attendant Cynthia Madvig in Los Angeles County Superior Court against Kotick, Andrew Gordon, the head of Goldman Sachs & Co.’s investment banking division in Los Angeles, and Cove Management, a company the duo created to manage a Gulfstream III private jet they jointly owned. The suit also named Phil Berg, a pilot employed by Cove.

Hold on, we're getting to the juicy part here. Madvig, who worked as a flight attendant on the jet, claimed that Berg had pressured her in 2006 to be his "arm candy" at dinners and outings during layovers. When she refused, the flight attendant alleged that Berg "set out to make life miserable." The lawsuit said that Berg made her to clean the plane’s toilets repeatedly while "leering" at her. Madvig claimed that she reported the incidents to Gordon, but never get a response. Two months later, Kotick fired her. Kotick allegedly told Madvig later that "The guys are unhappy with the hostile environment."

She filed a lawsuit two months later (January 2007) claiming sexual harassment, wrongful termination, failure to prevent sexual harassment and retaliation for reporting the harassment, among other things. Kotick, Gordon and Berg denied all of the allegations in a response filed in February with the help of attorneys at Sullivan & Cromwell.

Kotick switched attorneys in April 2007 and hired Glaser’s firm, aka Christensen, Glaser, Fink, Jacobs, Weil & Shapiro. Soon after she was hired, her firm advised Kotick that the Madvig case could be settled for $200,000 to $400,000, but "Mr. Kotick believed no sexual harassment or retaliation had taken place and it was important to vindicate the principle even if it would be very expensive in terms of legal fees," according to court records.

Sometime in September of 2007, Glaser and Kotick discussed what he and Gordon owed the law firm. Sometime in October Kotick sent $200,000 along with a letter that said the money was the "full settlement of the firm’s fees and costs." Glaser disagreed, claiming that the total owed was slightly more than $1 million. When December of 2007 came along Glaser’s firm had stopped working with Kotick and his co-defendants, hired another firm - Bingham McCutcheon and in April another firm called Gibson Dunn & Crutcher.

Kotick, Gordon, Cove and Berg ended up settling the case with Madvig in April 2008 by paying her $200,000, plus $475,000 in legal fees. Sounds like some advice someone once gave them. Interesting.

The dispute with Glaser’s firm, meanwhile, went into arbitration, with the arbitrator taking testimony from 11 people, including Kotick, Gordon, Glaser, and her colleague Nabil Abu-Assal, who also worked on the case. In March 2009, the arbitrator issued a final award in Christensen, Glaser’s favor. He awarded the firm $938,458, along with $479,898 in legal fees and costs from the arbitration process, for a total of $1.42 million. (plus 10 percent interest).

On July 6, a three-judge panel affirmed the lower court's ruling. Kotick's attorney says that they will review available options. Either the case will end with a payout or Kotick and crew will appeal the decision to a higher court.