In a legal matchup involving some Hollywood heavyweights, Thomas Randolph filed suit in Los Angeles Superior Court recently, alleging he was defrauded out of his stake in a prominent 3-D movie technology venture.
Randolph sued William Sherak, the son of Motion Picture Academy of Arts and Sciences President Tom Sherak and a prior chairman of 20th Century Fox’s domestic film group; movie producer Christopher Mallick; actor Giovanni Ribisi, star of such films and television shows such as Avatar, My Name is Earl, and Cold Mountain; software developer Kuniaki Izumi; and William Morris talent agent David Phillips.
Randolph alleges that his company’s alleged trade secrets were stolen in violation of a non-disclosure agreement, he was not paid his share of company profits, and he was falsely accussed of self-dealing. Randolph also seeks damages for intentional interference with prospective economic advantage, intentional interference with contractual relations, fraud, negligent misrepresentation and breach of contract.
Mallick formed MRSF LLC, which was previously known as StereoD LLC in 2009. The company is one of the top 3-D conversion companies in the country, and its products include the films Captain America, Avatar and Thor. The company allegedly planned to market and sell Izumi’s software technology, and Randolph was allegedly hired to create the business plan for the company. Randolph, who was a principal at Kerner Technologies, a spin-off of George Lucas’ Industrial Light and Magic at the time, allegedly initially met with Mallick in late 2008. During their meeting, Mallick allegedly expressed interest in converting two dimensional movies to three dimensional movies. According to the complaint, Randolph told Mallick about VDX technology, and persuaded Izumi to combine that technology with Kerner’s CPX technologies, and then allegedly with Kerner’s consent, Randolph entered into an agreement with Mallick.
As alleged in the complaint, the parties verbally agreed that Randolph would be the company’s Chief Technological Officer, and would own a 5-10 percent stake in the company. Under the terms of the alleged agreement, he would also be entitled to license Kerner’s CPX technology freely. Randolph and StereoD entered into a non-disclosure agreement prohibiting Randolph from disclosing the company’s confidential information and business plan. Randolph alleges, however, that before the deal was even completed, Phillips began conspiring against him over finder’s fees, which he believed he was owed in exchange for introducing Randolph and Mallick. According to Randolph, Phillips allegedly double crossed him, notifying Ian Rose, Kerner’s general counsel, that Randolph was self-dealing, and trying to exclude Kerner from any future deals. Mallick, who also believed he was owed a finder’s fee, allegedly furthered the legend of Randolph’s self-dealing. After rumors allegedly arose that Randolph was breaching his fiduciary duty to Kerner in February 2009, Randolph resigned from the company 2009, after he was accused of failing to disclose the VDX deal to Kerner Technologies.
Following Randolph’s resignation from Kerner, Mallick, Ribisi, and Sherak ejected him from StereoD. According to the complaint, Randolph allegedly stayed in touch with Izumi, however, who assured him he would protect Randolph’s interests, and that Randolph would still receive a cut of the profits. Mallick, Ribisi, and Sherak allegedly ended up making tens of millions of dollars when the company was purchased by Deluxe 3-D for approximately $50 million. The company then allegedly proceeded to implement a business plan that was quite similar to the “structure, objectives, development strategy, production methodologies, revenue goals and exit strategy” Randolph had envisioned in 2009. Randolph alleges that after the company’s purchase, he discovered Izumi was part of the overall conspiracy against him, and that he himself lacked any equity or ownership interest in the company. Following this revelation, Randolph filed the lawsuit in July 2012.
Last year, talent agent David Phillips filed a similar lawsuit, against the company, alleging breach of oral partnership agreement, breach of contract, breach of fiduciary duty, and conversion. The case settled before trial for an undisclosed sum.
The interplay between Hollywood heavyweights, alleged breach of a confidentiality agreement, purported trade secrets, and white hot 3-D technology makes this new suit an interesting matter to follow and serves as an unfortunate reminder of how some business dealings can run astray.