Tuesday, May 16, 2023
According to Law360 (behind a paywall), a Nevada District Court has ordered Instagram Celebrity and CBD oil entrepreneur Dan Bilzerian (left) to pay $1.6 million and dismissed a breach of contract claim. Prior to that decision, the case generated a lot more heat than light.
There are some larger-than-life characters involved. Dan Bilzerian is the son of Paul Bilzerian. According to Wikipedia, Paul was a successful entrepreneur and takeover specialist until he ran into trouble with the SEC and was jailed in the early 199os. After his release from prison, Paul launched a Utah-based software company, Cimetrex, but the government confiscated his ownership interest in that company in 2002. Paul declared bankruptcy in 1991 and again 2001, but, according to Dan Bilzerian's Wikipedia entry, the government alleges that he concealed assets, passing some of them on to his two sons. It is unclear whether Dan used those funds or his poker winnings to fund his companies, Ignite International Brands and affiliated entities (collectively Ignite). Paul played a role in the negotiations between Ignite and a consulting firm, Consulting by AR (AR) .
Piecing together the nature of the dispute from redacted pleadings found on Westlaw, Alan Richardson, AR's principal, reached out to Dan Bilzerian in January 2021 to offer his consulting services in assisting Ignite in gaining a marketing foothold in Las Vegas. Ignite, in case you were wondering, markets vaping products, spirits, apparel for people who prefer not to leave much to the imagination (based on the website), and at least at one point, a CBD-infused lip balm (hence its presence on the Reefer Brief). AR hoped to link Ignite's products with Las Vegas's newest casino and resort, Resorts World Las Vegas (Resorts World, below right)). The parties entered into a letter agreement in March 2021, providing that AR would be compensated with stock in Ignite should an agreement with Resorts World be completed by July 1, 2021.
Problems arose according to AR's counterclaims, with Dan Bilzerian demanding a better deal than the one originally negotiated. AR claims that it successfully negotiated terms more generous to Ignite than those in the original letter agreement. In April, 2021, the parties entered into a Letter of Intent, the terms of which provided for a strategic partnership between Ignite and Resorts World. Dan Bilzerian then appeared at Resorts World's grand opening in June 2021, as required under the letter agreement. Afterwards, AR claims that it facilitated an updated letter agreement, with terms still more favorable to Ignite than previous iterations had been.
Thereafter, AR alleges that Ignite ceased to cooperate with AR, refused to pay any compensation to AR, and accused AR of poisoning its relationship with Resorts World. After an exchange of letters relating to the possibility of arbitration, AR sent a demand letter. Paul Bilzerian wrote to Alan Richardson, urging settlement. Here are some excerpts from that letter as cited in AR's counterclaims;
Hi Alan, I understand that your lawyer sent a letter to Ignite that essentially said either Ignite accedes to your demands or suit will be filed next week. I know Ignite will not be happy with this response so it is pretty clear where this is headed at the moment. . . . Of course your lawyer will tell you that you have a great case and can't lose. I have heard that speech so many times over the past 43 years I lost count decades ago. . . . You do have some goodwill left on the Ignite side which is why Paul Holden [Ignite's general counsel] suggested binding arbitration. . . . All you need to do is choose the path you want to follow: prompt, cost effective settlement or bitter, costly, scorched earth litigation with the only winners being the lawyers. I hope you make a good choice.
Notwithstanding this letter, it was Ignite that filed suit, seeking a declaratory judgement. AR counterclaimed. The parties have spent much of the intervening period in discovery disputes. It did not go well for Ignite. Here, for example is an August 2022 decision of the District Court ordering Ignite to file under seal 65 documents allegedly subject to claim of privilege. Here is a March 2023 order, finding Ignite in contempt for its failure to do so. The $1.6 million judgement followed just weeks later. We will see if the Bilzerians pay for a quick end to the matter or, take Paul Bilzerian's road oft-traveled road of scorched-earth litigation with the only winners being the lawyers. Either way, he will have been proven correct.
Ignite filed its appeal with the Ninth Circuit on April 28, 2023. Perhaps they did so, like King Croesus, based on the advice of the Delphic oracle, who said, "If Ignite makes war upon AR Consulting, it will destroy a great empire."