Teravision sued Playboy in Los Angeles Superior Court and is involved in simultaneous arbitration with Club Jenna, Teravision lawyer David Beitchman told XBIZ.
Teravsision contends that it was forced to file two separate actions because Club Jenna is party to an arbitration clause in the contract and has refused to submit to the jurisdiction of the State Court. At the same time, Teravision alleges that Playboy, despite its ownership of the contract, is refusing to submit to the pending arbitration, forcing Teravision to file in L.A. Superior Court.
The suit against Playboy was filed Feb. 13 and has been assigned to Judge Robert L. Hess. Teravision is alleging breach of contract, alter ego liability, common counts, accounting, unjust enrichment and declatory relief.
“We’re not just talking about joins; this action covers upsells, traffic and all revenue streams that were earned by ClubTera.com from the onset of their relationship, Beitchman said. “We allege that there has been less than complete disclosure on [Club Jenna’s and Playboy’s] part in regards to the finances and accounting of the ClubTera.com website.”
According to court documents obtained by XBIZ, Teravision is entitled to 65 percent of any and all revenues derived from ClubTera.com including exit popup windows served by the site. Teravision is alleging that despite repeated requests for detailed financial accounting, Playboy has not disclosed those numbers, thus breaching the website agreement, which states that Teravision is entitled to “unfettered access to the online records” of all accounts and billing vendors that Club Jenna/Playboy uses on ClubTera.com.
Teravision CEO Evan Seinfeld told XBIZ that he “felt guilty about dragging Playboy into this because this suit is a result of Club Jenna not dealing with this issue.” Seinfeld said that Teravision has been receiving commission checks from Playboy for ClubTera.com sales.
Beitchman said that it was “too early in the discovery process to disclose financial particulars” of the case, but that he is seeking a comprehensive accounting of Patrick’s site since the beginning of its contract with Club Jenna, which could last two more years. Court documents indicate that Teravision alleges it’s owed more than $25,000.
Playboy assumed control of ClubTera.com when it purchased all of Club Jenna’s properties last June for $17.6 million.
“We’re currently engaged in settlement negotiations with Club Jenna,” Beitchman said. “They seem to want to end this amicably. Playboy is another story; they refused arbitration. These are two separate actions, but our hope is to have them joined as one.”
The next meeting on the legal docket is a hearing Wednesday on the Playboy matter in Superior Court. Beitchman said that he’s seeking a late July, early August arbitration hearing with Club Jenna.
The five-year exclusive business contract that Teravision entered into with Club Jenna for website management expires in 2009. The contract is eligible for two one-year renewals unless otherwise terminated in writing by either party 60 days before expiration.
Teravision is requesting damages, interest, collection costs, attorneys fees and further relief to be determined by the court.
Playboy is represented by the law firm of Moskowitz, Brestoff, Winston & Blinderman, which did not respond to a call seeking comment at press time. Club Jenna’s lawyer Gary L. Crandell could not be reached for comment by press time.
The case number for Teravision Inc. vs. Playboy Enterprises Inc. is BC366277.