Financial incentives to keep Little Tikes in Hudson clear hurdle-PUBLISHED IN JULY GIVE 2009

Jul 28, 2009

The future of Little Tikes' headquarters in Hudson is still unclear, but state and local officials hope a financial incentive package approved on Monday will be a clear enough signal to the toy manufacturer to stay.

While state and local officials said the decision is up to Little Tikes' owner, MGA Entertainment, company officials said they'll wait until a final state board approves the incentive package before considering it.

At stake is whether Little Tikes will keep its Barlow Road headquarters and production in Hudson.

On Monday, the Ohio Development Financing Advisory Council approved a $3.2 million, five-year loan at an interest rate of 3 percent for MGA Entertainment of Van Nuys, Calif. The loan would support costs associated with the purchase of equipment for the Little Tikes factory in Hudson. The $5.8 million project is expected to create 66 positions and retain 395 jobs.

Monday's action was the final piece of the puzzle of tax incentives, loans and grants offered by the state and city of Hudson to try to convince Little Tikes to stay.

The total in loans, incentives and grants from the state and Hudson total more than $4.3 million, said Chuck Wiedie, Hudson's economic development director.

Officials for the toy maker's parent company, which also produces Bratz dolls, have been in negotiations with the state and city for three years asking for assistance. Other states have been wooing Little Tikes to leave Hudson, the company has said.

The process to keep Little Tikes in Hudson has spanned several years and many meetings, said Wiedie.

''They're going, they're staying. It's like a pingpong ball that keeps going back and forth across the net,'' he said.

''I'm guardedly optimistic based on the discussions we've had recently,'' said Wiedie, adding that MGA has received all of the incentives it had originally asked for. ''Everybody collectively did what they were supposed to do.''

But Wiedie said it'll only be great news when word comes from Little Tikes that ''we're here and we'll stay here and we'll grow here.''

In a prepared statement, Little Tikes Worldwide General Manager Tom Richmond said, ''The [state] did add another piece to the puzzle with this loan offer. The next step is that the State of Ohio Controlling Board will meet in mid-September and they are the ones who release the funds. Once all of that is complete, we'll be in a position to take the entire proposal before executive management of our company to make a decision.''

Wiedie said local officials have been led to believe that the controlling board usually follows the recommendations of the advisory board.

The state's incentive package totals more than $3.8 million — that includes the $3.2 million loan; a $125,000 work force development grant; a ''rapid outreach'' grant of $300,000, which can be used for a variety of things, such as retooling of machinery for new products; and a previously announced 55 percent job creation tax credit for seven years, valued at $134,228.

The city of Hudson matched the rapid outreach grant with a one-time, $300,000 grant and also approved a 50-percent job creation tax credit on the new income tax created for the proposed new 66 employees for six years, said Wiedie.

In addition, county officials have provided services to Little Tikes in training and assistance and have been involved in talks with state and local officials, Wiedie said.

Ohio Department of Development spokesman Bob Grevey said the state is very interested in retaining Little Tikes in Hudson.

''When we do this, it doesn't happen in a vacuum. We want to offer incentives for companies we believe have a strong presence in Ohio. When we put together an incentive package, we do so trying to be responsive to their business plans and needs. We hope this incentive package will be adequate in retaining Little Tikes in Hudson,'' Grevey said.

Offering incentives to a company like Little Tikes, even though it gives up some revenue for the state and city, is worth it in the long run, said Wiedie. Little Tikes currently pays $300,000 in income tax to the city of Hudson. If they accept the incentives, many of them require the company to commit to staying for a certain number of years.

''We read every day about how manufacturers are leaving Ohio. Here's a company that wants to stay in the United States. They're asking us for a compelling reason and everybody banded together to make sure they stay here. We are the home of Little Tikes. Little Tikes has an international brand,'' Wiedie said.

http://www.ohio.com/business/51932992.html

U.S. District Court Rules in Favor of MGA Entertainment in Mattel/Bratz Doll Insurance Litigation-PUBLISHED IN JULY GIVE 2009

July 15, 2009

LOS ANGELES--(BUSINESS WIRE)--On June 24, 2009, U.S. District Court Judge Stephen Larson issued an Order granting Motions for Summary Judgment brought by MGA Entertainment against two insurers for failing to defend MGA in litigation relating to the Bratz brand. The Order establishes that both insurers, Evanston and Crum & Forster, had a duty to defend MGA in its litigation against Mattel, Inc. over the wildly popular Bratz dolls. Further, the Order allows MGA to pursue damages against the two insurers at trial.

Since 2004, MGA has spent nearly $100 million defending itself against an onslaught of litigation brought by Mattel, Inc. over the Bratz brand. [Mattel, Inc v MGA Entertainment, Case No.: 2:04-cv-09049 SGL (RNBx) ] MGA will now seek to recover all incurred attorney fees and costs, consequential damages to its business, and punitive damages occasioned by the intentional failure to defend by the insurers.

“This is a significant development which will open the way for recovery of all past and future damages suffered by MGA,” said attorney Michael J. Bidart, who represents MGA. Bidart is a senior partner at the Claremont law firm Shernoff Bidart Darras Echeverria.

When Mattel sued MGA, alleging that a Bratz designer had developed the concept for the popular doll while working for Mattel, MGA tendered to four consecutive insurance companies to defend the claim. All four insurance companies - Hartford, Evanston, Crum & Forster and Lexington - denied a defense.

Forced to defend itself, MGA filed suit against the four insurers on April 15, 2008. The lawsuit alleged a bad faith failure to defend MGA and protect it from the devastating effects of the “scorched earth” litigation by Mattel. In May 2008, only one of the insurers, Lexington insurance, agreed to defend MGA under a reservation of rights.

Subsequently, both Hartford and Crum & Forster entered into confidential settlements with MGA for past obligations. Evanston, however, continued to deny any defense obligation, which led to last month’s Motion for Summary Judgment.

With the failure to defend issue now resolved in its favor, MGA will seek the earliest available trial date to recover damages.

Permalink: http://www.businesswire.com/news/google/20090715006086/en

MGA Entertainment Wins Ruling Against Insurers-PUBLISHED AS IT IS SAID IN JULY,2009

Posted date: 7/15/09

By DEBORAH CROWE

Los Angeles Business Journal Staff

MGA Entertainment said Wednesday that a judge ruled that two insurance companies that earlier refused to pay for its defense in its Bratz legal battle with Mattel Inc. are legally bound to do so.

A federal jury decided last year that a former Mattel doll designer created the Bratz name and characters for MGA while still working for Mattel. The Van Nuys toymaker is on the hook for more than $160 million, including a $100 million damage award and more than $60 million in court costs.

The U.S. district judge in the case, Stephen G. Larson, last month granted a summary judgment against Crum & Forster and Evanston Insurance Co., saying they had to pay despite certain policy exclusions, MGA said.

“This is a significant development which will open the way for recovery of all past and future damages suffered by MGA,” said attorney Michael J. Bidart, who represents MGA, in a statement.

A future trial will determine how much the insurance companies owe the company. MGA said. It is possible that even the damage award, or a portion of it, could be covered by insurance.

The company last month reached a separate settlement with three other insurers – Hartford Insurance Co. of the Midwest, Hartford Fire Insurance Co. and the Hartford Financial Services Group Inc. – over the damages and legal bills.

MGA filed a federal lawsuit in 2008 against the all the insurers, saying they had breached their agreement to pay for MGA’s defense.

http://www.labusinessjournal.com/article.asp?aID=47116327.42821402.1805804.272103.88333802.525&aID2=138899

Statement from MGA Entertainment Re: Ruling on Mattel's Motion for Injunction-PUBLISHED AS IT IS SAID IN DECEMBER, 2008

Statement from MGA Entertainment Re: Ruling on Mattel's Motion for Injunction LOS ANGELES, Dec 04, 2008 (BUSINESS WIRE) -- Last night, US District Judge Stephen Larson granted Mattel's request for an injunction to stop MGA Entertainment from selling certain Bratz products.

"We believe the jury verdict was clear in denying 99% of Mattel's copyright infringement claim and that issuing such a broad injunction is inconsistent with the limited jury verdict and the law," said Isaac Larian, CEO of MGA. Larian added that "MGA intends to immediately appeal the injunction Mattel was granted."

While the Order does provide that it will be stayed until February 2009 while the Court considers additional legal briefing on post-trial issues, MGA will request that the stay be extended pending resolution of MGA's appeal.

"We will seek to stay enforcement of this Order until our appeal is resolved so we can maintain the over 1500 people that MGA employs, and continue to give our consumers a product they desire," Larian stated.

Further, the Order acknowledges that "[t]here is a strong economic interest, especially in these troubled times, in maintaining a profitable enterprise as a going concern," and MGA agrees, citing this as one of the important facts it will raise when it seeks to stay enforcement of the Order until its appeal is resolved.

Notably, Judge Larson previously stated Mattel's request was "quite a leap," and stated that "the measurable value to Bratz, the brand Bratz, to the dolls Bratz, to everything that came of it, is so much a function of what Isaac Larian and his team at MGA put into it." The broad Order is surprising given these foregoing sentiments and MGA looks forward to its opportunity to present its appeal to the U.S. Ninth Circuit Court of Appeals.
SOURCE: MGA Entertainment, Inc.

http://bratzworld.livejournal.com/