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.

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