LOS ANGELES - Judge Richard C. Neal recently ruled that Giant Mobile's claims against Larry Flynt Productions for damages exceeding $23 million were not supported by its record of earnings.
After the two-week trial, however, Hustler and LFP owner Larry Flynt was found to have wrongfully terminated Giant Mobile as his company's exclusive distributor of adult content for mobile phones.
Giant Mobile reportedly had secured a long-term exclusive contract for Hustler-brand adult content to be delivered to mobile phones. According to Giant Mobile, LFP made an excuse to terminate the distributor's exclusive rights in order to pursue a more lucrative deal with another distributor.
LFP President Michael H. Klein maintains that the company did nothing wrong.
"Even though we ... did not prevail on the issue of liability," he said, "the fact that the arbitrator saw through Giant Mobile's efforts to extract an unearned windfall justifies our decision to have this matter arbitrated and not to cave in to the outrageous demands of Giant Mobile."
The arbitrator awarded Giant Mobile damages totaling about $470,000, roughly 2 percent of the $23 million originally demanded.
The award is considerably less than the $600,000 Giant Mobile paid to LFP during the course of their relationship.
"This was an unfortunate situation where we believed Giant Mobile had over-promised what it could deliver to us," Klein said. "We tried to negotiate an amicable resolution with Giant Mobile before the arbitration hearing and even offered to settle for more than we believed the case was worth, in order to allow the parties to part on good terms. However, Giant Mobile just kept asking for more, and it got to a point where we just said, ‘Enough is enough. Let the arbitrator decide.'
"The most satisfying thing for me is that the amount Giant Mobile was awarded was substantially less than what they sought and less than what we offered to settle."
Sirus Ahmadi, chairman of the board for Giant Mobile, said in a news release that Neal's ruling vindicated the company's rights in a number of ways.
"First, I felt Judge Neal saw through LFP's blatant attempt to fabricate excuses as to why Giant Mobile's rights were terminated," he said. "Second, Judge Neal awarded Giant Mobile a significant sum of lost profits as a result of LFP's breach of the Exclusive Distribution Agreement. And third, Judge Neal's ruling supported Giant Mobile's contention that it successfully built demand for Hustler mobile content in Europe and that [it] is ... one of the most pre-eminent distributors of such content in Europe and Asia."