LOS ANGELES (Legal Newsline) - Fitness personality Jillian Michaels can sue the law firm Greenberg Traurig over allegedly bad advice she received when she signed conflicting contracts with the “Biggest Loser” TV show and a diet supplement company that later was accused of false advertising.
The California Second Appellate District Court of Appeal reversed a lower court’s decision dismissing the claims by Michaels and her personal holding company Empowered Media. The trial judge improperly rejected an opinion from a financial expert Michaels hired on her lost future profits, the appellate court ruled, and also erred by refusing to accept her argument she could have negotiated better deals if she had been properly advised.
Greenberg Traurig Partner David Markman represented Michaels in her 2009 contract with Biggest Loser, which included a clause limiting her outside commercial deals to a single national TV campaign, subject to approval by the network carrying the show. She then entered an agreement with ThinCare to endorse diet supplements, earning an advance of $2 million on royalties that ultimately reached $5.5 million.
ThinCare was hit with several class actions claiming false advertising in 2010, hurting sales. In the wake of those cases, the company sued Michaels, claiming she’d made false warranties in her contract. The two sides settled in 2013, with Michaels agreeing to repay some $2.5 million and enter into a new agreement to sell Michaels-branded products.
Greenberg Traurig represented Michaels in her dealings with ThinCare but as litigation between them progressed she shifted to another firm. In 2016, she sued Greenberg Traurig and Markman for legal malpractice and multiple other claims including breach of fiduciary duty and unfair business practices.
Greenberg Traurig moved to dismiss six of the nine claims and in February 2019 the trial judge agreed. In August, the judge dismissed the remaining claims.
Michaels offered accountant Sidney Blum to testify about some $100 million in profits she lost due to problems with the ThinCare contract as well as another endorsement deal that never came to pass. The judge said his opinion was too speculative to allow the case to proceed.
The appeals court partly disagreed, saying that at the time of summary judgment the court generally must accept the plaintiffs’ claims as true. The expert’s opinion about $7 million in lost earnings before ThinCare was sued for false advertising were based on solid evidence, the appeals court ruled, but his calculation of lost profits after the class actions and from the failed endorsement deal were in fact too speculative.
On the malpractice claims, Michaels argued that had she been properly advised about the restrictions in the Biggest Loser contract, she could have either pursued only the ThinCare agreement, negotiate it with an exception for commercials, or form a different deal. She told her lawyer at the time she was unhappy with her pay on “Biggest Loser” and looking to get out.
“If I had been told I needed to choose one or the other I likely would have picked the ThinCare agreement,” she said in a deposition.
The appeals court said her case could proceed over a potential net loss of $4.9 million.