Defunct streaming service Quibi is trying to force executives at Elliott Management to explain whether the hedge fund’s involvement in financing a patent lawsuit against the company was motivated by a relationship between Elliott’s founder and a colleague.
In a brief filed Thursday in Los Angeles federal court, Quibi said Elliott’s founder and co-Chief Executive Officer Paul Singer, 76 years old, is in a romantic relationship with an Elliott colleague, age 70, whose son is employed by Eko, the interactive-video company claiming trade-secret theft.
“Elliott’s motivation for involvement in the lawsuit appears personal,” the filing said.
In a statement, Elliott said that it is funding the lawsuit because it believes Eko’s case has a strong chance of prevailing. Elliott said it has no other motivations for funding the lawsuit.
“The irrelevance of Quibi’s focus on personal matters in order to put forward a false narrative about Elliott’s role related to this case demonstrates Quibi’s reluctance to engage forthrightly on the actual underlying legal issues,” said Richard Zabel, Elliott’s general counsel and chief legal officer.
Representatives for Eko didn’t immediately respond to requests for comment.
STREAMER STRUGGLES
The development is an unusual and personal twist in a case that has already proved unusual and personal since Eko sued Quibi in March 2020. Citing people familiar with the matter, The Wall Street Journal reported last May that Elliott Management was financing the lawsuit, which first emerged as a dispute between Quibi and Eko two months prior. The Journal reported that Elliott would wind up with an equity stake in Eko as part of its agreement to finance the lawsuit.
At the heart of the dispute between Quibi and Eko is the streaming service’s “turnstyle” feature, which allowed viewers to adjust their perspective depending on the orientation of their devices. Eko said the feature infringes on its own technology, which Quibi disputes.
In Thursday’s filing, Quibi attorneys said the company wants access to communications between Elliott and Eko concerning the merits of Eko’s claims. The company also wants depositions from Mr. Singer and Terry Kassel, who is Elliott’s head of strategic human resources and with whom Mr. Singer is in a relationship, the filing said. Ms. Kassel’s son, Stephen Backer, holds a senior position at Eko, according to the filing.
Mr. Backer didn’t immediately respond to requests for comment.
“Discovery will reveal whether Elliott’s stated confidence in Eko’s claims is based on evidence or based on fabrication and a personal favor,” the filing said.
Elliott has opposed the requests to subpoena Mr. Singer and Ms. Kassel, which Quibi argued for in another filing earlier this week.
Mr. Singer and Ms. Kassel have been in a committed romantic relationship for about a decade, and their relationship is well known to many people affiliated with Elliott, according to a person familiar with the matter.
New York-based Elliott is known for campaigns against Peru and Argentina, pressuring the countries to make payments on defaulted bonds, and for battles with companies such as Arconic Inc.
Eko said earlier this week in a filing that many of the documents requested by Quibi are protected under attorney-client privilege and should be exempt from disclosure. Eko also argued that Quibi’s requests are overly broad and aren’t aimed at unearthing admissible evidence.
A judge ruled in December that Eko presented enough circumstantial evidence to suggest that some of Quibi’s employees had taken elements of Eko’s technology with them when they joined the short-form streaming service. The court dismissed many of Eko’s other arguments, saying the company hadn’t proved it was likely to prevail on some of its patent-ownership claims. The judge dismissed Eko’s request for a preliminary injunction, saying Eko hadn’t proved Quibi’s efforts to sell its remaining assets would cause Eko irreparable harm, but directed Quibi to keep the court updated on developments related to its wind-down.
Quibi was one of Hollywood’s biggest flops in recent memory, a streaming service that raised $1.75 billion from investors with the hope that short-form, high-quality entertainment would win over a wave of new subscribers. The service attracted movie stars like Liam Hemsworth and Anna Kendrick, secured investment from movie studios like Walt Disney Co. and Comcast Corp.’s NBCUniversal and was led by film mogul Jeffrey Katzenberg and well-known tech CEO Meg Whitman.
The service, which launched during the Covid-19 pandemic, missed its subscriber targets by a wide margin and failed to gain traction with viewers. Quibi announced it was shutting down last year and sold its content catalog to video-streaming company Roku Inc. for less than $100 million.
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
