Endeavor can’t prevent consultant from being sued for IPO marketing

Endeavor is facing complaints from a consultant who says its public market debut was saved by the company’s business model plan. David Card may have created an implied contract with Endeavor when his lawyer emailed CEO Ari Emanuel with his analysis of how good this class of unrelated acquisitions was for business, according to Monday’s ruling.

The lawsuit centers around Endeavor’s $10.3 billion IPO last year. Prior to the public offering, there was widespread criticism from analysts over the company’s acquisition, which included mixed martial arts organization UFC, art fair company Frieze and Professional Bull Riders. The “spend,” as Card called it in his complaint, caused Endeavor to lose $554 million in 2019 and accumulate $4.5 billion in long-term debt.

Endeavor planned an initial public offering in 2019 but backed out amid market skepticism.

“Following the embarrassment of the first failed initial public offering, Endeavor’s overwhelming debt has become an existential threat after the COVID pandemic disrupted the company’s business,” the complaint reads. “However, once Endeavor stole and adopted Mr. Card’s approach to communicating its business to the market, the path to a successful IPO became clear and was finally accomplished.”

Endeavor denied the allegations. When trying to file the lawsuit, he argued that there was no implied contract with Carde that required him to be paid for the company’s analysis. Even if there were, Endeavor said they hadn’t used their ideas.

Los Angeles Superior Court Judge Gregory Keosian called Endeavor’s arguments “unconvincing”. He pointed to Carde’s assertion that providing compensation for the use of ideas presented through an attorney is standard industry practice.

“The existence of a provision in Defendant’s website terms of service regarding filing, while possibly relevant to evidence of the parties’ intent, does not prejudice Plaintiff’s claims at the petition stage,” Keosian wrote in the decision, included below. .

A week before Endeavor canceled its first IPO of 2019, Carde’s lawyer sent Emanuel an analysis that said Endeavor’s infrastructure of allegedly unrelated companies was driving network effects, the concept that the value of a product increases when more people use it. According to the lawsuit, several company executives used Carde’s ideas in marketing materials for Endeavor’s second initial public offering.

“My friend and client (as far as Disney/Fox allows me to have clients!) David Card took it upon himself to write an analysis of his upcoming IPO based on VC Bill Gurley’s (Benchmark Capital) defense of the Uber valuation and Bharat Anand in protection. theories about digital media,” Carde’s attorney, Michael Giordano, wrote to Emanuel in September 2019. “David believes that with applied artificial intelligence and machine learning, Endeavor is poised to become a $100 billion company.” . I smile.”

The judge was also unconvinced by Endeavor’s arguments that it was not actually using Carde’s analysis because its plan and the company’s IPO marketing materials were not similar. While there is no direct evidence of use, it is sufficient at this stage of the litigation for Carde to claim that Endeavor had access to his ideas.

“Plaintiff alleges Defendant used Plaintiff’s definition of network effects in its subsequent IPO and modified its pre-PI materials to copy the cycle diagram presented by Plaintiff in its analysis,” Keosian wrote. “The complaint sufficiently alleges a substantial similarity.”

In order for Carde to establish a breach of the implied contract, he needed to prove that he produced the work, that he shared it with Endeavor, and that it had value. The unjust enrichment and punitive damages lawsuits were filed because Carde filed a notice that he did not contest the dismissal.

WME and the attorney did not immediately respond to requests for comment.