Jury Awards $7.7 Million to United Studios of Self Defense in Lawsuit Against Z-Ultimate

Irvine, Calif.–After a four-week trial, an Orange County Superior Court jury returned a $7.7 million verdict in favor of United Studios of Self Defense (USSD) in a case against Z-Ultimate Self Defense Studios, LLC, Z-Ultimate Martial Arts Supplies, LLC and their individual owners. USSD had argued that Z-Ultimate illegally rebranded USSD licensed dojos into Z-Ultimate studios without USSD’s consent or knowledge (United Studios of Self Defense, Inc., et al. vs. Kris Eszlinger, Hans Prosch, Frank Ley, William Clark, Russell Clegg, Paul Taylor, Z-Ultimate Self Defense Studios, et al., Case No. 30-2010 00404621, Cross Complaint, Orange County Superior Court, October 7, 2010). The jury awarded $6.5 million in compensatory damages on Sept. 13 and an additional $1.2 million in punitive damages on Sept. 18.

The jury decided unanimously in favor of USSD on almost every cause of action against Z-Ultimate companies and its owners (former USSD executives) Paul Taylor, Kris Eszlinger, Hans Prosch, Frank Ley, William Clark and Russell Clegg. The charges included breach of fiduciary duty, constructive fraud, misappropriation of trade secrets and confidential information, Penal Code 502 (destroying computer records), trademark infringement and civil conspiracy. In addition, it found against Mike Hatleberg, manager of Z-Ultimate Martial Arts Supplies, LLC, for misappropriation of trade secrets and found against the owners of Z-Ultimate companies for malice and fraud.

“Z-Ultimate started this long legal battle in 2010 when its owners sued USSD as they attempted to unlawfully take over USSD schools,” says A. Barry Cappello, managing partner of the Santa Barbara law firm Cappello & Noël, LLP and the lead attorney representing USSD.

Each of the defendants were trained and mentored by Charles Mattera, 10th degree black belt and USSD’s founder, and eventually each ran numerous USSD schools. “Because of their breach of fiduciary duties and a collective conspiracy against USSD, they were able to illegally seize control and convert over 80 USSD locations,” explains Cappello.

USSD proved at trial that the defendants, during and after the takeover attempt, misappropriated USSD’s trade secrets including the Shaolin Kempo-style training system exclusively owned by USSD. They also took confidential corporate financial records and other confidential business materials. Defendants were found to have infringed the USSD logos and trademark.

In September 2010, the defendants announced in letters to investors and students that “select USSD locations will be joining the professional ranks of Z-Ultimate Self Defense Studios.” “Their tactics misled students and investors into believing that USSD was still involved,” says Lawrence J. Conlan, USSD co-counsel with Cappello. “The defendants arrogantly believed that it would be okay to change the names of the USSD studios overnight and use USSD trade secrets and trademarks without suffering the legal consequences.”

“We are very happy with the jury’s decision,” says Mattera. “We thank USSD investors, instructors and, most of all, our students who have remained loyal to United Studios of Self Defense over these past two years.”

For more information on USSD, visit USSD’s website at http://www.ussd.com.

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