United Studios of Self Defense Sues Former Executives for Attempted Business Takeover

IRVINE, CALIF. (Oct. 11, 2010)–United Studios of Self Defense (USSD) filed a cross-complaint (October 7, 2010) against six former USSD executives and others, as well as their new company, Z-Ultimate Self Defense Studios, charging them with breach of fiduciary duty, constructive fraud, conspiracy, misappropriation of trade secrets, trademark infringement and breach of written contract related to their attempt to take over USSD karate studio business operations. (Cross-complaint: United Studios of Self Defense, Inc., et al. vs. Kris Eszlinger, Hans Prosch, Frank Ley, William Clark, Russell Clegg, Paul Taylor et al., Case No. 30-2010 00404621, Orange County Superior Court, Central Justice Center, October 7, 2010)

USSD, based in Irvine, California, was founded in 1988 by Charles Mattera, a 10th degree Black Belt in Shaolin Kempo-style karate. USSD grew to more than 170 studios throughout the U.S. and Canada. Mattera developed a unique system of martial arts training and instruction and USSD studios used Mattera’s proprietary system of martial arts development when teaching Shaolin Kempo-style karate. “Through the years, USSD became widely recognized and respected as a world-class martial arts program,” says A. Barry Cappello, managing partner of Cappello & Noël, LLP and attorney for USSD. “USSD conveys the values of honor, discipline, integrity and loyalty while teaching top level martial arts skills to thousands of students.”

According to the cross-complaint, on September 1, 2010, a group of USSD executives abruptly left USSD to launch a secretly-formed competing company, Z Ultimate, taking with them valuable USSD trade secrets and confidential information, and trying to take control of a number of USSD studios and students.

“By trying to stage this coup, they committed a whole litany of unlawful actions,” says Cappello. “These include misappropriating and using USSD’s confidential information and trade secrets, sabotaging the USSD website, destroying USSD’s electronic files, infringing the USSD trademark name and logo, defaulting on sales agreements and interfering with USSD franchise and licensing agreements with third party investors.”

The cross-complaint is seeking compensatory and punitive damages and other compensation and relief for the harm caused to USSD by the cross-defendants.

“Fortunately, most USSD students and instructors have seen through the cross-defendants’ actions for what they are: a money grab and a total betrayal of all that USSD stands for,” says Lawrence J. Conlan, USSD co-counsel with Cappello. “The allure of money to them apparently won out over honor and integrity.”

While litigation continues, USSD plans on opening new studios. “We want to give students caught up in this unfortunate situation an opportunity to return to a USSD studio and to our training philosophy,” says Charles Mattera.

For a copy of the cross-complaint, contact Diane Rumbaugh, 805-493-2877, diane@rumbaughpublicrelations.com.

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