Consumer Goods and Services

MM&H's client,Eric Malka, spent years building and developing a prominent skincare line with a dermatologist and her family. After growing the business into a multi-million-dollar success over the course of several years, the majority-controlling family froze him out, and attempted to buy-him out at a discount. After Mr. Malka refused, the family filed a lawsuit in the name of the company accusing Mr. Malka of competing against the venture, despite the fact that Mr. Malka never signed a non-compete. Mark Migdal & Hayden was retained to defend Mr. Malka and his entities and represent his interest in the enterprise.

MM&H saw the lawsuit as an opportunity to negotiate a lucrative exit from the enterprise. Immediately after being retained MM&H went on the offense, exercising Mr. Malka’s inspection rights under Florida’s Revised LLC Act (the “Act”) and the operative corporate governing documents. MM&H also drove a wedge between the company and the majority-controlling member (owned by the family), notifying the law firm representing both that they have an improper conflict of interest. When the company refused to provide records, MM&H initiated a second action against the company under the Act. But perhaps the most effective corporate tool used was exercising Mr. Malka’s contractual right to advancement of all his fees and costs, a well-established mechanism in Delaware courts that is new to Florida. MM&H filed a comprehensive motion and pleading for immediate advancement of all fees and costs necessary to defend against the underlying action and, once the majority-controlling family realized that they would have to pay Mr. Malka’s fees in addition to their own (and possibly the company’s via a third law firm), the case promptly settled.

These cases reflect a total win for the client, turning a defensive retention on its head and aggressively negotiating a favourable exit for the client. The cases addressed several issues that are well-established in Delaware but developing in Florida, providing an opportunity to shape law in Florida based on decisions from Delaware and New York.

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