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Law360 (May 25, 2021, 5:13 PM EDT ) A California judge paused a request by a former Ignite executive to collect attorney fees over claims he was fired for refusing to approve personal expenses under a Paycheck Protection Program loan, giving an appeals court time to examine the cannabis business' failed anti-SLAPP motion.
After Instagram personality Dan Bilzerian and Ignite International Ltd. lost their anti-SLAPP, or anti-strategic lawsuit against public participation, motion to toss former employee Curtis Heffernan's suit, Heffernan asked for $97,000 in attorney fees. But during a hearing Tuesday, Los Angeles Superior Court Judge Gregory W. Alarcon put the motion on ice to give the California Appeals Court time to either affirm or reverse the anti-SLAPP motion.
Heffernan in July sued Bilzerian and Ignite, claiming he was fired because he tried to call attention to a proposal to misclassify a government PPP loan as income, among other alleged financial misdeeds at the company.
He said he refused to rubber-stamp Ignite's funding of personal expenses for Bilzerian, including yacht rentals, trips to London and improvements to Bilzerian's house.
Heffernan, a former executive vice president, claimed that company principals suggested a number of tactics for hiding Ignite's cash-flow problems, including overstating the company's revenue by reporting its PPP loan as "miscellaneous income."
Ignite received between $1 million and $2 million this year through the Small Business Administration's Paycheck Protection Program, according to data released by the U.S. Department of the Treasury. The program was designed to help businesses impacted by the COVID-19 pandemic pay their employees.
Heffernan also claims that he was pressured to appease the company's auditors by approving more than $350,000 in total expenditures on Bilzerian's home, including a $75,000 paintball field, a $40,000 rock climbing wall, a $45,000 game room and a $15,000 pingpong table.
When the subject of the extensive costs to maintain Bilzerian's house came up during a budget call, the social media star allegedly justified the expenses by saying, "I'm going to be doing some summer pool parties and will utilize the house," according to the complaint.
Bilzerian and Ignite tried to shut down Heffernan's suit in September with an anti-SLAPP motion — which is used to stop lawsuits that are meant to stifle First Amendment rights — but Judge Alarcon denied the motion in February, according to court records.
Bilzerian and Ignite quickly appealed the ruling, court records show. Then about a month later, Heffernan filed for attorney fees, arguing that such fees are mandatory under the sanction power of the anti-SLAPP statute because the motion was frivolous and contrary to California law.
In a tentative ruling issued ahead of Tuesday's hearing, Judge Alarcon said he can't rule on the attorney fees request until the appeals court rules on the fate of the anti-SLAPP motion.
Tamara S. Freeze of Workplace Justice Advocates PLC, an attorney for Heffernan, urged the judge to rule now, arguing that such fee motions are usually determined almost immediately after an anti-SLAPP motion is denied. She said she expects the appeals court to affirm the ruling.
But Ryan A. Ellis, an attorney for Bilzerian, said the judge should just wait to see how the appeals court rules before making a decision on the related fees.
Judge Alarcon said he would stick with his tentative ruling and placed the matter on ice.
"We look forward to the decision by the Court of Appeal and we will seek to renew our motion for attorney's fees against Bilzerian," Freeze told Law360 on Tuesday.
Representatives for the other parties did not immediately respond to requests for comment.
Heffernan is represented by Tamara S. Freeze and Shirin Forootan of Workplace Justice Advocates PLC and Preston Lim of Lim Law Group PC.
Bilzerian is represented by Ryan A. Ellis of Ryan Ellis Law.
Ignite is represented by Lonnie D. Giamela and Talar Tavlian of Fisher & Phillips LLP.
The case is Curtis Heffernan v. Ignite International Ltd. et al., case number 20STCV25549, in the Superior Court for the State of California, County of Los Angeles.
--Additional reporting by Sam Reisman. Editing by Ellen Johnson.
For a reprint of this article, please contact reprints@law360.com.
