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Judge Denies Omniverse Mediation Request

Jeff Baumgartner
8/26/2019

Omniverse One World Television got the short end of the stick again.

Omniverse was dealt another blow late last week in its fight against Hollywood studios when the judge overseeing the case denied Omniverse's request to "compel mediation," halt discovery in the case and work toward a settlement.

Omniverse made its plea earlier this month, arguing that "there is literally nothing left for litigation" after the company shut down its TV streaming service in June and now moves to unwind its operations. Omniverse and company founder and CEO, Jason DeMeo, claimed they are being coerced to settle on the terms put forth by the studios while also fearing that a stipulated settlement would be used to help fuel a criminal investigation against them. Omniverse has also complained that the "voluminous discovery requests" have driven up the cost of litigation and are "wasteful and unnecessary."

The Alliance for Creativity and Entertainment (ACE), which is representing the studios in the case, filed its opposition to Omniverse's request last Tuesday (August 20). ACE argued that a compelled mediation is premature and that the "true goal" of Omniverse's request is to stay discovery and to enable Omniverse to "hide the true facts" of the case.

ACE also questioned Omniverse's intentions to wind down amid evidence that OmniShop Media, another company headed up by DeMeo, appears to be prepping the launch of a service in early September called OSTV Now.

In the suit filed by ACE in February, Omniverse and DeMeo are accused of distributing TV programming to several third-party reselling partners without obtaining proper carriage rights. Omniverse has argued that it did so legally through a joint venture with HovSat, a private cable operator based in New Jersey that, Omniverse believed, possessed a 100-year contract with DirecTV affixed with "no limitations" with respect to US distribution and delivery method.

A key part of the discovery process centers on the pursuit of that purported contract, which Omniverse has yet to produce or present in-full to the California court. While records going back to the 1990s and early 2000s tying HovSat and DirecTV and DirecTV predecessor companies (like Hughes) have been sought, subpoenas have not produced records of significance earlier than 2003. Copies of what was found have not made it into the court records, though Omniverse has since attempted to further remove itself from any wrongdoing by telling the court that any infringement was "caused or contributed to by third-parties such as HovSat."

An apparently large obstacle standing in the way is Shant Hovnanian, the purported owner of HovSat. According to court filings, Hovnanian has been a tough man to reach and believed to be in Armenia. And counting on him to help out with the Omniverse case likely is folly given that Hovnanian is now wanted by US authorities after a New Jersey court issued a default judgement against him in July in a civil tax enforcement proceeding involving $16 million in alleged penalties.

In denying Omniverse's request on August 22, US District Judge Dolly Gee said that Omniverse and DeMeo have not shown that the discovery requests are improper or exceed the scope of discovery authorized by federal rules.

"Further, if these discovery requests were as unduly burdensome as Defendants claim, then they should have sought a protective order from the Honorable Patrick J. Walsh, United States Magistrate Judge, instead of seeking a stay of all discovery from the undersigned," Gee added.

Gee said the court will issue an order to all parties "to participate in mandatory settlement proceedings" after a scheduling conference.

The court's denial was just the latest blow against Omniverse. Gee recently denied a motion by Omniverse to strike comparisons between Omniverse and Dragon Box (which settled with ACE in January) from the case, claiming such comparisons are "scandalous and immaterial," and to dismiss all the plaintiffs except Paramount, the lead plaintiff.

Get up to speed on the Omniverse saga:

— Jeff Baumgartner, Senior Editor, Light Reading

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