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On April 7, a high-speed chase on a Los Angeles freeway got a lot of attention. Two men, who are accused of burglary, captivated television viewers with a two-hour attempt to elude authorities. The wheelman was a trained former Marine. At one point, the vehicle, a Ford Mustang convertible, became trapped by a TMZ tour bus. The media site was certainly proud of its cameo, and it was definitely great promotion for the celebrity tour it has been running since 2010.
Except that two weeks earlier, TMZ canceled its celebrity tour bus deal with its partner, Starline Tours of Hollywood, alleging in a lawsuit that Starline kept missing payments. That was quickly followed up with a demand for an injunction that included a declaration from none other than TMZ honcho Harvey Levin himself that talks of how May 11 would be the “Termination Date,” and that after then, Starline would no longer have access to TMZ tour guides, TMZ would no longer be involved in picking the route and that TMZ “will continue to try to operate the Tour on its own after termination.”
Not so fast?
The very same day that the Ford Mustang ran into the TMZ tour bus on that frantic chase — providing opportunity for Levin, TMZ affiliate EHM Productions and parent company Warner Bros. to promote the hell out of the incident — Starline’s owner Kamrouz Farhadi submitted his own declaration in court where he talked about a Feb. 17 meeting between the two sides. Among those at the meeting were Starline’s attorney Mohammed Ghods and Levin.
According to Farhadi, “Mr. Ghods advised Mr. Levin that EHM was a media company and it made no sense for it to operate a tour bus business and that the only source of information about tour bus operation EHM possessed was Starline’s confidential information obtained during the joint venture relationship. Mr. Levin said he did not care as the decision had been made and EHM was going to run buses and compete with Starline. This, of course, was very disappointing to Starline to have its partner steal the business in this manner. Indeed, I have learned that EHM has been aggressively advertising their new bus tour online, through a myriad of local hotels, and other marketing channels.”
The deal over the TMZ tour bus requires payments to be made to EHM five days after Starline hands over a reconciliation statement each month accounting for revenue and expenses. Starline admits that it typically has been late in rendering such payments, but tells the judge that dating back to 2010, there was never any objection to the handling of tour money, the use of a bank account nor the payment of net profits. Starline says that due to “long-standing, silent acquiescence,” EHM waived strict compliance with the agreement’s clauses.
Starline also brings up another part of the contract that could factor heavily in the coming months and might complicate Levin’s ambitions. The bus company says the agreement has a non-compete clause that prevents TMZ from operating a rival bus tour during the partnership and for two years after termination unless the agreement is properly terminated “for cause.”
When Levin came forward with word of operating a TMZ-branded bus on their own, according to Starline, “This immediately led Starline to believe that the only reason EHM had abruptly asserted the alleged contract breaches when it hadn’t raised them previously at any point in time over the past several years was because it wanted to relieve itself of the burden of the non-competition clause.”
Never has the business of celebrity tours gotten so mired in contracts, trade secrets and trademarks. “Just like its TMZ news-gossip television show, by this action, Plaintiffs opportunistically seek to exploit a party that had its guard down,” states the Starline court document burn.
Starline says it has “absolutely no intention to conduct a TMZ-branded tour after May 11, 2016, without EHM’s participation,” while Levin’s company on Wednesday pointed the judge’s attention to the fact that Starline continues to sell tickets past that date. As a result, it is continuing to push for an injunction with a hearing scheduled for May 2. TMZ also says it won’t reconsider its decision to cut ties with Starline.
Putting aside the non-compete, can Levin operate a successful tour bus on his own? Despite a poor review of the TMZ Celebrity Bus Tour from The Hollywood Reporter, Levin takes the opportunity to brag in court papers. He proclaims, “TMZ works diligently to ensure our Bus Tour customers’ satisfaction, and we rely on their positive online reviews to drive ticket sales and build brand loyalty. Because of these efforts, the TMZ Bus Tour enjoys 4-star reviews on the two most important tour review sites: Yelp! and TripAdvisor. By comparison, Starline’s tours unaffiliated with TMZ receive only 3 stars on Yelp! and 2.5 stars on TripAdvisor.”
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