Dan Hollings v. Rhonda Byrne et al
Case: ilndce 1:2008cv04369
Cause: 28:1332 Diversity-Breach of Contract
Filed: 07/31/2008

Excerpted From Complaint Filed In Federal Civil Court By Dan Hollings

COMPLAINT

Dan Hollings, Plaintiff in the above-styled action, files this
Complaint against Defendants Rhonda Byrne, TS Production, LLC, The
Secret, LLC (aka TS Holdings, LLC) TS Production Holdings, LLC, TS
Merchandising, Ltd., and Prime Time U.S., Inc. (hereinafter
collectively referred to as “Defendants”), alleging as follows:

JURISDICTION AND VENUE

Plaintiff Dan Hollings is a resident of the State of Arizona.

Defendant Rhonda Byrne is a resident of the State of California… The
corporate Defendants constitute a complex business organization
designed to achieve beneficial tax treatment for Defendant Byrne for
the substantial profits derived from The Secret. The Secret LLC is a
Delaware limited liability company.  The Secret LLC operates under the
name TS Holdings LLC.

Defendant Prime Time U.S., Inc. is a Delaware corporation with a
principal place of business at 1550 N. Cleveland Avenue, Chicago,
Illinois 60610 and conducts business in the United States on behalf of
or through TS Production, LLC. Upon information and belief, Defendant
Prime Time U.S., Inc. is the United States affiliate of Prime Time
Productions Holdings Pty Ltd., an Australian corporation which
regularly transacts business within the State of California.  Defendant
Prime Time U.S., Inc. is the wholly-owned subsidiary of TS Productions,
LLC.

Defendant TS Merchandising Ltd is a British Virgin Islands
corporation which regularly transacts business within the State of
California and which maintains its principal place of business in
Chicago, Illinois. TS Merchandising Ltd. controls the distribution and
sales of DVDs, books, and other materials relating to The Secret and
operates websites www.thesecret.tv and www.whatisthesecret.tv that are
currently believed to be hosted on Internet servers located in San
Antonio, Texas.

Defendant TS Production, LLC is a Hungarian limited liability
company which regularly transacts business within the State of
California and which maintains its principal place of business at 1550
N. Cleveland Avenue, Chicago, Illinois 60610. TS Production, LLC
purports to have a principal office at Eros Ugyvedi Iroda, Roosevelt
Irodahaz, Roosevelt ter 7-8, Budapest H-I051, Hungary, but, in fact,
conducts no substantive business at this location or anywhere within
the country of Hungary. The Hungarian address is actually the offices of
Defendants’ legal counsel, Squire Sanders & Dempsey, a law firm
headquartered in Cleveland, Ohio. TS Production, LLC is a shell company
that was created in an effort to achieve favorable tax consequences for
its owners and to help immunize them from liability. Upon information
and belief, TS Production, LLC has been assigned many of the rights
associated with The Secret.  TS Production Holdings, LLC is a Delaware
limited liability company and the parent company of TS Production, LLC.
It is believed that TS Production Holdings, LLC receives income from
the operations of TS Production, LLC, Prime Time U.S., Inc., and TS
Merchandising Ltd. relating to The Secret. TS Production Holdings, LLC
is believed to be owned in whole or in substantial part by Rhonda
Byrne. It is further believed that TS Production Holdings, LLC was
originally incorporated under the name Byrne Holdings LLC.

FACTUAL BACKGROUND

Defendant Rhonda Byrne is the creator, author and producer of “The
Secret”, a film that has been viewed by millions around the world. The
Secret has also been released as a book with more than seven million
copies in print.  Upon information and belief, Defendant Byrne owns all
or a significant portion of Defendant Prime Time Productions, an
Australia-based film and television company. Prime Time Productions
produces films in multiple cities across the world including Melbourne,
Chicago, Austin, and Los Angeles.  In 2005, Mr. Hollings began 
negotiations with Rhonda Byrne and her company, Prime Time Productions,
to perform Internet strategy and marketing services that included
oversight and direct involvement in the creation, maintenance, support
and operation of websites for the project known as The Secret
(collectively, “The Secret Website”), as well as the Internet marketing
strategies to support The Secret. Ms. Byrne represented that she was in
the course of producing a movie called The Secret and solicited Mr.
Hollings’ help in designing and setting up the website and overseeing
Internet activities such as Internet strategy, marketing, customer
support, fulfillment and programming for The Secret’s website.  In
September of 2005, Mr. Hollings and Ms. Byrne reached an agreement
under which Mr. Hollings was retained to provide creative and marketing
services necessary for the establishment of a website and related
marketing channels that were a vital component of The Secret strategy,
advertising, production and sales campaign that were to follow.  Mr.
Hollings was chosen by Ms. Byrne based on his reputation, experience,
and his unique skill set and ability to provide a substantial platform
that would assist in the roll-out and sales of The Secret movie and
related products in a manner that would maximize the revenue captured
by the program. Far from just providing basic website development, the
strategy, marketing and platform established and implemented by Mr.
Hollings was integral to Ms. Byrne’s efforts to establish a
multi-million dollar product in a world-wide consumer market. Mr.
Hollings’ Internet strategy and services provided the primary means by
which customers were introduced to and sold the various products
offered at The Secret website. Mr. Hollings’ services were specifically
acknowledged by Defendant Byrne in The Secret book.  The Secret
marketing campaign and marketing pages were launched in March 2006 and
The Secret web site was launched along with the release of The Secret
movie in late August 2006.  Millions of people have viewed The Secret
film since the Internet marketing campaign began in March 2006. The
book The Secret, became a #1 New York Times bestseller and has more
than 7.5 million copies in print. According to its website, The Secret
film and book have been translated into many languages for audiences
around the world.

The terms of the agreement between Mr. Hollings and Defendant Byrne
are memorialized in a series of email correspondence which sets forth
Defendant Byrne’s desire to maximize the profit potential surrounding
this project and the amount of revenues that could be captured through
the web-based marketing campaign.

In her email correspondence to Mr. Hollings, Defendant Byrne and
Prime Time Productions promised to pay Mr. Hollings, “US$8,000.00 per
month to broadcast plus a share of 10% of gross margins of all revenues
from The Secret website. The revenues you will receive from this, in
fact, will exceed the Nine Network’s revenues as they have 10% of Prime
Time’s net profits, which will come after your share.” A true and
correct copy of the email correspondence between Mr. Hollings and
Defendant Byrne is attached hereto as Exhibit A.

Following the negotiations between Mr. Hollings and Defendant Byrne
and Defendant Prime Time Products, Defendant Byrne established
Defendant TS Merchandising to handle certain business matters related
to The Secret’s website.  Plaintiff Hollings performed all work asked
and required of him on The Secret website, including Internet strategy
and development and implementation of the marketing campaign pursuant
to his agreement with Defendants.   Further, in order to perform his
obligations under the contract, Defendant was forced to put aside other
clients and opportunities so that he could designate adequate time to
The Secret website, Internet strategy and marketing.

In April, 2006, after the website’s launch, Mr. Hollings sent an
invoice to TS Merchandising requesting his 10% share of the gross
margins pursuant to the terms of his agreement with Ms. Byrne and Prime
Time Productions.

Following April, 2006, The Secret sent numerous communications
assuring Mr. Hollings that his portion of the gross margin would be
forthcoming.  Defendant went so far as to instruct Mr. Hollings to set
up an LLC for the purpose of receiving the large sum of money.

Defendants have failed to pay Mr. Hollings the agreed upon
percentage of the gross margin which he is due pursuant to his
agreement with Defendants; an amount which is now believed to be in
excess $3,000,000.00.

COUNT I - BREACH OF CONTRACT

Plaintiff realleges the allegations in paragraphs 1 through 23 of this Complaint as if set forth here verbatim.

The agreement between Plaintiff and Defendants forms a binding
contract between the parties for which Defendants have received
valuable consideration.  Defendants’ failure to pay Plaintiff’s 10%
portion of the gross margin constitutes a breach of the contract
between the parties.

As a direct and proximate result of Defendants’ breach, Plaintiff
has suffered damages in the amount of at least $250,000.00 plus
interest and costs.

COUNT II-FRAUDULENT INDUCEMENT

Plaintiff realleges the allegations in paragraphs 1 through 26 of this Complaint as if set forth here verbatim.

Defendants induced Plaintiff to perform work for The Secret website
by falsely representing either orally, in writing or by implied
conduct, that they would pay him 10% of gross margin for his work. 
Defendants induced Plaintiff to set aside other clients and business
opportunities by falsely representing either orally, in writing or by
implied conduct, that they would pay him 10% of gross margin for his
work.

Defendants’ representations were false and Defendants knew them to
be false. Defendants, through Rhonda Byrne and Robert Rainone, were
well aware that they would not pay Plaintiff the percentage of gross
margin which they had fraudulently promised.

At all times relative hereto, Plaintiff reasonably believed
Defendants’ representations, was unaware of the true concealed facts,
and justifiably relied upon Defendants’ representations by performing
work on The Secret’s website and setting aside other clients and
opportunities in order to complete his performance under the contract.

If Plaintiff had known the true facts, Plaintiff would not have
performed the work on The Secret’s Website and would not have set aside
other clients and opportunities in order to perform work for Defendants.

As a proximate result of Defendants’ fraud and deceit, Plaintiff has
suffered general and special damages in an amount to be proven at trial
in excess of $250,000.00.

Upon information and belief, Defendants are guilty of oppression,
fraud and malice towards him. Therefore, in addition to actual damages,
Plaintiff is entitled to recover punitive damages from Defendants, for
the purpose of punishing Defendants and deterring it and others from
engaging in such actions in the future.

COUNT III - UNJUST ENRICHMENT

Plaintiff realleges the allegations in paragraphs 1 through 34 of this Complaint as if set forth here verbatim.

Plaintiffs has performed services for Defendant for which Defendant
has failed to compensate Plaintiff and Defendant has been unjustly
enriched thereby.

Defendant has maintained money which is due and owing to Plaintiff
and to which Plaintiff is entitled and Defendant has been unjustly
enriched thereby.  Plaintiff has repeatedly demanded that Defendant
remit payment of the amounts owed by Defendant to Plaintiff.

Defendant has failed, refused and continues to refuse to pay the
amount due and owing to Plaintiff, thereby resulting in damages to
Plaintiff in the amount to be proven at trial, plus interest, attorney
fees and costs pursuant to the terms of the Programs.

COUNT IV - UNFAIR COMPETITION UNDER CALIFORNIA BUSINESS AND PROVISIONS CODE

Plaintiff realleges the allegations in paragraphs 1 through 40 of this Complaint as if set forth here verbatim.

Defendants, and each of them, are “persons” as defined under California Business and Professions Code § 17021.

By engaging in the above-described practices and actions, Defendants
have committed one or more acts of unfair competition within the
meaning of California Business & Professions Code § 17200, et seq.
Under these statutes, “unfair competition” means an unlawful, unfair or
fraudulent business act or practice. This conduct as alleged is
actionable pursuant to Business & Professions

From: Rhonda Byrne
sent: Monday, 26 September 2005 12:44 PM
To: ‘Dan Hollings
Subject: RE: THE SECRET

Hello Dan,

We are still working out the basic heads of agreement with PI, which
is all going along really well, and I anticipate we will have that all
down within the next day or two. In the meantime, I want to proceed
with finalising things with you, so you know where you are.  I am happy
to pay you US$8,OOO per month to broadcast plus a share in 10% of gross
margins of all
revenues from The Secret website. The revenues you will receive from
this, in fact will exceed the Nine Network’s revenues, as they have 10%
of Prime Time’s net profits, which will come after your share.  If you
are fine with this, I will have a simple agreement drawn up that
reflects it. The only other thing that I am thinking I would want to
include is that when you reach a particular platform of receiving
revenues that your monthly fee is offset against that. So for example,
when you are receiving US$100,OOO a month, it seems unrealistic to be
paying you your monthly fee on top of that. So I want to set a figure
that we both feel comfortable with. I am sure there is a set formula
for doing this, so I will check on that in the meantime.

Let me know if you are fine with this, and we can proceed.

Regards,
Rhonda Byrne
DIRECTOR

—–Original Message—–
From: Dan Hollings
Sent: Sunday, 25 September 20052:01 PM
To: Rhonda Byrne
Subject: Re: THE SECRET

On Sep 24,2005, at 8:12 PM, Rhonda Byrne wrote:

Hi Dan

The great news Is Marcy and I have Just been on Yahoo, and the
confusion has now turned into clarity for us both. so we can move
forward in Just defining that clarity In our agreement.

Great.

I wanted you to know that all is well. and our Intention is to
proceed on the way Bob presented the proposal with The Secret and PI,
and we will define the value brought to both in our agreement.  I will
be back to you today or tomorrow on percentages. I am very excited
about all of this. My team will have finished reformalling the trailer
for the website by tomorrow morning, which also includes the finished
logo and animation of The Secret.
Thank you for your help on this Dan.

Rhonda

All good. Very good.  Oh, and your letter “The Secret Update” was very exciting. Well written.

Thanks
Dan

SEE ALSO

http://www.backgroundnow.com/blog/2008/07/31/rhonda-byrne-the-secret-civil-litigation/

http://www.backgroundnow.com/blog/2008/08/21/what-is-dan-hollings-complaint-with-rhonda-byrne-and-the-secret-llc/