O’Melveny Secures Favorable Jury Verdict for DC Shoes

FOR IMMEDIATE RELEASE

Contacts:
Erika Tucker
O'Melveny & Myers LLP
213.430.7792


Alexi Estrella
O'Melveny & Myers LLP
415.984.8908

O’MELVENY SECURES FAVORABLE JURY VERDICT FOR DC SHOES

LOS ANGELES, CA — December 5, 2007— O'Melveny & Myers LLP partner Michael Yoder recently obtained a favorable jury verdict in his representation of DC Shoes and its founders, Ken Block and Damon Way, in a US$28 million fraud and breach of contract action brought by DC Shoes' former CFO and shareholder, Clayton Blehm.

Yoder, head of O'Melveny & Myers's Newport Beach Litigation Department led the trial team on behalf DC Shoes, with assistance from associates Molly Magnuson and Dan Robinson.

On Tuesday, December 4, 2007, a California Superior Court jury returned its verdict for DC Shoes in a case that stemmed from DC Shoes' buy-out of Blehm's 30% interest in the Company as part of a US$15 million settlement of a wrongful termination suit Blehm filed after he was terminated as CFO of the Company. After Quiksilver acquired DC Shoes in May 2004 and Blehm was paid the balance of the US$15 million settlement, Blehm brought the present lawsuit asserting claims for breach of contract, fraud and breach of fiduciary duty against DC Shoes, Block and Way, and DC Shoes' former General Counsel, Brian Wright. Blehm alleged that defendants had defrauded him in connection with the August 2003 settlement and sale of his DC Shoes' stock by not disclosing that DC Shoes had been in discussions with a potential investor to acquire a minority interest in the Company at the time of the settlement. Blehm also alleged that DC Shoes had breached the settlement agreement by not paying in full certain employment taxes relating to Blehm's prior employment with DC Shoes, but rather settling with the IRS in such a way that Blehm remained personally liable for federal income taxes. Blehm sought US$25.5 million in damages on his fraud and breach of fiduciary duty claims, and another US$2.5 million on his breach of contract claim. Blehm also sought punitive damages against all defendants.

Following the plaintiff's case, San Diego Superior Court Judge David Brown granted a non-suit pertaining to the fraud claim against Brian Wright, and to the punitive damages claim against all of the individual defendants. At the close of evidence, Judge Brown directed a verdict in favor of Block and Way on the plaintiff's fraud claim, and in favor of DC Shoes on the plaintiff's claim for punitive damages, leaving the plaintiff's claims for damages against the Company for breach of contract and fraud to the jury. After deliberating for less than 4 hours, the jury rejected Blehm's claims on all counts, finding that DC Shoes did not breach the parties' settlement agreement and did not defraud Blehm when it bought out his 30% interest in the Company as part of the August 2003 settlement. Judge Brown then dismissed Blehm's claim for breach of fiduciary duty.

"We are extremely happy with the outcome of this trial," said Damon Way, Executive Vice President and Co-founder of DC Shoes. "Michael and his team have an impressive skill-set and were absolutely amazing in the courtroom."

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With more than 1,200 lawyers in 13 offices worldwide, O'Melveny & Myers LLP helps industry leaders across a broad array of sectors manage the complex challenges of succeeding in the global economy. We are a values-driven law firm, guided by the principles of excellence, leadership, and citizenship. Our commitment to these values is reflected in our dedication to improving access to justice through pro bono work and championing initiatives that increase the diversity of the legal profession. For more information, please visit www.omm.com.

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