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December 3, 2008 5:38 PM

Orrick Rocks in Nasty Family Feud Over CBGB Brand

Posted by Ed Shanahan

When the Rock and Roll Hall of Fame Annex opened in Manhattan last month, artifacts plucked from CBGB, the dingy Bowery dive known as the birthplace of punk, provided much of the shrine's local flavor.

After all, what celebration of New York's rock scene would be complete without the club's iconic front awning, its sticker-plastered telephone booth, or that fondly remembered (by some) urinal? To music fans everywhere, anything associated with the club or marked with its distinctive logo practically screams "rock 'n roll."

What most of those fans don't know is that just a few blocks south of the museum--and not that far from where CBGB itself once stood--a battle is unfolding in Manhattan Surrogate's Court over who owns the rights to that famous name--and to the millions of dollars it brings in every year.

On one side: Karen Kristal, the 83-year-old ex-wife of Hilly Kristal--the gruff impresario who opened CBGB in 1973, ran it until it closed in 2006, and was, until his death last year, its human face. On the other: Hilly and Karen's daughter, Lisa Kristal Burgman, co-executor of her father's estate and heir to most of his property. (The couple's son Dana, who stands to inherit $100,000 from his father's estate, is siding with his mother.)

Represented by a five-lawyer team from Orrick, Herrington & Sutcliff, Karen Kristal has mounted a tenacious challenge to the estate, claiming, among other things, that Hilly Kristal conspired with Burgman to hide a small fortune reaped from the sale of CBGB-branded merchandise, and to bully and trick his ex-wife into forfeiting her stake in past and future CBGB revenue.

Those claims and others are detailed in a lengthy motion filed with the court in November by the Orrick lawyers. (Download Karen Kristal Motion.pdf.) The filing is the latest chapter in a legal saga that started a year ago.

As Karen Kristal's sees it, without her there might have been no CBGB. Though she and Hilly divorced in 1969 after 18 years of marriage, she remained devoted to him and, when he opened what would become one of the world's most famous nightclubs, threw herself into making it a success. She claims to have helped come up with the name and, more importantly, to have designed the club's iconic logo. Through the early 1990s, she was a ubiquitous CBGB presence--tending bar, breaking up fights, going over the books, and scolding performers for behavior she didn't like.

Most significantly, though, she was CBGB's official owner through most of its history:  "In order to get the new bar and music club up and running," the motion states, "Karen Kristal agreed to take on the responsibility of being the sole shareholder and president of a new corporation that would own and run CBGB."

The new entity was dubbed Sareb Rest. Corp., a conflation of Karen's given name, Sarah Rebecca. All ten shares of Sareb stock were issued to her, and she was appointed the corporation's president and director. Her name was on the CBGB lease, as well as on the club's liquor license.

A 2005 agreement transferring Karen's entire interest in Sareb to Hilly is at the heart of the dispute. The estate says Karen signed such a transfer. She and her lawyers are questioning the document's authenticity. And Karen's lawyers maintain that even if she did sign it, she did so under pressure from her daughter, who hounded her mother and told her the move was necessary to "save CBGB."

Karen's lawyers also contend that by 2005, their client's mental state had slipped to the point that she couldn't fully understand what was being asked of her--something they maintain Hilly and Lisa knew.

According to the motion, Karen Kristal seeks "to recover her ownership of CBGB and the CBGB trademarks that were improperly taken from her, and recoup her investment and share of the profits generated by the club she devoted her life to."

Those profits are substantial. In 2005, Hilly Kristal told The New York Times that his CBGB Fashions business grossed about $2 million a year. And, Karen Kristal's November filing says, his estate struck a deal earlier this year to sell the CBGB trademarks to a business variously identified as Kismet Media Group and CBGB Holdings for $3.5 million.

The Orrick team includes partner Robert Isackson, who heads the firm's East Coast IP practice, litigation partner Lisa Simpson, and litigation associates Annabelle Chan, Seth Cohen, and Kristen Fournier.

Reached by telephone, Cohen said that neither he nor his colleagues would comment. Calls to Simpson went unreturned.

Scott Steiner of Steiner & Kostyn, who is representing the estate, offered the following statement vie a-mail: "The estate of Hillel Kristal has commenced litigation to establish the specious nature of Karen Kristal's claims upon the "CBGB" trademark. "CBGB" was, and is, synonymous with Hilly Kristal. The matter is proceeding, and will be resolved in the Surrogate's Court, New York County. We are confident of a favorable outcome."

In a November 24 letter to the court, Steiner demands that a conference be scheduled soon. As of Wednesday, Steiner says, no such date had been set.

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