Case File: United Studios of Self Defense, Inc., et al. v. Kris Eszlinger, Hans Prosch, William Clark, Frank Ley, Paul Taylor, Russell Clegg, Z-Ultimate Self Defense Studios, LLC, Z-Ultimate Martial Arts Supplies, LLC, et al.
Case No: 30-2010-00404621
Court: Orange County Superior Court, California
Original Jury Verdict: $7.7 million
Later Amended Judgment: $929,007.56 in compensatory damages, plus $250,000 in punitive damages
Final Judgment Total Identified in Appellate Record: $1,179,007.56
A courtroom fight that began with a dispute over martial-arts studios eventually produced a headline-grabbing $7.7 million jury verdict — but that was only the beginning of the financial story.
The litigation between United Studios of Self Defense, Inc. (USSD) and people associated with the competing Z-Ultimate organization stretched across years, multiple proceedings, an arbitration, post-trial motions, appeals and several changes to the amount ultimately awarded.
At the center was a business relationship that had once connected the parties closely. According to the appellate record, Kris Eszlinger, Hans Prosch, William Clark, Frank Ley, Paul Taylor and others had been longtime members of the USSD organization, progressing from students and instructors into management and senior executive roles.
What followed was a bitter dispute over ownership, business operations, studio locations, trademarks, confidential information and the right to operate martial-arts businesses under a new name.
The jury initially put a $7.7 million price tag on USSD’s claims.
But by the time the litigation reached its later appellate stage, the amount reflected in the amended judgment was dramatically different.
How a Martial-Arts Business Relationship Turned Into Litigation
United Studios of Self Defense operated martial-arts studios under the USSD name through licenses and franchises. Charles Mattera, identified in the appellate record as USSD’s chief executive officer, was the company’s founder and a central figure in the dispute.
The relationship between Mattera and several former USSD executives had been developing for years.
In September 2004, the parties entered into agreements concerning the purchase of interests in various limited liability companies holding licenses for USSD studios. The proposed transaction was never completed, and the relationship eventually deteriorated.
At some point, the former USSD executives began operating martial-arts businesses under the Z-Ultimate name.
By September 2010, the dispute had become a lawsuit.
The Z-Ultimate-affiliated plaintiffs sued Mattera and others, asserting claims including breach of contract, slander and declaratory relief. They sought, among other things, a determination concerning their rights to operate their studios independently and use the Z-Ultimate name.
USSD and affiliated parties responded with their own cross-claims.
They alleged that the defendants had participated in an effort to rebrand USSD studios as Z-Ultimate locations and had improperly taken business information, trademarks and other materials belonging to USSD.
The dispute was no longer simply about who owned which studio.
It had become a battle over the identity and commercial assets of an entire martial-arts business network.
The Fight Over More Than 80 Studios
USSD’s lawyers later alleged that the defendants had been able to take control of more than 80 USSD locations.
The allegations went beyond the names on the studio doors.
USSD claimed that confidential corporate financial information and other business materials had been taken, while also alleging misuse of USSD’s trademarks and proprietary information.
Among the causes of action presented in the litigation were claims involving:
- Breach of fiduciary duty
- Constructive fraud
- Misappropriation of trade secrets and confidential information
- Computer-related violations under California Penal Code section 502
- Trademark infringement
- Civil conspiracy
- Contract-related claims
- Unfair business practices
The earlier proceedings show just how complicated the dispute had become. Some contractual claims were sent to arbitration, while the tort claims and cross-claims proceeded through the court system.
The result was effectively two legal tracks running alongside each other.
The $7.7 Million Jury Verdict
After a four-week trial, an Orange County Superior Court jury returned a verdict in favor of USSD.
The headline number was $7.7 million.
The jury awarded:
- $6.5 million in compensatory damages
- $1.2 million in punitive damages
The verdict was reported in September 2012.
The jury found in favor of USSD on almost every cause of action presented against the Z-Ultimate companies and several of their individual owners.
The case involved allegations concerning fiduciary duties, fraud, trade secrets, computer records, trademarks and civil conspiracy.
For USSD, it appeared to be the financial culmination of a two-year courtroom battle.
But the $7.7 million figure would not survive intact.
Another Award Was Moving in the Opposite Direction
While the jury was considering USSD’s cross-claims, a separate arbitration was addressing contractual claims brought by the Z-Ultimate side.
Retired judge James L. Smith, serving as the JAMS arbitrator, awarded $470,991.44 on those breach-of-contract claims.
That created an unusual financial complication.
The same broader dispute was producing monetary awards in both directions, and the trial court still had to determine how those amounts would interact in the final judgment.
The appellate record later noted that Judge David R. Chaffee confirmed the arbitration award but directed that it run against Charles Mattera alone rather than the USSD entities.
That distinction became important when the courts began calculating the ultimate judgment.
The $7.7 Million Verdict Starts to Shrink
The original jury number did not remain untouched.
After the verdict, the parties filed post-trial motions challenging portions of the result.
On February 11, 2013, Judge Chaffee ordered a new trial on the civil-conspiracy claim and entered judgment notwithstanding the verdict on the claims for breach of fiduciary duty and constructive fraud.
The court also addressed the size of the damages.
The original $6.5 million compensatory award was subject to a reduction to $1.4 million.
The original $1.2 million punitive-damages award was also reduced, with the court setting a lower aggregate amount against certain individual defendants as part of the conditional new-trial ruling.
The parties then continued fighting over what the final judgment should actually say.
The dispute became sufficiently complicated that the California Court of Appeal eventually dismissed an earlier appeal as premature because the trial court had not yet entered a final judgment resolving all of the outstanding issues.
In other words, the $7.7 million headline was not the end of the case.
It was one stage in a much longer financial calculation.
The Final Amended Judgment
After additional proceedings, the trial court entered a new judgment in March 2015.
That judgment initially reflected $6,029,007.56 in compensatory damages, along with punitive damages against several individuals.
But the defendants continued challenging the amount.
In May 2015, the trial court granted another new trial on compensatory damages, subject to a reduction to $1.4 million.
The court also reduced the potential punitive awards.
This time, the plaintiffs accepted the reductions.
An amended judgment was entered on June 15, 2015.
The amended judgment ultimately provided for $929,007.56 in compensatory damages, jointly and severally against Kris Eszlinger, William Clark, Paul Taylor and Z-Ultimate Self Defense Studios.
It also awarded:
- $125,000 in punitive damages against Kris Eszlinger
- $125,000 in punitive damages against William Clark
That brought the amounts identified in the amended judgment to $1,179,007.56.
The $929,007.56 compensatory figure itself reflected an offset connected to the separate arbitration award.
So the financial history of the case can be summarized this way:
$7.7 million → post-trial reductions → $1.4 million compensatory award → offsets → $929,007.56 compensatory judgment + $250,000 punitive damages.
That progression is crucial because describing the case simply as a $7.7 million judgment would leave out the later court proceedings that materially changed the amount.
What the Courts Said About the Alleged Trade Secret
One of the more unusual aspects of the litigation involved the martial-arts training system itself.
USSD alleged that its proprietary Shaolin Kempo-style training system constituted a trade secret and that the defendants had misappropriated it.
But Judge Chaffee did not accept that position in its broad form.
The trial court found that the method and style of Shaolin Kempo karate was not a trade secret, reasoning that the techniques had been publicly displayed in tournaments, classes, lectures and online.
That meant the dispute could not simply be reduced to a question of who had the exclusive right to perform a particular martial-arts technique.
The litigation instead continued around other alleged conduct, including trademark infringement, computer-related violations, conspiracy and other business claims.
The Appeal Brings Another Twist
The case eventually reached the California Court of Appeal.
In 2014, the appellate court dismissed an earlier appeal because the judgment then being challenged was not yet a final judgment. The court sent the matter back so the trial court could resolve the remaining issues and enter a final judgment.
That did not end the appellate history.
After the amended judgment was entered in 2015, the defendants again challenged the result.
In January 2018, the California Court of Appeal affirmed the amended judgment.
The appellate court identified the operative judgment as one awarding $929,007.56 in compensatory damages, jointly and severally, together with $125,000 in punitive damages against Eszlinger and $125,000 against Clark. The court rejected the appellants’ challenges to the damages awards and affirmed the judgment.
Why the $7.7 Million Number Still Matters
The original $7.7 million verdict remains an important part of the story because it shows the scale of the jury’s initial determination.
But a jury verdict and a final judgment are not always the same thing.
Post-trial motions, remittiturs, offsets, amended judgments and appellate proceedings can substantially alter the amount that ultimately becomes enforceable.
That is exactly what happened here.
The case began with a jury awarding $6.5 million in compensatory damages and $1.2 million in punitive damages.
Years of litigation later, the appellate record identified an amended judgment totaling approximately $1.18 million in compensatory and punitive damages.
The difference is more than a mathematical footnote. It illustrates why money-judgment reporting has to follow a case beyond the initial verdict headline.
A Business Dispute That Lasted for Years
At its core, Eszlinger v. United Studios of Self Defense was a dispute over a business relationship that had gone badly wrong.
People who had once worked within the same martial-arts organization ended up on opposite sides of a lawsuit involving studio operations, ownership interests, trademarks, confidential information and competing businesses.
The litigation generated a multimillion-dollar jury verdict, a separate arbitration award, multiple post-trial rulings, amended judgments and appellate proceedings.
It also demonstrates how dramatically the financial result of a case can change between the day a jury announces a verdict and the day a final judgment survives appellate review.
The first number was $7.7 million.
The later amended judgment identified by the California appellate court was $929,007.56 in compensatory damages, plus $250,000 in punitive damages.
That distinction is the real financial story behind one of Orange County’s more unusual business litigation battles.
SOURCE:
This article was prepared using publicly available material concerning Eszlinger v. United Studios of Self Defense, Inc., including the Cappello & Noël litigation updates, the syndicated 2012 verdict announcement, the California Court of Appeal opinions and the Daily Journal verdict record.
The Cappello & Noël material provides the contemporaneous account of the 2012 jury verdict and the allegations underlying USSD’s claims. The California appellate record was used to establish the procedural history, arbitration award, post-trial reductions, amended judgment and later appellate disposition.
The $7.7 million figure refers to the original 2012 jury verdict, not the final amended judgment. The later appellate record identifies the amended judgment as $929,007.56 in compensatory damages plus $125,000 in punitive damages against Kris Eszlinger and $125,000 against William Clark.
