August 19, 2014 4:31pm PT by Eriq Gardner
Adam Carolla Faces September Trial Over Podcast Business
Anyone who have read news that Adam Carolla recently settled a lawsuit over his podcasting enterprise might think the headline above is inaccurate. It's not.
Yes, it's true that after raising almost $500,000 from listeners to battle Personal Audio LLC's claims over a podcasting patent, Carolla last week settled the lawsuit, agreeing among other things, to stay quiet through September 30 about what happened. The reaction by many has been to view this development through the prism of what it means for Personal Audio, a so-called "podcasting troll" scheduled to go to trial against media giants like NBC, CBS, and Fox in separate lawsuits.
But with Carolla's own court docket loaded, maybe there's another way to read what's happening.
On September 2, Carolla is scheduled to go to trial against his long-time friend and former producer, Donny Misraje, who claims to have convinced Carolla to try podcasting in 2009 after his syndicated radio talk show for CBS was canceled. Over the last few months, the case has been heating up. First, a judge rejected Carolla's motion for summary judgment. And now, on the verge of trial, Carolla has replaced his former lawyer with the famed Mark Geragos, who is taking charge of a case that could be primed for some courtroom mud-slinging.
Misraje claims that after leaving a lucrative job in the entertainment industry and investing "sweat equity" to make The Adam Carolla Show become the "most downloaded podcast" in the world, Carolla became "increasingly dictatorial and threatening," and after disputes over authority erupted, that he was ousted. The plaintiff is looking to hold Carolla to an alleged partnership agreement that entitled him to 30 percent of profits.
Those who have paid attention to Personal Audio's lawsuit against Carolla might wonder about the profits. One of the popular memes that has arisen from news of the patent litigation is that Carolla didn't actually make much money from podcasting. Perhaps. But it could depend on some perspective. According to Misraje's lawsuit, the "Partnership netted significant profits and by 2011 increased its profit margin by approximately 75 percent." On top of that, the plaintiff claims that the podcasting became a marketing platform for other Carolla products including best-selling books and alcoholic beverages.
The trial figures to explore the issue in more detail.
Despite Carolla's argument in a summary judgment motion that his relationship with Misraje is best understood as employer-employee, L.A. Superior Court Judge Michael Johnson ruled that it was a triable issue whether the relationship was really a partnership. In making the ruling, the judge nodded to evidence that Carolla once referred to Misraje as his partner.
The litigation is hardly one-sided, though.
Carolla has brought his own counterclaims against Misraje as well as another former colleague, Sandy Ganz, claiming they were "extremely disruptive forces" who "became increasingly insular" as time went on. The television and radio personality says he began performing live shows to create more revenue and draw more fans to the podcast, but that the live shows were conducted as part of a separate and distinct business. Carolla alleges that he encouraged Misraje to participate in the live performances, but that Misraje's "unsatisfactory performance" became a "hindrance." Eventually, he decided to fire his long-time friend.
But not before Misraje and Ganz allegedly hired another company to supply merchandise using the podcast logos and his image and began "improperly divert[ing] funds." Misraje is also accused of self-dealing by attempting to register trademarks without Carolla's consent.
Now, as the dispute gets closer to trial, the parties have begun to fight over what kinds of testimony and evidence a jury will hear. Gregory Doll, Misraje's attorney, has brought motions to exclude references to the allegedly diverted merchandise profits as well as whether drug and alcohol use impacted his client's work. The judge has yet to rule on this.
A final status conference is scheduled for August 25. It's likely a judge will either give the green light for the trial to commence the following week or push the calendar back slightly to deal with the evidence issues. At the moment, though, September is shaping up to be a quite noisy one on the Carolla legal front. Quiet period, notwithstanding.