7:36pm PT by Austin Siegemund-Broka
Adam Carolla Testifies in Trial Over Podcasting Partnership Agreement
Adam Carolla testified Monday against claims that he removed his former friends from his popular podcasting business without paying them for their stakes in it.
The comedian and Fox News contributor was sued by his ex-producer Donny Misraje, Donny's wife, Kathee, and Donny's cousin Sandy Ganz, a co-host on Carolla's CarCast podcast. They claim in a January 2013 complaint that they were instrumental in the podcasts, which have brought in $14 million and include The Adam Carolla Show, the world’s most downloaded podcast. When Carolla kicked them out of the business in 2011, they allege, he breached a partnership agreement in which he owned 60 percent of the podcasting enterprise, Misraje 30 percent and Ganz 10 percent.
There never was a partnership, Carolla is arguing. He filed a summary judgment motion in which he claimed theirs was a "profit participation" arrangement closer to an employer-employee relationship, but the motion was denied in May. Los Angeles Superior Court judge Michael Johnson ruled that there were triable issues of whether the plaintiffs contributed like partners and whether Carolla's reference to the relationship as a "partnership" constituted a binding agreement. If that's the case, Carolla will have to pay his former partners for their stakes in the podcasting enterprise.
The trial began Tuesday. In his testimony this week, Carolla argued that his use of the words "partnership" and "partners" didn't seal a business relationship. To show the term is a general one, he brought up other non-business "partners" who contribute to his work, like the writing partner with whom he's working on a fourth book. "I think it's a term that's used quite liberally," he said.
Nevertheless, he said, an official 60-30-10 partnership wasn't out of the question. He claimed to have proposed it at a meeting with Donny Misraje. No partnership was formed, he said, because Misraje insisted on a 50-50 partnership — and kept insisting. "After a year and a half of being beaten up for 50%, I said, let the lawyers handle it," he testified. That's a reference to a May 2011 email shown in court (from Carolla to Kathee with instruction for her to read it aloud to her husband) in which he wrote, "paperwork can be drawn up, ratifying participation/ownership and the roles and duties of all the major players in this scenario."
He fired Misraje and Ganz in September 2011. The plaintiffs' lawyer Gregory Doll asked him why the partnership paperwork hadn't been drawn up in the four-month interim. Carolla said it was Misraje who was interested in and therefore responsible for arranging the paperwork. No official partnership had been put into writing when he fired Misraje and Ganz, he testified.
But that doesn't really matter, Doll tells The Hollywood Reporter. "I think we're going to show this is a partnership. By partnership law, all you have to do is show there's intent to do business together," he says. Carolla never brought up profit participation when the 60-30-10 split was discussed and often referred to a partnership, Doll argues.
"It was the highs and lows of trials. You have good moments and bad," he said of the day's proceedings.
In their complaint, the plaintiffs claim that Carolla became "increasingly dictatorial and threatening" in the months leading up to their termination. When they tried to exercise their decision-making rights in their partnership, they allege, he responded with behavior that included ordering Donny Misraje to stop traveling with Carolla's live show and threatening to exclude live show earnings from their shared revenue.
Carolla's testimony, unsurprisingly, painted a different portrait. Under questioning from his attorney, Mark Geragos, he explained the start of his friendship with Donny in high school — he was often hungry because his mother was on welfare, and Donny had "a nice house with a big fridge" that he shared with Carolla. "Things turned around for me at age 30, 31, and I remembered Donny. We'd been friends all that time," Carolla said. "I wanted to repay the favor."
That's why he included Misraje in his podcasting business, even though "everyone who knew Donny said that 30% was too much" to pay for his services. He started doing live stand-up shows in 2010 so that he could channel more revenue to Misraje, he testified, and only excluded him from touring when Misraje's conduct — like repeatedly forgetting to bring a notepad on which they could plan Carolla's setlist — became problematic.
Misraje claims that he first recommended Carolla start podcasting. That's untrue, the entertainer testified. "It was a nice narrative for our podcast. It wasn't true," Carolla said. "I liked Mr. Misraje, so I said nice things about him."
Carolla recently replaced his former lawyer with Geragos, who told THR, "I'm very pleased with the way the trial is going, and I look forward to having the jury make a decision."
The trial will continue Tuesday.