Judge Rules Grammy Awards Outfit Made Ex-Employee Sign Unconscionable Deal

Neil Portnow - 60th Annual Grammy Awards - Getty - H 2018
Jeff Kravitz/FilmMagic/Getty Images

The National Academy of Recording Arts & Sciences, the organization behind the Grammy Awards, won't be able to force arbitration upon Dana Tomarken after a Los Angeles Superior Court judge on Monday came to the rare conclusion that the employment agreement she signed was unconscionable.

Tomarken, 75, was a vp at MusiCares and the Grammy Foundation, nonprofits affiliated with the Recording Academy that are charged with providing emergency financial assistance to musicians experiencing hardship. She spent 25 years at the outfit and oversaw MusiCares’ signature fundraising event, Person of the Year, a tribute that has gone to artists including Aretha Franklin, Bruce Springsteen and Bob Dylan.

In February, Tomarken filed a lawsuit against the Recording Academy alleging wrongful termination, sex and age discrimination, and retaliation after she voiced concerns about the organization's direction.

Specifically, Tomarken accused Neil Portnow, the CEO of both the Recording Academy and MusiCares, of abusing his trust and violating fiduciary duties by "using MusiCares as a bargaining chip in Grammy Awards telecast negotiations to promote the Recording Academy’s interests over those of MusiCares."

According to the complaint, the Person of the Year tribute was in distress. From 2017 to 2018, MusiCares revenue had declined from over $5 million to barely $1 million as Portnow came under fire for comments suggesting that women in the music industry needed to "step up" if they wanted more recognition.

Tomarken, who in the suit claims credit for distributing over $60 million to more than 125,000 musicians in need over MusiCares' nearly 30-year history, was prepared to make a report to board members on how business decisions that Portnow allegedly made had benefited the Academy's telecast to the detriment of the charitable foundation. In particular, she was upset that after it was decided the 2018 Grammy Awards would be held in New York instead of Los Angeles, alleged interference had come nixing Brooklyn’s Barclays Center as a venue for Person of the Year. Tomarken says that in the midst of negotiations, she received a call from Irving Azoff informing her of an agreement with Portnow — one that resulted in holding the ceremony at Radio City Music Hall, an MSG venue. The deal terms for Radio City were "costly and unacceptable," says Tomarken, but allegedly MSG wouldn't sign the Grammys telecast deal unless she signed the deal with Radio City. She felt her hands were tied, and her suit describes how the Grammy Awards and Person of the Year both suffered serious revenue shortfalls in the aftermath.

Her lawsuit goes beyond financial dealings to also detail Tomarken's opinion that the Recording Academy had become a "boys club," with women being denied promotions and Portnow leading a "sexist culture" with open hostility toward the females who worked within the organization.

Tomarken's lengthy complaint alleges further problems before eventually getting to how she was terminated for late payment of a $2,500 pledge. She appears to believe the firing was pretextual.

Upon the filing of her complaint, the Recording Academy commented, "The accusations have no merit and we will vigorously defend ourselves."

That task just became a lot tougher and much more serious thanks to a decision yesterday by L.A. Superior Court Judge Christopher Lui.

In defense, the Recording Academy pointed to the employment agreement that Tomarken signed. The deal had an arbitration provision, which the judge finds to be procedurally unconscionable because it was presented to her on a take-it-or-leave it basis after she had worked there for more than a decade. The judge accepts her word that when she signed the deal, she had no idea she could opt out. The Recording Academy is also faulted for not explaining to her that JAMS is an alternative dispute resolution forum and providing her with a copy of JAMS rules.

Equally availing Tomarken were her arguments directed at the agreement's substantive unconscionability.

Tomarken couldn't demand arbitration under her employment deal unless she mediated her claims first, and to do so, she'd have to request mediation within a year of learning a potential claim. That altered the statute of limitations, but the same mediation obligation wasn't imposed on the Recording Academy. In effect, Tomarken said she was required to give a "sneak peek" of her evidence through required mediation plus be forced to waive many of her discrimination claims.

The judge finds this all unacceptable.

Here's the full ruling, which states, "In sum, [] there is evidence of procedural unconscionability and a larger degree of substantive unconscionability. Severing the mediation requirement provisions would not change the court’s conclusion regarding the unenforceability of the arbitration agreement."