Toymaker Mattel pledged in 2017 to donate $49 million to UCLA’s children’s hospital. However, according to a new lawsuit, the company has failed to follow through on that commitment.
The lawsuit, filed last week by the University of California Board of Regents and the UCLA Foundation, alleges that Mattel made the “inexplicable decision a few short years later to renege on that pledge.” Instead, the company is now trying to offer the hospital just a few million dollars, plus donations of toys like Barbie dolls, Hot Wheels cars, and other Mattel products.
The suit accuses Mattel of breach of contract for backing out of the $49 million giving pledge. It seeks to recover the full pledged amount, plus damages stemming from the financial difficulties the hospital claims resulted from Mattel’s decision to withdraw its support. The hospital says Mattel’s failure to honor its commitment has significantly impacted its programs and services.
“As a last resort, UCLA Health has taken legal action to compel Mattel Inc. to honor its $49 million pledge,” UCLA Health spokesperson Phil Hampton said in a statement to TheWrap. “Litigation is not the university’s preferred path. UCLA Health made multiple good-faith attempts to resolve this matter through meaningful dialogue, and those efforts were unsuccessful.”
Hampton added: “We are hopeful that an alternative resolution can be found through dialogue grounded in respect for a relationship of more than 25 years and in pursuit of a shared interest: the care and well-being of children.”
Mattel and UCLA’s medical center began their relationship in 1998, when Mattel pledged $25 million to the UCLA Foundation for the construction of a children’s hospital on campus.
The university agreed to name the new hospital after Mattel in exchange. Mattel delivered the full $25 million by 2004 as promised. Over the following decades, thousands of children have been treated at what became UCLA Mattel Children’s Hospital.
The company has also continued to host an annual fundraising event called Party on the Pier at the Santa Monica Pier for the hospital. According to the lawsuit, “the 2022 Party on the Pier event raised over $1 million.”
In 2017, Mattel pledged to donate $49 million in cash to the hospital over the next 12 years. In exchange, UCLA agreed to incorporate Mattel’s logo into the hospital’s own logo and signage.
Mattel donated the promised $2 million in the first year. According to the lawsuit, “Mattel paid just $1 million of the $3 million promised in 2018 under the 2017 Pledge Agreement. That $1 million payment was the last one Mattel made.”
In 2018, Mattel CEO Ynon Kreiz informed UCLA in writing that the company’s board had decided to pause donations for 3 years due to financial struggles. In 2017 alone, Mattel had posted over $1 billion in losses.
However, in 2021 when donations were set to resume, Mattel said it now planned to donate only $10 million total, not the remaining $46 million pledged. Of that $10 million, only $2.5 million would be cash. The rest would be $5 million of in-kind marketing and $2.5 million of toy donations.
This decision came even as Mattel’s business was rebounding. Since 2021, the company has earned over $1.3 billion in profit, bolstered by proceeds from the “Barbie” movie.
According to the lawsuit, “Mattel’s failure to fulfill its obligations under the 2017 Pledge Agreement has resulted in significant financial injury to The Regents and UCLA Mattel Children’s Hospital and impedes the mission of the Children’s Hospital.”
Besides the loss of pledged donations, the suit alleges the canceled support has jeopardized plans for a new hospital tower and expansion of services. It also cost potential sponsorships from more reliable donors and damaged overall fundraising by showing there are no consequences for reneging on major gifts.
Mattel argued in 2021 it was not obligated to fulfill the pledge because UCLA failed to meet certain conditions, like making construction plans for a new facility or launching international initiatives. But UCLA contends these arguments are baseless excuses, and Mattel simply wanted out of the deal.
Over the past two years, UCLA attempted to negotiate with the toymaker but was unsatisfied with the outcome. Despite the tensions, Mattel still sponsored its annual fundraising event Party on the Pier for the hospital on November 5th – just four days before UCLA filed suit.
In response to the lawsuit, the toymaker issued a statement disputing UCLA’s allegation that the company breached its contractual pledge obligations.
“Mattel deeply values its longstanding relationship with UCLA Health and we are proud that UCLA Mattel Children’s Hospital (UMCH) bears our company’s name,” a Mattel spokesperson said in a statement to The Wrap. “Our $25M endowment of the hospital in 1998 was the single largest gift made to any U.S. children’s hospital by a corporation or corporate foundation at the time.”
“In 2017, Mattel and UCLA Health entered into a separate pledge agreement specifically for the construction of a new hospital tower. Our agreement expressly allocates funds for the new tower and provides that funding cannot be allocated for any other purpose by either party alone. UCLA Health has unilaterally abandoned its plans for the construction of its new hospital tower. As a result, the conditions for the pledge under the 2017 Agreement have not been met.”
“Since then, Mattel has continued to enthusiastically support UMCH’s ongoing activities including fundraising, toy, cash and in-kind donations, and community activations.”
“Supporting UCMH’s current pediatric activities is important to Mattel. We are open to continuing a dialogue with UCLA Health in the same spirit of collaboration that has been a hallmark of our relationship for decades. We are confident that we can continue to contribute meaningfully to our ongoing partnership in service to the children and families in UMCH’s care.”
Pamela Chelin contributed to this report.
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