Mattel, one of the world’s largest toy companies which own brands including Barbie and Fisher-Price, has been sued by the University of California, Los Angeles (UCLA), for allegedly backing out of a promise to donate $49m to a children’s hospital.
According to the lawsuit, obtained by The Los Angeles Times, the $6bn company reneged on a pledge made in 2017 to send the large donation to the hospital over the following 12 years.
Instead, the toymaker is allegedly offering to donate just $10m.
UCLA and the UCLA Foundation filed the lawsuit last week, seeking the company’s promised amount plus additional damages for alleged financial hardship emanating from Mattel’s supposed decision to back out of the promise.
“As a last resort, UCLA Health has taken legal action to compel Mattel Inc. to honour its $49 million pledge,” UCLA Health spokesperson Phil Hampton wrote in a statement to the The Independent.
“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.
“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 have a long-standing relationship spanning more than two decades since Mattel pledged to donate $25m to help construct the children’s hospital on UCLA’s Westwood campus back in 1998.
The hospital was named the UCLA Mattel Children’s Hospital in exchange for the company’s support, and the pledge was fulfilled by 2004.
The toy conglomerate wrote on its website that it has donated over $30m to the hospital, which has expanded its services and care, making it one of the top-ranked paediatric acute care children’s hospitals in the US.
Mattel is also involved in the hospital’s “Party on the Pier” fundraiser, hosted annually on the Santa Monica Pier, which raised over $1m in 2022, according to the lawsuit.
Earlier this month, the 24th annual pier party was held, with Mattel and UCLA working together to run the fundraiser.
According to Forbes, Mattel was responsible for donating toys for the event and asking its employees to volunteer at the fundraiser’s game booths and hand out toys.
UCLA’s senior director of strategic partnerships and development, Danielle Dietz, told the outlet that the university chose to partner with Mattel due to hospital staff recognising the importance of play for children’s development, especially while healing in the hospital.
Yet, a few weeks on from the event, the relationship between the two seemingly soured after UCLA accused the corporate company of not keeping up with its $49m promise.
The colossal $49m pledge in 2017 began with Mattel donating $2m in the first year, with more payments to follow.
However, the following year, “Mattel paid just $1 million of the $3 million promised,” the lawsuit states.
“That $1 million payment was the last one Mattel made,” the suit claims.
UCLA, which claims it has tried to negotiate with Mattel over the past few years, is arguing that the reduction of the proposed donation has caused “significant financial injury,” has jeopardised the construction of a new hospital tower and has compromised other potential sponsorship deals with other donors.
Various reasons have been given for why Mattel allegedly failed to honour its donor pledge, with the toymaker stating that the money was intended for a now-scrapped hospital tower.
Mattel said in a statement to The Independent that it values its longstanding relationship with UCLA Health, but the hospital “unilaterally abandoned its plans for the construction of its new hospital tower” – something the company said was a condition of the pledge.
“Mattel has continued to enthusiastically support UMCH’s ongoing activities including fundraising, toy, cash and in-kind donations, and community activations.”
“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,” the company added.
Mattel previously argued in 2021 that it was not obliged to fulfil its obligations because UCLA was not holding up its own part of the pledge, the LA Times reported.
The lawsuit argues that these claims are baseless and are merely excuses used by Mattel to pull out of the promise.
The outlet also reported that due to the toy company’s financial instability around 2017, where it lost more than $1bn, Mattel’s Chief Executive Ynon Kreiz informed UCLA that the board had decided to pause donations for the next three years.
In 2021, once those three years passed by, the donations were supposed to resume.
But the company allegedly told UCLA that instead of its initial pledge, it could now only donate $10m more in total – including within that $5m in in-kind marketing and $2.5m in toys.
Since 2021, Mattel has seen a boom in business, with $1.3bn in profit and a predicted $125m from its share in sales from the 2023 Barbie movie, Mr Kreiz announced at a conference in September.
The Independent has contacted Mattel and UCLA Health for comment.