Adam Carolla Sued Over Breakup of Podcast Partnership

Law360, Los Angeles (January 17, 2013, 10:06 PM ET) -- Adam Carolla's former partners in the world's most downloaded podcast filed a lawsuit Thursday in California state court accusing the comedian of wrongfully forcing them out of the business and seeking to exclude them from the profits they are owed for their "sweat equity."

Donny Misraje - a high-school friend of Carolla - his wife, Kathee Schneider-Misraje, and Sandy Ganz allege they provided the "innovative force" behind "The Adam Carolla Show" on the basis of Carolla's assurances that they were "all in this for the long haul" and would "all get rich." Carolla began podcasting after his syndicated radio show was canceled in 2009.

"Carolla himself is now sometimes referred to as a 'digital pioneer' based on the unique and innovative production, distribution, and monetization practices conceived of and developed by Plaintiffs," the Misrajes and Ganz said in a complaint filed in Los Angeles Superior Court.

According to the suit, Carolla has breached his partnership agreement with the plaintiffs by failing to distribute their pro rata share of the profits from his podcasts.

"Carolla succeeded in inducing Plaintiffs to develop the foundations of a profitable business; however, once the business began to take off, Carolla sought to exclude Plaintiffs from the profits they are owed under the partnership agreement," the suit says.

Under the alleged agreement, Carolla owned 60 percent of the partnership, executive producer Misraje 30 percent and Ganz 10 percent. The partnership "netted significant profits and by 2011 increased its profit margin by approximately 75 percent," the suit says.

Carolla has frequently acknowledged Misraje's contribution to his podcasting success, saying during one podcast, "This whole thing was his idea" and "I'd never really heard of podcasting, Donny forced it upon me."

The suit says Misraje convinced the "computer illiterate" Carolla to immediately start a podcast to retain his fan base after his terrestrial show was canceled. Although the first episode of "The Adam Carolla Show" was rudimentary, according to the suit, "Misraje's vision was to build a 'multimedia podcast network.'"

Misraje and his wife had such faith in the project that they agreed to deferred partnership distributions, the suit says. Ganz, who initially provided technical support free of charge, was brought into the partnership in October 2010.

But in January 2012, Carolla announced on his show that he had fired Misraje. Since ousting Misraje and Ganz, his former partners allege, he "has attempted to paint a picture for the public that Mr. Misraje was insubordinate, unable to 'get along'" with anyone, unproductive and simply not "up to the job."

"Such statements represent disingenuous rhetoric, as the Misrajes and Mr. Ganz spent years successfully developing the business aspects of the Partnership and sacrificed much of their lives, professional reputations and personal net worth in reliance upon a future payoff promised by Carolla," the suit says.

The plaintiffs are seeking unspecified damages for breach of partnership agreement, breach of fiduciary duty and breach of employment contract.

The Misrajes and Ganz are represented by Gregory L. Doll, Ronald M. St. Marie and L. Katie Fulsher of Doll Amir & Eley LLP.

Counsel information for Carolla was not immediately available.

The case is Misraje v. Carolla, case number BC499379, in the Superior Court of the State of California, County of Los Angeles.

--Editing by Richard McVay.