UCLA Health is suing Mattel Inc. over a $49 million pledge it alleges the toymaker failed to honor.
Mattel, the company behind Barbie and Fisher-Price brands, agreed in 2017 to donate $49 million incrementally over 12 years to the Regents of the University of California, on behalf of UCLA Health, and the UCLA Foundation to expand care at UCLA's children's hospital in west Los Angeles. Mattel paid $2 million in 2017, and the health system renamed the facility UCLA Mattel Children’s Hospital, according to a lawsuit filed Nov. 9 by UCLA in the Superior Court of California.
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Mattel paid another $1 million in 2018, only a portion of the agreed-upon amount for that year, and then began postponing payments, citing poor financial performance, the suit alleges. In 2021, Mattel backed out of the previous agreement and instead pledged just $10 million, despite its improved financial state, UCLA alleges.
The $10 million pledge included $2.5 million in cash, plus funds for marketing and toys over the next decade, the lawsuit alleges.
UCLA planned to use the $49 million donation mostly to expand pediatric services in a new hospital tower, aiming for a total of 125 beds at the time, according to the 2017 agreement. A Mattel spokesperson, however, said in a statement the hospital has since abandoned those plans and thus failed to meet conditions of the original pledge.
The nonprofit health system and Mattel have had a decades-long relationship. Mattel donated $25 million to the UCLA Foundation as part of a 1998 agreement. Over the years, the company has also partnered with UCLA on sponsorships and fundraising events, including the annual "Party on the Pier."
In the statement, a UCLA Health spokesperson called the lawsuit "a last resort." In the complaint, UCLA said it depends on donors to honor their pledges, and alleges Mattel's refusal to pay impairs the hospital's ability to provide care.
"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," the UCLA spokesperson said.
Philanthropic donations have long played an important role in health systems' efforts to fund new facilities and services, and have become more vital in recent years as the healthcare industry battles inflation and economic fallout stemming from the COVID-19 pandemic.
In its 2020 Citizenship Report, Mattel estimated it had donated more than $30 million to UCLA since 1998.
"Supporting [UCLA]’s current pediatric activities is important to Mattel," a Mattel spokesperson said. 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."
Mattel has enjoyed a brand boost and an estimated $125 million infusion this year from the blockbuster "Barbie" movie released in July. The company reported more than $1.9 billion in sales in the third quarter alone.
But this year's income lags behind 2022. Mattel reported third-quarter net income of $146.3 million, or 41 cents per share, down from $289.9 million, or 80 cents per share, a year ago. As of Sept. 30, the company reported $67 million in net income year-to-date, compared with $377.8 million a year earlier.
