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Background

Tohme filed a complaint against MJ Estate asking for fees he’s owed. These were 10% from Neverland refinancing, 10% from any future transaction about Neverland, $35,000 per month plus 15% of income from services he provided (plus interest when applicable). Estate petitioned Labor Commissioner based on California’s Talent Agency Act to cancel three agreements MJ had with Tohme. The three agreements are Neverland finder’s fee agreement, services agreement (management agreement) and indemnity agreement. Labor Commissioner heard this petition on late 2013 and took it under submission. Late 2014 Tohme requested to put Neverland finder’s fee agreement issue on calendar and judge lifted the stay for that issue on January 2015. Parties have filed their initial motions about the Neverland Finder’s Fee. A tentative trial date for Neverland Finder’s fee is set for May 2016.

Labor Commissioner Determination

Document here: https://www.scribd.com/doc/272285682/Tohme-Labor-Commisioner-Determination

After 20 months of waiting, Labor Commissioner has finally finalized their decision for Estate’s petition to cancel MJ - Tohme agreements based on CA Talent Agency Act.

Labor Commissioner determines that Tohme was not licensed to work as a talent agency during the period he worked for Michael. Labor Commissioner focuses on the TII concert deal.

During Labor Commissioner hearing Randy Phillips described Tohme as a “hard negotiator”. Tohme negotiated AEG deal included $5 Million advance ($3 Million of it to be paid to Sheikh Abdullah for the settlement 2 Seas lawsuit), a $100,000 advance a month to rent a house in Bel-Air and an optional advance of $15 Million to purchase a specifically identified house in Las Vegas. In his defense in front of Labor Commissioner, Tohme argued he was a just a messenger between Michael and AEG. However Labor Commissioner did not believe this argument as it went against Tohme’s previous depositions at other lawsuits and his previous claims that he played “central role” in TII agreement. Therefore Labor Commissioner determines Tohme was directly involved in AEG TII concert deal and this is in violation of the Talent Agency Act. Labor Commissioner determines TII concert deal to be illegal procurement of employment for an artist under Talent Agency Act. (Note: TAA requires any manager/agent to be licensed to secure performance engagements for artists)

Labor Commissioner then discusses the potential remedy for these illegal activities under TAA. Labor Commissioner states the agreement between MJ and Tohme was not just about Tohme securing artistic contracts for Michael. It also included purpose of reviving MJ’s career and restructuring business and personal affairs. Based on this Labor Commissioner lists Neverland deal, settling the case with Sheikh Abdullah and getting Sony to pay $10 Million that they are withholding (details will be mentioned later) as successful services Tohme provided to Michael. Based on this Labor Commissioner determines there have been both legal and illegal activities done by Tohme.

Labor Commissioner then discusses if revenues from illegal activities can be separated from revenues from legal activities and they think it can be. (Estate argued against any kind of separation). Labor Commissioner argues the main illegal activity was the TII concerts deal. However as the concerts did not happen and Michael did not get paid for the concerts, Labor Commissioner thinks Tohme never became entitled to any commission for TII concerts. Estate argued Tohme not to be paid anything for TII movie as well. However Labor Commissioner rejects Estate’s position and states that there wasn’t a contract about rehearsals and recording of the rehearsals. Labor Commissioner finds Estate’s argument that these recordings and TII movie would have never happened if it wasn’t for the TII concert deal as too speculative. So Labor Commissioner doesn’t exclude TII revenues from being subject to commission for Tohme.

The last issue is to determine how much commission Tohme is entitled. Tohme is asking for 15% but the Labor Commissioner states around 50% of the activities Tohme provided as illegal under Talent Agency Act so it cuts the commission payable to Tohme to 7.5%.

As for the remaining two agreements, Labor Commissioner has stated long ago that Neverland Finder’s Fee agreement doesn’t fall under their area and therefore it was put back on calendar. As for the indemnity agreement Labor Commissioner rules that it is illegal and unenforceable.

So overall Labor Commissioner decision means indemnity agreement is null and void, Tohme gets paid 7.5% commission fee due to his legal services and Neverland Finder’s Fee issue needs to resolved by Superior Court.

Estate has filed an appeal notice by the Superior court based on Labor Code 1700.44 and asking a trial de novo. In other words, Estate is appealing to LA Superior Court asking them to reconsider this dispute with no consideration to the Labor Commissioner proceedings as if it wasn’t held. 

 

The document provides some new information and confirms some stuff that we knew before:

- The document states that Michael was paid over $10 Million for the re-release of Thriller (aka Thriller 25). Tohme claims Sony was withholding this money and he got Sony pay it to Michael.

- MJ – AEG negotiations timeline also becomes clearer. AEG and Jackson representatives had negotiations about a tour in 2007. By February 2008, Michael decided he did not want to tour. The idea was revived around September 2008. Colony Capital owner Tom Barrack called AEG owner Phil Anschutz. Anschutz told Randy Phillips to meet with Tom Barrack and Richard Nanule. After this meeting, Nanule arranged Phillips to meet with Tohme. There have been several meetings; first two only had Phillips and Tohme, Paul Gongaware attented to the third meeting. Michael attended the 4th meeting with Phillips and Tohme. Michael, Tohme, Phillips and Anschutz attended to a subsequent meeting.

Note: There is also the misconception that Tohme lawsuit is sealed, it isn’t sealed. Only some documents referring Executor John McClain’s health were sealed. Rest of the documents are publicly available.

 

Legal explanations 

  • Labor Code 1700.44 states “In cases of controversy arising under this chapter, the parties involved shall refer the matters in dispute to the Labor Commissioner, who shall hear and determine the same, subject to an appeal within 10 days after determination, to the superior court where the same shall be heard de novo.”
  • A Trial de Novo is a new trial or a criminal retrial in which the entire case is presented as if there had been no previous trial. In a trial de novo, new evidence and witness testimony can be presented “without deference to the initial judgment”- meaning that the outcome of the previous trial is not considered.