Chef, author, and reality TV star Bethenny Frankel, whose rise to fame on the hit Bravo series, the Real Housewives of New York City, earned Frankel her own show and a platform to promote her Skinnygirl Cocktail Brand, now faces a new role as defendant in a $112 million lawsuit by her former management team. Raw Talent, the L.A. entertainment agency that once represented Frankel, alleges five causes of action, including fraud and breach of oral contract, in its complaint filed May 11 in the Los Angeles Superior Court. The suit paints a scathing picture of the star and seeks $100 million in punitive damages to punish Frankel for her “deceitful and greedy conduct.” Frankel reacted immediately to the filing, stating that “one of the signs of success is being the subject of frivolous lawsuits, like this one.”

The lawsuit arises out of the massive success of Frankel’s 100-calorie concoction, the Skinnygirl margarita. Following its launch in 2009, the cocktail enjoyed record growth in its field, with demand far exceeding production. The popularity of her signature cocktail caught the attention of the liquor industry, and in March 2011, industry giant Fortune Beam Global Spirits & Wine acquired Frankel’s interest in the Skinnygirl brand in a purported $120 million deal.

In its complaint, Raw Talent alleges that Frankel “willfully and knowingly fleeced it” out of $12 million in commission for the earnings Frankel generated in relation to its management services. According to Raw Talent, after hiring the agency in 2008, Frankel expressly agreed that Raw Talent would receive a 10% commission on any agreement related to Skinnygirl for which negotiations began during its representation. The complaint alleges that during the short period from August to November 2008, Raw Talent’s career advice and connections gave Frankel entrée into the competitive liquor industry and its expert, David Kanbar. To support its claim that Frankel sought its counsel on marketing her cocktails, Raw Talent cites an August 12 email in which Frankel described the growing demand for her margaritas and asked, “How do we get a deal to package it?” The agency also claims that it counseled Frankel during the negotiations that culminated in the formation of a company designed to develop and market the Skinnygirl brand. Poised to guide Frankel through her new venture, the agency instead found itself fired “without explanation” and “within days” of Frankel’s final agreement to form the company, Skinny Girl Cocktails, LLC. Since terminating Raw Talent, Frankel’s company has achieved national success, creating a new category of low-calorie spirits and demonstrating women’s buying power in the liquor marketplace along the way.

Despite the suspicious timeline of Raw Talent’s termination and the emergence of Frankel’s Skinny Girl company, the suit appears to rest only on Frankel’s alleged oral representation that any Skinnygirl ventures would be commissionable under her management agreement. The potential counterclaims to which Frankel recently alluded will likely focus on the substance and timing of the “negotiations” that led to the formation of her corporation. Furthermore, under California regulations governing talent agencies, a talent agency like Raw Talent is entitled to recover a commission under an oral contract so long as the employment for which the commission is sought was “procured directly through the efforts or services” of the agency and confirmed in writing within 72 hours thereafter. Thus, Frankel may argue that Raw Talent played only a marginal role in the deal that put the Skinnygirl brand on the market. If she successfully disputes Raw Talent’s allegations, then the agency will be entitled to 0% of the multi-million dollar deal Frankel secured with Fortune Beam Global.

While Frankel’s legal team prepares its response to the Raw Talent suit, she remains a key figure in the burgeoning Skinnygirl brand, and is likely preparing for the next phase of her media moguldom: talk show host. As Frankel proclaimed in response to the lawsuit, “Success is earned by hard work, not taking advantage of others.”

-Kathryn Brown

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One Response to For Bethenny Frankel, the Role of Defendant is a Sign of Success

  1. ebeth says:

    It’s interesting that there are no update news articles on this suit – seems like they must have settled out of court. Bethenny’s life is played out on national television, so a confidentiality agreement must have been part of the settlement. That’s not surprising, except that it seemed like such a weak case against her. Maybe the damaging reputational evidence they had was worth more than the case on its legal merits. Is that really what the course system should be for?