Photographer: Vince Talotta/Toronto Star via Getty Images

The Toy That Sparked 1980s Riots Is Still Fueling Fights Today

The new fight over Cabbage Patch Kids has sabotage, choke holds, and slurs.

For those who weren’t around for the great Cabbage Patch Kids craze of the 1980s, it’s hard to convey the intensity of it. There were fistfights between parents, near riots outside stores and endless shrieks of hysterical children desperate to get their hands on the dolls.

Yet all that looks somewhat tame compared with the fight going on today. The wholesome playthings are at the center of a nasty legal spat pitting Jakks Pacific Inc. against a startup run by former executives who allege the toymaker retaliated after losing a license to make the dolls. The drama includes accusations of sabotage, choke holds, gay slurs and vendettas, according to court documents.

The battle underscores once again the importance of brands in the $19 billion U.S. toy industry—even one that only retains a sliver of its old popularity. A $600 million seller at its 1985 peak, the Cabbage Patch line now produces revenue of about $50 million a year, according to estimates. Jakks’s sales declined by about 8 percent last year, the first without the Cabbage Patch Kids license.

"It won’t ever be what it was, but it still can be valuable,” said Sean McGowan, who runs consultant SMG Leisure. “Because it’s so well known, you get that running start, not just with the consumer, but perhaps even more important with retailers."

Cabbage Patch Kids weren’t particularly cute—that’s being nice—and they didn’t talk or wet the bed. What they did possess was a story. Each doll had a unique name (Eunice Clover and Simon Abraham, for example), adoption papers and birth certificate. In 1983, demand surged before Christmas, leading to the scuffles and a frenzied re-sale market. The national media dubbed it “dollmania,” with Newsweek dedicating a cover story to the craze.

Over the years, the brand’s owner, Original Appalachian Artworks Inc., has awarded the marketing license to various companies including industry heavyweights Mattel Inc. and Hasbro Inc. Then, after a decade with Jakks, Original Appalachian decided in 2014 to move the license to Wicked Cool Toys, started two years earlier by former senior Jakks executive Michael Rinzler. That’s when litigation hell broke out.

Jakks sued Wicked Cool and Jeremy Padawer in New York state court in September. Padawer had worked on Cabbage Patch Kids while at Jakks, later leaving to join Rinzler at the new company. The suit alleges that while Padawer was employed at Jakks in 2013, he disparaged the company and leaked proprietary information on profits and strategies. The goal: to get Original Appalachian to give the Cabbage Patch license to Wicked Cool Toys, the suit claims.

Jakks is seeking about $20 million in damages.

Padawer and Wicked Cool Toys denied the charges and countersued. They alleged that Jakks slashed advertising for the Cabbage Patch line and flooded the market with low-priced dolls in the final months it had the license—all in an effort to tarnish the brand before losing it. That cost Wicked Cool Toys at least $4 million in sales, the suit says.

“What they’ve done is essentially damage the market for those toys in the short term,” Judith Archer, an attorney for Wicked Cool, said at a hearing in Manhattan last week.

Cabbage Patch
Brinks guards in Toronto escort a Cabbage Patch Kid to its new owners, who paid $5,600 in an auction to help the Hospital for Sick Children, in this December 1983 photo.
Photographer: Boris Spremo/Toronto Star via Getty Images

What’s more, Wicked Cool alleged that Jakks managers, including Chief Executive Officer and co-founder Stephen Berman, launched a campaign to sully its reputation with major retailers and licensors. And they further claim that Berman oversaw a hostile workplace at Jakks filled with homosexual slurs, physical abuse and intimidation.

As examples, Rinzler alleged that while at Jakks he was choked by a senior executive and received threats to ruin his personal and professional lives, court documents say. Padawer also said in a court filing that Berman told him that if he left the company he “could destroy” his reputation.

Berman through a representative declined to comment.

By raising these allegations, Wicked Cool is trying to paint a picture of a management team that uses these tactics as a matter of course, according to Paul Keller, a lawyer for Wicked Cool. Padawer said in a statement, “We will successfully demonstrate in these proceedings that Jakks’s allegations are not true.”

Jakks said all the claims in the countersuit are baseless and was filed simply to retaliate. Wicked Cool Toys wants to engage in a “fishing expedition” to find anything to support its claims of ill will or bad motives, Jakks said in a filing asking the court to dismiss the action.

It also said that it did nothing wrong in cutting prices and marketing efforts in the months before the license ended. Taking actions to harm a rival is all part of free enterprise, said Murray Skala, an attorney representing Jakks who has been on its board since its founding in 1995.

“Wal-Mart can’t complain about how Amazon prices its goods or how Amazon advertises,” Skala said at the Manhattan hearing. “Even if we told other retailers we don’t like them, it’s all good, that’s competition.”

A spokeswoman for Jakks declined to comment.

Shoppers queue to “adopt” Cabbage Patch Kids in the U.K. in November 1983.
Source: Manchester Daily Express/SSPL via Getty Images

New York State Supreme Court Judge Anil Singh is currently weighing a bid by Jakks to throw out the countersuit following a hearing in Manhattan.

Jakks is enmeshed in a separate legal battle with OAA involving the Cabbage Patch license in federal court in Georgia. In a 2014 suit, OAA accused Jakks of using threats and intimidation in an attempt to block it from working with Wicked Cool Toys. The dispute ended up in a confidential arbitration hearing and a decision was issued in January. While the ruling remains sealed, OAA is seeking to confirm it and Jakks is asking to vacate it.

Della Tolhurst, president of Cleveland, Georgia-based OAA, declined to comment on the legal proceedings, but praised the brand’s current licensee.

“There had to be a reason for us switching companies and you can draw whatever conclusions you want to from that,” Tolhurst said. “We are happy with Wicked Cool Toys now.”

The case is Jakks Pacific Inc. V. Wicked Cool Toys LLC, 159812/2015, New York State Supreme Court, New York County.

—With assistance from Christopher Palmeri.