Business News Legal

Beats will get its monster legal bill paid for by Monster

By | Published on Friday 22 December 2017

Beats by Dre

A jury in the US has decided that $7.9 million was a perfectly reasonable price for Beats to pay its lawyers when defending itself against fraud claims made by a former business partner. And therefore that former business partner should put its hand in its pocket and pay those legal bills.

As previously reported, the now Apple-owned Beats collaborated with a company called Monster when it was first developing its ‘stick-a-by-Dre-label-on-the-side-and-hike-up-the-price’ headphones business. But the partnership ended in something of a messy divorce in 2012. And after Apple bought the Beats business for $3 billion in 2014, Monster and its founder Noel Lee sued.

The lawsuit made allegations about Beats’ previous share sale to phone maker HTC and the impact it had had on its deal with Monster. It also accused Beats management of misleading Lee about their future plans, so that he sold his stake in the Beats company in 2013 at much less than he would have got for his shares had he held on to them until the Apple deal the following year.

However, in a summary judgment last year the judge hearing the case concluded that Beats’ actions were allowed under its contracts with Monster and Lee, while also noting that both had entered into deals with the Beats business as “sophisticated investors”.

Having basically won, Beats then pushed for Monster to cover its legal costs in relation to the case, asking the judge to rule on what sum its former partner should pay. But Monster successfully persuaded an appeal court that that matter should go before a jury.

Not that doing that has helped much. Both sides have been in court recently arguing over what Monster should now pay. According to Law360, Beats said its legal costs came to $7.9 million and that Monster should pay the full amount. Legal reps for Monster argued that that figure was too high, that Beat’s legal reps in the original case had spent too much time on the lawsuit, and that their expert reckoned about $2 million should be cut from the bill.

The law firm that originally represented Monster also argued that it spent about a third of the time on the case that Beats’ lawyers said they’d worked. Though the Beats side pointed out that, had Monster won the billion dollar damages it was seeking, its lawyers were set to pocket 20% of that figure.

Concluding, Beats’ attorney Nick Hanna said: “Beats and the individuals who were sued fought to clear their name. They fought to tell the world they did not commit fraud. That fight was expensive, and Monster and Lee caused every single penny of that expense”.

Having heard the various arguments, the jury quickly ruled in the favour of Beats. It remains to be seen what move Monster makes next.