Business News Digital Legal Top Stories

Judge declines to dismiss Lil Yachty’s Ditto Music lawsuit on jurisdiction grounds

By | Published on Thursday 4 August 2022

Lil Yachty

A court in California has declined to dismiss on jurisdiction grounds Lil Yachty’s lawsuit against DIY distributor Ditto Music and its co-founder Lee Parsons. It means the litigation – in relation to the music NFT start-up also founded by Parsons, Opulous – can proceed.

The rapper – real name Miles McCollum – went legal in January claiming that Opulous had used his name and brand as part of its launch communications last year, even though he had never agreed to get involved in the new venture. Ditto and Parsons were also defendants on that lawsuit on the basis that – as a sister company to and founder of Opulous respectively – they had posted about those launch communications on their social media channels.

McCollum’s lawsuit conceded that he and his management team had met with Parsons to discuss Opulous, which encourages fans to invest in new music in return for a royalty right linked to any tracks they support, all secured via NFTs on the blockchain. However, it insisted, they never agreed to work with the NFT start-up, or for Lil Yachty’s name to be linked to it in formal communications.

Opulous quickly responded to the lawsuit by insisting that, in fact, its “use of Lil Yachty’s name and likeness were all authorised by Lil Yachty and his representatives”. However, it was co-defendants Ditto and Parsons that actually responded in court, seemingly because Opulous – formally based in Singapore – had yet to be served with any legal papers.

In their court filing, both Ditto and Parsons sought to have McCollum’s lawsuit dismissed on jurisdiction grounds, because Ditto is a UK-based company and Parsons is a British citizen with no formal connections to California. McCollum’s legal team then filed their own papers arguing that the Californian courts did, in fact, have jurisdiction, over both Parson’s and his business.

Summarising the two sides’ arguments in a judgement yesterday, the judge overseeing the case explained: “The thrust of defendants’ motion is that both Ditto and Parsons are international citizens with insufficient California contacts to allow this court to exercise personal jurisdiction over them. While plaintiff admits that the court lacks general jurisdiction, he argues that jurisdiction is proper under Federal Rule Of Civil Procedure 4(k)(2), which provides jurisdiction over international residents if they have sufficient contacts with the United States as a whole”.

In terms of Ditto, the judge agreed that there are indeed sufficient contacts with the US for the Californian courts to have jurisdiction. In his ruling, the judge noted that Ditto lists LA and New York offices on its website, and has actively recruited and has employees based in America. He also focused on various social media posts on Ditto’s official accounts bigging up events in the US.

Regarding those social media posts, the judge wrote: “This evidence establishes that Ditto has at least some presence in the United States. But perhaps most saliently, this evidence establishes that Ditto has social media followers in the United States, that Ditto knows it has social media followers in the United States, and that Ditto uses social media to advertise or otherwise connect with its United States audience”.

Regarding Parsons himself, the judge stated: “Defendants argue that Parsons should be summarily dismissed from the action because his alleged contacts with the United States are protected by the fiduciary shield doctrine. The court disagrees. It is true that corporate agents whose conduct derives from their affiliation with a corporation are subject to the fiduciary shield doctrine for the purposes of establishing jurisdiction. Nonetheless, exercising personal jurisdiction is proper if the corporate officer was a ‘primary participant’ in the alleged wrongdoing”.

Noting that it was Parsons who met with McCollum and his management to discuss Opulous – and that he had personally posted to social media when his NFT business put out the communications name-checking the rapper – the judge concluded: “Courts throughout this district have exercised personal jurisdiction over corporate officers when the officers were active participants in the tortious conduct. Here, there is sufficient evidence to support such a finding over defendant Parsons”.

And so, Lil Yachty’s litigation against Ditto and Parsons in relation to Opulous can continue.