Business News Legal

Jury must decide whether Monster should pay Beats’ attorney fees

By | Published on Friday 23 June 2017

Beats by Dre

Court proceedings in the legal battle between the Beats company and one of its original business partners, Monster LLC, have generally swung in the former’s favour, though an appeal court ruling on one specific question has now found in favour of the latter.

As previously reported, Monster and Beats collaborated on the original ‘stick-a-by-Dre-label-on-the-side-and-hike-up-the-price’ headphones, but the business partnership ended in something of a messy divorce in 2012.

Monster and its founder Noel Lee sued in the wake of Apple’s $3 billion deal to acquire the Beats business in 2014. 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.

In a summary judgement 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”.

However, one issue remained unresolved, which was Beats’ efforts to force Monster to cover its legal costs in relation to the dispute. Beats reckoned that a judge should be able to rule on what, if anything, Monster should pay towards its attorney fees, citing a thing in Californian law called Civil Code Section 1717. At first instance the LA Superior Court agreed, but Monster appealed. And now the appeals judges have ruled that Beats’ bid to get its legal costs covered should go before a jury.

To that end the appeals court has told the Superior Court to “issue a new order directing that Monster and Lee are entitled to a jury trial to determine the amount of those attorney’s fees”. Complying with Beats’ interpretation of Section 1717 could undermine the constitution of the state of California, the appeal judges added, and “when possible, we must construe statutes in a manner which avoids constitutional difficulties”.

So that’s all fun. And so the tedious Monster v Beats squabble continues.