Judge tosses key claims in Monster lawsuit against Beats

A California superior court judge on Monday threw out key claims in a lawsuit alleging Beats cofounders Jimmy Iovine and Dr. Dre swindled audio company Monster out of its investment in the Beats by Dre headphone brand just prior to Apple's acquisition in 2014.

Los Angeles Superior Court Judge William Fahey handed down a summary judgment dismissing claims that Monster and its CEO Noel Lee were duped out of a 5 percent share of the Beats by Dre brand, a move orchestrated through Beats' "sham" sale to HTC, the Associated Press reports.

Leveled early last year, the lawsuit asserts Iovine and Dre, whose real name is Andre Young, obfuscated the design, manufacturing and marketing contributions Monster and Lee put in to the Beats by Dre headphone lineup when the brand was sold to HTC for $300 million in 2011. The sale triggered a change of control clause that allowed Beats to completely sever ties with Monster.

Shortly after Monster was out of the picture, Iovine and Dre repurchased a 25.5 percent share in Beats as Lee drew down his stake to 1.25 percent. The lawsuit alleges misrepresentations about Beats' future plans ultimately prompted Lee to relinquished his remaining stake in the company in 2013 for a $5.5 million.

Eight months after Lee withdrew, Apple purchased the Beats brand for $3 billion. Had Lee kept his 1.25 percent share, it would have been worth more than $30 million.

Fahey in his ruling decided Beats was within its rights under existing contracts, adding that Lee and Monster entered into the agreement as sophisticated investors, according to the report. Further, Fahey cleared HTC and Beats investor and board member Paul Wachter of any wrongdoing

The case is scheduled to go to trial next week, but with the core of Monster's argument gutted, the focus now turns to Beats' plea to recoup attorney fees and associated costs.

7 Comments

robin huber 4025 comments · 22 Years

About 8 years ago

Wow. Business. And people think politicians are bad.

MacPro 19838 comments · 18 Years

robin huber said:

Wow. Business. And people think politicians are bad.

There's a difference? ;)

podlasek 32 comments · 15 Years

robin huber said:

Wow. Business. And people think politicians are bad.

So on the surface of this article, this Business is bad somehow?

Investors in anything have to make adult choices. When those choices don't work out, the judge, in this case, says you can't have it both ways. The investment could have just as easily gone south, and Beats would have been no more.

Obviously, Lee thought he was wronged in some way. The court said he wasn't wronged in whatever way he was thinking, end of story, unless appeal, but that sounds unlikely based on the facts in the article.

Nothing here remotely looks like politics.

podlasek said:

robin huber said:

Wow. Business. And people think politicians are bad.

So on the surface of this article, this Business is bad somehow?

Investors in anything have to make adult choices. When those choices don't work out, the judge, in this case, says you can't have it both ways. The investment could have just as easily gone south, and Beats would have been no more.

Obviously, Lee thought he was wronged in some way. The court said he wasn't wronged in whatever way he was thinking, end of story, unless appeal, but that sounds unlikely based on the facts in the article.

Nothing here remotely looks like politics.

Regarding robin's initial humorous comment, I'd say there is a lot in common. Not in the decision in this case as such, as you took it, rather in the accusations, lawsuits and demeanor. As I said, slightly tongue in cheek, there isn't much difference between politics and business these days anyway in those regards. In fact some one was saying politics should be run exactly like a business didn't they? I read that somewhere, I could be wrong. ;)

maestro64 5029 comments · 19 Years

robin huber said:

Wow. Business. And people think politicians are bad.

You did not obviously read this
"Fahey in his ruling decided Beats was within its rights under existing contracts, adding that Lee and Monster entered into the agreement as sophisticated investors, according to the report. Further, Fahey cleared HTC and Beats investor and board member Paul Wachter of any wrongdoing"
Business people know what they are getting into and its not the responsible of the courts to be a nanny state and watch out for business people.

podlasek said:

robin huber said:

Wow. Business. And people think politicians are bad.

So on the surface of this article, this Business is bad somehow?

Investors in anything have to make adult choices. When those choices don't work out, the judge, in this case, says you can't have it both ways. The investment could have just as easily gone south, and Beats would have been no more.

Obviously, Lee thought he was wronged in some way. The court said he wasn't wronged in whatever way he was thinking, end of story, unless appeal, but that sounds unlikely based on the facts in the article.

Nothing here remotely looks like politics.

He was only wrong in the fact that he did not foresee. He was obviously exiting his investment since he failed to see any future value, now that he knows better he want a second chance at the well.