The bitter legal battle between Sean “Diddy” Combs and alcohol giant Diageo over their soured tequila venture is going to be paused until at least next spring, an appeals court says.
In a ruling on Tuesday, a panel of judges on New York’s appellate division granted Diageo’s request for a so-called stay of the lawsuit, in which Combs accused the company of racism and failing to adequately support his DeLeon brand of tequila.
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Diageo’s attorneys asked for the pause while they try to convince the appeals court to overturn a ruling this summer for Diddy and send the case to private arbitration, which would negate the need for continued litigation. Combs’ attorneys had called Diageo’s request a “desperate attempt to delay judicial scrutiny for its discriminatory conduct.”
Tuesday’s decision means any progress in the underlying case will be paused until at least April, which is when the appeals court said Diageo’s appeal must be ready to be heard.
Following the ruling, Combs’ attorney John Hurston told Billboard: “Once the appellate court considers the actual merits, we are confident that they will reach the same conclusion as two separate judges already: that Diageo can’t avoid a public trial.”
In its own statement to Billboard, Diageo said: “We have always maintained that the claims brought by Mr. Combs not only lack merit, but are subject to arbitration, as the parties agreed. We are confident that the appellate court ultimately will agree with us on this. In the meantime, we are relieved that the court understood that it makes no sense for us to have to litigate the same claims in two separate places at the same time.”
Combs sued in May, claiming Diageo breached his partnership deal for DeLeon Tequila by failing to properly support the brand. But he also went a lot further than that, leveling accusations of racism and claiming Diageo had treated his product line “worse than others because he is Black.”
“Cloaking itself in the language of diversity and equality is good for Diageo’s business, but it is a lie,” Combs’ lawyers wrote. “While Diageo may conspicuously include images of its Black partners in advertising materials and press releases, its words only provide the illusion of inclusion.”
The case claimed that Diageo had “typecast” his DeLeón Tequila as a “Black brand” that could only be sold to “urban” consumers, harming its sales and leaving it lagging behind competing Diageo brands like Casamigos and Don Julio.
Diageo responded a month later, calling the lawsuit a “bad faith, sham action” filed by a star who had “amassed nearly one billion dollars” from their partnership but now wanted to “extract” billions more.
“These allegations are nothing more than opportunistic attempts to garner press attention and distract the court from the fact that plaintiff’s breach-of-contract claim is entirely without merit,” the company’s attorneys wrote. “Diageo categorically denies these accusations.”
Diageo demanded that the case be sent to private arbitration, citing a provision in Diddy’s partnership contract that they said required such disputes be handled out of court. The company argued that, if Diddy’s “inflammatory rhetoric” about racism was removed, the case was nothing more than a “garden variety” business dispute that must be arbitrated.
But in September, the judge overseeing the case rejected that argument, meaning the case would move forward in state court, with the trial open to the public.
Diageo quickly appealed that ruling, and asked for a stay to prevent the case from moving forward while the appeal played out. Without a pause, the company said it faced “irreparable harm” because it would be forced to “arbitrate and litigate the same issues at the same time.”
After Tuesday’s ruling granting that request, the case will not proceed until the appellate court rules on Diageo’s appeal. Tuesday’s order said the appeal must be “perfected for the April 2024 Term of this Court,” but it’s unclear if that means the case will be decided by then, or merely argued and briefed.
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