Deleon Tequila
Sean “Diddy” Combs just scored a significant win in his case against alcohol giant Diageo after a judge denied two crucial motions filed by the liquor maker, according to court documents filed Thursday.
Combs himself was present in court for the ruling, during which New York state judge Joel M. Cohen rejected Diageo’s motions for the case to be dismissed or, alternatively, sent to private arbitration. The case will now move forward in state court, with the trial open to the public.
The lawsuit, brought by Combs in May, claims Diageo breached its partnership deal with the artist and entrepreneur for its DeLeón Tequila by failing to properly support the brand, thereby harming its sales. Combs’ lawsuit also leveled accusations of racism against the alcohol company, accusing it of treating his product line “worse than others because he is Black.”
In June, Diageo fired back by calling Combs’ racism accusations “false and reckless” and part of an effort to “extract additional billions” from the company while concurrently filing motions for dismissal or arbitration. At the same time, a spokeswoman for Diageo noted the company had permanently severed its business relationship with Combs, claiming the rapper had “repeatedly undermined our partnerships and threatened to publicly defame Diageo if we did not meet his unreasonable financial demands.” The company additionally painted Combs as “an unreliable and untrustworthy business partner” who failed in his obligations to support DeLeón.
In asking Cohen to keep the case out of court, the company argued that the “garden variety” business dispute should have been decided under a binding arbitration agreement previously signed by both parties. But the judge clearly disagreed, striking down Diageo’s motions after hearing oral arguments from attorneys on both sides of the case for more than 90 minutes on Thursday.
“This case has always been about getting fair and equal treatment,” said Combs’ lawyer John Hueston in a statement. “Today’s decision is an important step in the right direction. Diageo tried to end this action. Today the judge soundly rejected that effort.”
Combs added, “I’m fighting for fair and equal treatment for everyone. This isn’t just about me. I look forward to continuing this fight in court. We all deserve the same 24 hours.”
A spokesperson for Diageo sent the following statement: “While we are disappointed with yesterday’s procedural decision, it is important to underscore that this is not a ruling on the merits of the claims, which we maintain are false and baseless. We are currently considering all legal options.”
Rapper, producer and entrepreneur Sean “Diddy” Combs is asking the New York Supreme Court to enforce a 2021 agreement that requires spirits seller Diageo to treat his DeLeon tequila brand “at least as favorably” as its other tequila brands.
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Combs signed an agreement with Diageo — which owns more than 200 brands including Guinness beer and Tanqueray gin — after what he says were years of neglect for DeLeon, a brand he established with the London company in 2013.
Combs’ lawsuit against Diageo was filed in May. But many details, including the 2021 agreement, were redacted at the time. On Wednesday, those details were released after Judge Joel Cohen ruled that Diageo could keep only limited portions confidential.
Combs says Diageo’s treatment of DeLeon worsened after it bought two competing tequila brands: Don Julio in 2014 and Casamigos in 2017. Combs, who is Black, says Diageo positioned his tequila as an inferior “urban” brand and limited its distribution.
Diageo has denied Combs’ accusations. In late June, it asked the court to compel arbitration or dismiss the suit. It has also in the process of terminating a partnership between Combs and Ciroc vodka, a brand he had promoted since 2007.
The newly public documents detail what Combs says was Diageo’s repeated disinvestment in DeLeon. As of last year, DeLeon was distributed in 3% of possible outlets, for example, while Don Julio was in 36%. DeLeon has been listed as “out of stock” in major markets at least ten times in the past year, the lawsuit says.
In 2021, Combs said he was informed that all of Diageo’s agave plants were allocated to other brands, forcing DeLeon to scramble to find suppliers in the more expensive spot market. Combs says Diageo also made unilateral decisions that harmed the brand, including discontinuing popular 375-millileter “half bottles” and launching a redesigned bottle with no marketing support.
Combs claims Diageo’s decisions were often tinged with racism. He says he was adamant that DeLeon not offer flavored versions until customers had more time to learn about the brand. But Diageo went ahead and developed a watermelon flavor, even though Combs had previously warned the company to be careful about the racist history and negative connotations with watermelon in brands aimed at Black consumers.
Combs says internal Diageo documents also proposed downplaying Ciroc’s connection to Combs with the goal of rolling back its “image of being an African-American brand.”
In its own court filings, Diageo accuses Combs of resorting to “false and reckless” allegations in an effort to extract monetary damages. Diageo also says sales of DeLeon have doubled since the 2021 agreement.
Lawyers for alcohol giant Diageo are demanding that a judge toss out a lawsuit from Sean “Diddy” Combs that accuses the company of racism, calling it “false and reckless” and driven by an effort to “extract additional billions” from the company.
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Combs sued in May, claiming Diageo breached his partnership deal for DeLeon Tequila by failing to properly support the brand. But he went a lot further than that, also leveling accusations of racism and claiming Diageo had treated his product line “worse than others because he is Black.”
In the company’s first response to the lawsuit on Tuesday (June 27), Diageo’s lawyers didn’t exactly hold back, either. They called the Diddy’s 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.”
In a statement on Tuesday, a spokeswoman for Diageo echoed the message of the company’s legal filing — and said Diageo had permanently cut ties with the rapper.
“Mr. Combs’ bad-faith actions have clearly breached his contracts and left us no choice but to move to dismiss his baseless complaint and end our business relationship,” the company wrote. “Mr. Combs has repeatedly undermined our partnerships and threatened to publicly defame Diageo if we did not meet his unreasonable financial demands.”
In his lawsuit, filed on May 31, attorneys for Diddy’s Combs Wines and Spirits claimed that Diageo had “typecast” his DeLeon 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.
“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.”
But in Tuesday’s response, Diageo said those bombastic allegations were just a distraction from a run-of-the-mill business dispute that should have been handled under a binding arbitration agreement that both sides signed. They asked the judge to either dismiss the case or order that it be resolved through that private arbitration process.
“Without its inflammatory rhetoric and false accusations, the complaint is nothing but a garden-variety, and eminently arbitrable, suit alleging breach of contract,” Diageo wrote.
And when it comes to that “garden variety” business dispute, Diageo says it was Combs who was clearly in the wrong. The company claims he was “an unreliable and untrustworthy business partner” who failed to provide sufficient support to help DeLeon thrive, while Diageo supplied over $100 million for the project.
“Unwilling or unable to provide funding for the mutual benefit of the parties and the DeLeón brand, in mid-2020 Combs began to issue threats to damage the brand and defame Diageo and its executives and employees by publicly claiming that DeLeón’s failure to thrive was due to a racial animus against him,” Diageo’s lawyers wrote.
In a statement to Billboard on Tuesday, Combs’ attorney John C. Hueston sharply criticized Diageo’s claims that it was terminating its partnership with the star, saying it was akin to “firing a whistleblower who calls out racism.”
“Over the years, he has repeatedly raised concerns as senior executives uttered racially insensitive comments and made biased decisions based on that point of view,” Hueston said. “Diageo even acknowledged the problem by agreeing in his contract to treat DeLeon the same way it treated their other tequila brands. He brought the lawsuit to force them to live up to that contract, and instead they respond by trying to get rid of him. This lawsuit and Mr. Combs are not going away.”
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