That’s a Lot of Headphones: Beats Says Monster Owes $71M

LOS ANGELES (CN) – Beats Electronics sued audio-video cable maker Monster on Friday, claiming Monster owes $71 million for products it sold under a deal reached after the companies parted ways five years ago.

Filing for breach of contract in Los Angeles County Superior Court, Beats says its business relationship with Monster dates back to August 2009, when it granted the company a license to make and market Beats by Dr. Dre headphones. Beats ended its partnership with the Brisbane, California-based Monster and began partnering with smartphone maker HTC in 2011.

After Monster’s licensing deal ended, Beats says it entered into several contracts that took effect in June 2012, including distribution and royalty agreements. After that, Beats – now an Apple subsidiary – began to make and distribute Beats by Dr. Dre headphones while allowing Monster to sell some Beats products in certain territories and retail spaces.

Beats says its auditors PricewaterhouseCoopers reported after a 3-year audit that Monster owes $71,220,915 under the distribution agreement. Based on today’s exchange rates, Beats says the amount owed is closer to $95 million.

“Despite the considerable sums of money that Monster earned through its contractual relationships with Beats, and despite Beats’ numerous requests to Monster that it comply with the distribution agreement by paying the sums owed to Beats for Beats products it sold, Monster has failed to live up to its contractual promises by failing to pay Beats some $95 million owed under the distribution agreement, as determined by the PWC audit,” the 10-page lawsuit states.

Rapper and record producer Dr. Dre founded Beats with music executive Jimmy Iovine. In 2014, they sold the company to Apple in a deal worth $3 billion.

A year later, Monster and its founder Noel Lee sued Beats, Dr. Dre, Iovine and HTC, claiming they were cheated out of their stake in the headphone company in the Apple deal. An LA state court judge threw out the lawsuit in August 2016.

Beats is represented by William Isaacson of Boies Schiller Flexner in Washington.

Courthouse News has contacted Beats and Monster for comment.

 

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