Sean ‘Diddy’ Combs Accuses Diageo of Retaliation to Lawsuit (1)

Music mogul Sean “Diddy” Combs accused Diageo Plc of unlawful retaliation after the UK company moved to sever ties between them, extending his legal feud with the world’s biggest spirits company.

Combs accused Diageo of racism in neglecting the Cîroc vodka and DeLeón tequila brands in May and has now asked a New York court to block the company’s attempts to dismiss the case or force the claims into arbitration.

Combs and Diageo first partnered in 2007 to boost the sales of Cîroc vodka. In 2013, the two then partnered to purchase and sell DeLeón, each owning 50% of the tequila brand.

The founder of Bad Boy Records argues that Diageo under-invested in the brands because it saw them as only appealing to a Black demographic. Diageo classified DeLeón as a niche product for so-called “urban” Black customers “based on its misguided belief that a Black entrepreneur could only appeal to others who shared his skin color,” Combs’ lawyers said.

When Combs sued demanding equal treatment, Diageo broke off the relationship and asked the judge in the case to dismiss it or force it into arbitration. “The message is clear – if you dare to shed light on Diageo’s conduct, you will be punished,” the lawyers said.

Business Dispute

Diageo said this was a business dispute and should not be recast as anything other than that. “We have exercised our contractual rights to terminate the marketing services agreement in place for Cîroc and begin the wind down of the DeLeón joint venture,” a spokesperson for the company said.

“Our actions are consistent with our desire to protect the significant investment we have made in both brands and their future growth. Mr Comb’s longstanding bad faith actions, false accusations and breaches of contract overwhelmingly support Diageo’s decision to cut ties with him,” the spokesperson added.

Read More: Diageo Breaks Up With Sean ‘Diddy’ Combs After Racism Claims

The consumer-goods industry is increasingly partnering with famous faces to help market products like spirits and makeup. But the public falling out shows the reputational risks involved when a relationship with a household name sours.

Watermelon Flavor

Combs has accused Diageo of letting DeLeón languish while investing heavily in other tequila brands, including the Casamigos one co-founded by White actor George Clooney. Combs said he also initially objected to the company’s plan to introduce a watermelon version of Cîroc, warning it was a sensitive flavor to market to Black consumers because of its historic link to racism. The racism claims are an uncomfortable development for Diageo, which positions itself as an industry leader in inclusion and diversity.

Diageo denies its treatment of the Cîroc and DeLeón brands was unfair or racist and has said its “summer watermelon” flavor was very successful earning Combs and Diageo a significant amount of money.

The company has accused Combs of failing to make good on his contractual obligations when it publicly cut ties with the music producer in June. It said Combs did not contribute his portion of capital for the DeLeón joint venture and had disparaged the spirits group and disclosed confidential information in his complaint.

In his filing, Diddy said that the two sides had agreed that Diageo would use its “immense resources” to fund the tequila’s rollout while he leveraged his popularity to promote the brand. Diageo disputes this.

Combs’ lawyer John Hueston of Hueston Hennigan LLP said in a letter to Diageo, seen by Bloomberg News, that the musician had a legal right to file a complaint and publicly criticize the group. Under an “equal treatment” provision, Diageo also committed to supporting DeLeón in a way similar to other tequila brands, wrote Hueston.

(Updates with Diageo response, and further detail throughout)

--With assistance from Deirdre Hipwell.

To contact the reporter on this story:
Dasha Afanasieva in London at dafanasieva@bloomberg.net

To contact the editors responsible for this story:
Deirdre Hipwell at dhipwell@bloomberg.net

Marthe Fourcade, Frank Connelly

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