Internationally renowned musician, music producer, entrepreneur, and actor Sean “Diddy” Combs filed suit against Diageo North America Incorporated alleging that the spirits company discriminated against his liquor brands. The complaint, filed with the New York Supreme Court on May 31, 2023, alleges that Diageo breached an agreement with the superstar regarding his two brands, Cîroc Vodka and DeLeón Tequila, by marketing them less than other brands Diageo owned an interest in, like Casamigos and Don Julio.

Diageo, a multi-billion-dollar spirits company, entered into a joint venture with Mr. Combs to produce, distribute, and sell Combs’ liquor brands Cîroc and DeLeón. Combs alleges that the spirits giant discriminated against him by starving his brands of resources that are crucial to the drink industry. The complaint states, “[w]hile Diageo invested in and expanded its other brands… Mr. Combs' brands were allowed to wither, getting increased attention only if Combs Wines demanded it under threat of legal action.”

Mr. Combs’ success may well hinge on whether his agreement with Diageo details the marketing efforts Diageo is obligated to make. The agreement may contain provisions known as “efforts clauses.” These clauses are often used within marketing agreements to ensure that the parties are acting in good faith. Commonly used phrases include “best efforts,” “reasonable efforts,” and “commercially reasonable efforts.” They are meant to set forth the degree of effort to be expected in the promotion and/or marketing of the product. Despite their common use, some courts have found efforts clauses difficult to interpret because they are indefinite. There are no standard guidelines on how to quantify the difference between a “commercially reasonable effort” and one’s “best effort” and so on.  See, e.g.,  Holland Loader Co. v. FLSmidth A/S, 313 F. Supp. 3d 447 (S.D.N.Y. 2018).

Celebrities and social media influencers like Mr. Combs have a right to control their likeness, image, and voice when promoting the goods and services produced by others. This “right of publicity” offers protection from the misappropriation of one’s likeness, name, and/or other public aspect of one’s persona from being exploited for another’s commercial benefit without compensation. For more information about the right of publicity, click here.

Mr. Combs and other celebrities and influencers in his situation would be well served to negotiate for minimum dollar amounts to be spent on marketing, guarantees of exposure to a particular geographic region (e.g., a commitment to a national marketing campaign), and thorough outlines of how both parties will approach the marketing process. The more detailed these provisions, the less likely celebrities and influencers will find themselves bound to a partnership that exploits their publicity right without also making defined investments into the partnership.

More particularly, since Mr. Combs appears to allege that Diageo limited its marketing efforts to urban markets, Mr. Combs would be better positioned in his suit if his agreement provided that Diageo was to deploy a nationwide marketing strategy rather than targeting only urban markets. In these sorts of deals, celebrities and influencers would be better off negotiating strict marketing provisions at the outset to guarantee mutual success for the joint venture.

Public personalities may also use the extra protection of royalties and liquidated damages provisions in the case of a breach of marketing expectations. In Bloor v. Falstaff Brewing Corp the plaintiff beer manufacturer was able to recover royalties on each of his beers that was sold, while the buyer of the beer brand was obligated to use best efforts to sell the beer. A provision requiring the buyer to pay liquidated damages was included as well. The court found that the buyer breached the best-efforts requirement and awarded the seller his lost royalties.

Shortly before publication, Diageo sought to cut ties with Mr. Combs in response to his suit. Stay tuned here for more information.

The authors wish to thank Norris McLaughlin, P.A.’s summer associate, Nicole Portu, for her invaluable assistance in preparing this post.