4th DCA: 'Trial Court Erred;' Big Law Partial Victory after $82M Flo Rida Verdict Appeal
A feature article by Lisa Willis with commentary by Tripp Scott's Henny Shomar as published in: Law.com | DBR DAILY BUSINESS REVIEW
It's back to court for Tramar Dillard, who goes by the stage name Flo Rida, after a Florida appeals court ruled that a Broward trial court judge erred in his jury instructions when awarding $82.6 million in a breach of contract lawsuit against the makers of Celsius energy drinks in January 2023.
Celsius appealed the jury verdict, claiming the trial court erroneously allowed the appellees to pursue an improper measure of damages, specifically the stock valuation at the time of trial rather than the date of the alleged breach of contract. The case will now return to Broward Judge David Haimes' courtroom.
The rapper's Hialeah-based company Strong Arm Productions USA Inc., and Wellington-based D3M Licensing Group, which was involved in arranging the endorsement deals in 2014 and 2016, sued Celsius for violating the contact parameters allegedly refusing to pay Dillard, who says he took the brand from obscurity to an omnipresent drink product currently on store shelves.
Some big law attorneys are at the helm on both sides of the aisle of this case.
John Uustal of Kelley | Uustal in Ft. Lauderdale is Dillard's trial attorney. Jose P. Casal and Daniel P. Hanlon of Holland & Knight in Miami represented Celsius.
On the appeal, Greenberg Traurig Miami attorneys Elliot H. Scherker, Brigid F. Cech Samole, and Bethany J. M. Pandher for the appellant.
Fourth District Court of Appeals Chief Judge Mark W. Klingensmith authored the opinion with judges Burton C. Conner and Jeffrey T. Kuntz in agreement with Celsius only regarding the stock valuation timeline. On other concerns raised by Celsius on appeal, the jurists affirmed without comment.
At trial, Dillard's legal team argued that the company’s beverages had shot from obscurity to a household name with the hip-hop star spokesperson, but stock values in 2021 were significantly lower than in 2023.
Uustal said the final outcome could fall above or below what the jury intended.
"It is very hard for the law to deal with a situation like this because [Dillard] is entitled to shares, but they can't actually order the company to issue shares," Uustal said. "So it has to be a monetary number. Will the final number be over $83 million with interest and fees? Maybe. It could be. It could be lower. Absolutely, definitely, it could be lower. But I wouldn't get too focused on the dollars. This is a personal vindication for him. That's why he brought the lawsuit."
The appellees had a retired Florida Supreme Court justice on their team for the appeal; founding shareholder at Lawson Huck Gonzalez, Alan Lawson.
"It was both a privilege and a pleasure to represent Tramar," Lawson said. "His artistic contributions have left a lasting impact on the music industry and beyond, and his collaboration with Celsius played a pivotal role in the company’s success. The Fourth District’s thoughtful and well-reasoned decision rightly ensures that his contributions are justly recognized and compensated."
Outside Attorney Analysis
While not associated with the case, Tripp Scott director Henny L. Shomar, practices high-stakes and complex business litigation in both state and federal court. Shomar discussed the fact that the 4th DCA let the jury's verdict on liability be, but reversed on damages.
"The court’s reversal was solely on the damages amount," Shomar said."The court focused on the fact the jury considered evidence of the value of Celsius’ stock as of trial, Jan. 13, 2023, rather than the date of breach, April 30, 2021 or, as [Flo Rida] argues, the first date upon which he could have sold his stock, Nov. 1, 2021. The court concluded that the evidence presented by Mr. Dillard as to his intent to keep the stock or his intention to sell it on a date other than Nov. 1, 2021, and the communication to Celsius as to that intent, was lacking.”
Shomar also noted that the court further reasoned that the value of Celsius based on the record was not difficult to determine.
"Therefore, based on the case law, neither of these facts would provide Mr. Dillard an exception to the general rule on damages," Shomar said. "The parties will now need to conduct a new limited trial presenting evidence on damages and valuation as to either the breach date or the date he would have had the right to sell the stock; however, liability as to breach of contract will not need to be retried, as that is final."
Jason Giller of Giller P.A., who also offered his analysis, said this case underscores an interesting aspect of breach of contract cases concerning the delivery, or in this case, the failure to deliver property.
Relying on a similar case, Kozel v. Kozel, Giller was involved in the determination of damages in lieu of delivery of the stock. The attorney said the case highlights both the strategic aspects of electing remedies, as well as the wisdom, or folly, as to how to prove "up" the damage element of the claim.
"The [appeal court] opinion correctly notes that the valuation of closely held stock can be troublesome because of the limited market (in this instance, the stock at issue was “restricted” which meant that the shareholder could not sell the stock until a date certain," Giller said. "What appears to be missing from the record, or at least was not addressed in the opinion, was whether the jury ever made a decision concerning what the plaintiff had intended to do with the stock options had the defendant actually performed under the contract. In other words, I think the jury should have been permitted to make a determination about whether the plaintiff would have sold the stock on Nov. 1, 2021, or alternatively, was likely to have held it for future appreciation."
Giller said other complications that the trial court will now have to address will be how to handle the subsequent stock split that was announced on Nov. 2, 2023, and took effect on Nov. 15, 2023.
The Miami attorney, whose practice areas include business law, contract & partnership and plaintiff litigation, said, "I think the key takeaway of the underlying litigation and appeal is to remind the litigants that framing the proper damage model can be a multimillion-dollar windfall or blunder and something that should be firmly ironed out long before it is submitted to the trier of fact."
