Rapper Tramar Dillard, better known as Flo Rida, took the stand yesterday in his lawsuit against Celsius Holdings, claiming the energy drink company stiffed him out of tens of millions of dollars worth of stock he earned for promoting its products.
Despite having performed in front of packed stadiums over the years, the global superstar appeared nervous.
"This is different than me being on stage," Dillard said ahead of his testimony.
By way of introducing Dillard and his musical success, his attorney Cristina Pierson of the law firm Kelley Uustal played some clips of Dillard's hits.
The rapper in turn loosened up, bobbing his head as his tune "My House" reverberated throughout the Broward County courtroom. His popular song "Low" soon followed with some in the gallery mouthing the song's catchy line, "Shawty had them apple bottom jeans/Boots with the fur."
With "Right Round" on deck, Celsius' defense team tried to cut the party short, objecting over relevancy. But Judge David Haimes overruled the objection and allowed the clip to be played. This time, Dillard seemed very comfortable and mouthed the lyrics. His attorneys then queued up "Good Feeling" and "GDFR (Going Down For Real)" while Dillard inaudibly rapped and sang along.
The musical rundown was a welcome relief from legal rigamarole, but it also served to remind the jury of the scale of Flo Rida's stardom when Celsius brought him onboard to endorse its products beginning in 2014.
Dillard says that after he helped jumpstart the then-floundering company, it failed to pay him royalties and blocks of stock, now worth tens of millions of dollars, owed under his 2014 endorsement deal and a 2016 renewal contract. The two other plaintiffs are Dillard's company Strong Arm Productions USA and licensing agent D3M Licensing Group, which worked out the Celsius deal.
"I would do my part in promoting this product worldwide and making sure I planted the correct seed for it to be successful. And I expected them to do their part, which didn't happen," Dillard testified.
The Carol City native contended his work as the Celsius global brand ambassador played a major role in bringing the company out of its financial downturn. Dillard claimed his efforts, which included relentlessly promoting the brand and collaborating on a powder product called "Flo Fusion," led the company to make millions of dollars in profits and line up deals with major distributors like 7-Eleven and Vitamin Shoppe. He also showed off Celsius beverages in his music videos for "My House" and "Hola" though not at Celsius' request, he said.
"A lot of things I touch for the first time and that I was passionate about, I made very successful," Dillard recounted on the stand. "In taking in this product, reflecting off what 50 Cent did with VitaminWater, I wanted something that was parallel to my lifestyle."
The Boca Raton-based company's stock, which landed on the NASDAQ exchange in 2017, is now trading for more than $106 per share thanks to Celsius' success in the energy drink market. When Dillard got onboard, a Celsius share was worth less than $1.
"Celsius was a small company right here in town, a few employees, never turned a profit, deep in debt. It wasn't clear they were going to be able to continue operations, but they had a product that [Dillard] fell in love with," attorney John Uustal told the court. "He is this international icon and in his backyard is this little tiny company in financial trouble."
According to the lawsuit, which was first reported by New Times, Celsius hit the sales goals laid out in the endorsement deal but failed to notify Dillard.
"[Dillard] is not allowed to break into the building," Uustal said in his opening statement. "He can only look at what they give him... He had no choice but to rely on them for the calculations, and they never did any monthly or annual calculations."
Upon execution of the first contract, Celsius paid Dillard and D3M $300,000 and gave them 250,000 shares of stock, according to the defense. Celsius said the parties received another $500,000 in advanced royalties and 250,000 shares upfront in the 2016 renewal. The new agreement outlined additional royalties if the $500,000 advance was exceeded.
The big money is in the Celsius stock bonuses in light of the blastoff in the company's share price in recent years.
The benchmark terms under the 2014 contract provide 250,000 shares of bonus compensation for Dillard if Celsius hit $1 million in revenue through co-branded marketing within a 12-month period. The contract lays out an additional 500,000-share bonus for the rapper upon the company selling more than 690,000 units of the co-branded product.
"Once the benchmarks were reached and product revenues triggered additional royalties, Celsius failed to deliver the required compensation to which [Dillard], Strong Arm, and D3M were entitled," the lawsuit alleges.
The defense countered that Celsius never met the bonus benchmarks and that the benchmarks did not extend beyond the expiration of the 2014 contract. The company argued that its astronomical growth came in the years after its partnership with Dillard had ended.
At the conclusion of their collaboration with Dillard, Celsius says, the company regrouped and removed Dillard's branding from product packaging. Rebecca Plasencia, an attorney for Celsius, claimed the "Flo Fusion" product had "tanked," and the parties went their separate ways.
"This entire lawsuit is based on greed," Plasencia said in her opening statement. "Why are we here?... because Celsius finally started doing well in the stock market."
Plasencia argued during a hearing last month that Flo Rida's team was misclassifying a product "unit" as a single packet with an eye toward triggering the bonus compensation for the Flo Fusion products. The attorney claimed a "unit" actually refers to a commercial unit of more than a dozen individual packets.
The judge said in the December hearing that the contract's wording is vague on that issue, among others, and that the case has to be decided by a jury.