Bradenton audio company wins $16M suit against 50 Cent

mjohnson@bradenton.comApril 8, 2014 

BRADENTON -- Newly disclosed federal court papers reveal rapper 50 Cent has been ordered to pay a Bradenton earphone manufacturer more than $16 million in connection with a failed partnership to produce the entertainer's line of headphones.

50 Cent, whose real name is Curtis Jackson III, was ordered to pay Sleek Audio nearly $4.5 million in attorney fees and $11.7 million in damages. The U.S. District Court in Miami affirmed the award in late March after a three-year legal battle between Jackson and Sleek Audio ended in an arbitration victory for the Bradenton company.

Jackson, 38, shot to fame as a rap artist in 2003 when he released his album "Get Rich or Die Tryin.'" His hit songs include "Candy Shop" and "In Da Club." Sleek, which is located at 3904 9th Avenue W. has been in operation since 2006, producing custom molded ear buds and other audio products.

At issue between the two parties was the accusation that Jackson, a Sleek partner, stole the designs of over-the-ear headphones he asked the company to conceptualize and manufacture. Jackson has been selling headphones of a similar design under the 50-Over the ear line with Delray Beach manufacturer SMS Audio since breaking with Sleek in 2011.

Jackson partnered with Sleek, a maker of high-end ear buds, in early 2010 to design and sell his own line of over-the-ear headphones, the Sleek by 50. He loaned the company $285,000 at the time and became a partner in the business.

According to court papers, Jackson took headphone designs created by Sleek to SMS Audio when Sleek failed to bring the headphones to market. SMS currently sells Jackson's signature Street by 50 and Synch by 50 over-the-ear headphones. The SMS website shows Jackson to be the company's majority owner.

Jackson remains a partner in the business, according to Sleek's most recent corporate filing with Florida.

In a West Palm Beach proceeding on July 15, arbitrator William Needle ruled that Jackson breached confidentiality, misappropriated trade secrets and violated a non-disclosure agreement with Sleek in taking the headphone designs. The damages in the case were based on three years of net profits earned by SMS.

While the dollars and cents of the decision benefitted Sleek, Needle portrayed Sleek principals Mark and Mike Krywko as being partly responsible for their misfortune. He said the Krywkos particularly "did not have a good head for business" in partnering with Jackson. Needle's decision said the Krywkos saw Jackson's investment in the company as money to develop their ear buds, rather than the headphones Jackson wanted.

The arbitrator also sympathized with Jackson, who left Sleek out of frustration when the company failed to produce the headphones on a timely basis. However, the decision said that frustration did not justify taking the headphone design to a competing company.

Jackson filed claims against the Krywkos in his suit, asserting they fraudulently induced him into investing in the company, and that they grossly mismanaged the company. Needle denied both claims.

Fifteen witnesses testified before the arbitrator, including Jackson, the Krywkos, accountants representing Jackson and Sleek Audio, and a graphic designer who worked on the headphones for both Sleek and SMS Audio.

Contacted about the damages award, Mark Krywko refused to comment, referring inquires to his attorney, Lynn Sheehy of the Detroit, Mich. law firm Kotz Sangster Wysocki.

Sheehy refused to talk about the specifics of the suit and limited her comments to the final result.

"We're really happy with the decision," she said.

Jackson is not the only outside investor in Sleek. Jared Jeffries, a player with the New York Knicks, is also a partner in the company, having invested $200,000 in Sleek in 2009, according to court documents. Also listed as a partner in the business is Gregory Wysocki, a partner in the firm that represented Sleek in the arbitration suit.

Matt M. Johnson, Herald business reporter, can be reached at 941-745-7027, or on Twitter@MattAtBradenton.

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