On Monday, March 7, 2016, Derek Jeter and a marketer of luxury underwear resolved their dispute over legal fees in Delaware’s Court of Chancery. The settlement resolves Jeter’s fight with RevolutionWear Inc. over attorney’s fees stemming from Jeter’s lawsuit seeking declaration that he complied with his obligations to RevolutionWear and that he is entitled to indemnification.
In 2011, Jeter joined the company’s board of directors. RevolutionWear contends that an essential element of Jeter’s contract was that he would publicly announce his role in the company. However, Jeter failed to disclose his relationship with the company.
In its objection to Jeter’s request for legal fees, RevolutionWear argued that Jeter only procured his indemnification agreement with the company by misrepresenting that Nike, with which Jeter has an endorsement deal, would allow public announcement of his deal with the underwear company. On the other hand, Jeter argued that his deal with RevolutionWear expressly excludes endorsements or the use of his name or likeness to promote products and that he complied with his director obligations by supporting the business and meeting with potential investors. Jeter further contends that the company failed to indemnify him for defense costs from alleged claims despite an indemnification agreement entered into as part of his director deal.
In the current settlement, RevolutionWear agrees to cover Jeter’s costs that accrued in relation to his capacity as director of the company. In response, Jeter agrees that he is not seeking advancement of fees in connection with a Swedish arbitration, stemming from Jeter’s deal to raise money for RevolutionWear. However, Jeter reserves the right to amend his complaint to seek fees if the Swedish arbitration claims are expanded.
The Swedish arbitration arises from Jeter’s deal with shareholders of Swedish RevolutionWear in which he agreed to personally raise funds for the Delaware venture, RevolutionWear Inc. The U.S. incorporation, RevolutionWear Inc., stayed clear of this agreement due to concern that Jeter would be acting as an unregistered broker under the U.S. Securities Exchange Act of 1934.
Although Jeter and RevolutionWear have resolved the dispute over legal fees, the larger dispute over whether Jeter was to publicly promote RevolutionWear’s product still remains.