Lawyers for Insomniac allege in a Jan. 28 civil complaint in U.S. District Court in Washington state that USC Events breached its contract with Insomniac, terminating the two parties' agreement to stage the festival. Insomniac's lawyers are now asking for a judge to issue an injunction that would effectively prevent USC Events from staging Paradiso without Insomniac, along with a judicial confirmation that Insomniac is no longer bound to a non-compete agreement and can move forward with a new dance music event at the Gorge in George, Washington, where Paradiso has previously been held.
A spokesperson for USC sent a statement to Billboard from Anderson saying the company "finds these recent allegations disheartening and disagrees with this lawsuit. We are disappointed that Insomniac would decide to strain our long-tenured relationship with this litigation, over an event that USC has created from inception. To our community, thank you for your continued support as we work through this. Due to the legal nature of the situation, we are unable to comment further at this time. We will be filing a legal response.“
Officials for Insomniac declined Billboard's request for comment.
USC Events and Live Nation-owned entities have been 50-50 partners on the event since 2013 -- each own a cross-license to use the Paradiso name for the annual June festival, but neither are allowed to use the name for any other event. Insomniac began managing Live Nation's stake in the festival in 2014 and handled "ticketing; food, beverage, and alcohol concessions; venue operations; and permits," while USC Events was “responsible for managing and paying most artists and vendors for Paradiso Festival,” according to the complaint filed by lawyers Jaime Drozd Allen and Jennifer K. Chung of Davis Wright Tremaine.
As part of the agreement, “USC could request funds advanced on unearned revenue" from Insomniac to book artists and pay vendors, the complaint explains. USC Events made four funding requests in 2019 totalling $2 million, but allegedly didn’t make payments to artists represented by UTA and Paradigm as promised. To save the event from cancellation on the day it was set to begin in 2019, Insomniac says it had to pay $1.2 million to vendors and bands owed money or risk "Insomniac’s business relationships and reputation.”
According to the lawsuit, Insomniac had to pay out $215,055 to artists represented by Paradigm, including Alison Wonderland, Ben Benassi and Keys N Krates, and $600,000 to UTA, which had booked Kaskade, Illenium and Borgeous. Anderson later told Insomniac that the advanced funds for “UTA artists had been ‘allocated to other departments,’” says the complaint, but “did not explain, and has never explained, what these ‘other departments’ were.”
According to the suit, after the event wrapped, Amderson made a number of promises to repay Insomniac but never followed through. Eventually two festival vendors contacted Insomniac and alleged they were owed money -- Just Right Productions obtained a default judgment against USC Events for $29,000 while audio visual company LMC won a default judgement for $176,000.
On Sept. 21, Insomniac terminated its agreement with USC Events and in December the two parties agreed to a settlement to close out the event on Insomniac's books before the end of the year. USC Events was wired a reduced portion of the proceeds upon promise it would pay back some vendors, the suit says, but allegedly again failed to make any payments.
Lawyers for Insomniac say USC Events's alleged breach of the contract effectively terminated the two companies agreement, which in turn has teminated the festival. Insomniac is asking the a federal judge issue a declaratory judgment that the two sides agreement was terminated and that a clause in the agreement that automatically renewed the festival for one year if it was profitable be invalidated. They are also seeking an injuction to stop USC Events from promoting Paradiso or attempting to book artists for Paradiso and are suing for breach of contract and good faith, seeking damages from USC Events.
Anderson has until Feb. 21 to respond to the lawsuit.