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First Act Inc. announced that it accepted a $16.7 million settlement payment stemming from a lawsuit in which a jury found that Brook Mays Music Co. had falsely disparaged the products of the bargain-priced musical instrument maker.
The settlement comes after a 2005 verdict in which a civil jury awarded First Act $20.7 million. The payment ends the lawsuit, which Dallas-based Brook Mays had vowed to appeal.
“This settlement enables us to concentrate on our core business of bringing more music to more people,” said First Act President and Chief Executive Officer Mark Izen in a written statement.
In December 2005, a jury in Boston ruled unanimously in favor of First Act. The company sued Brook Mays in 2003 after the retailer sent a flier to band directors and consumers claiming that First Act and other imported instruments were of poor quality and that repair parts might not be available.
First Act called the flier “a calculated smear campaign.” The company said it had a nationwide network of repair technicians.
First Act’s strategy of selling instruments through mass retailers instead of traditional music stores has roiled the band-instrument market in ways not seen since the advent of catalog retailers decades ago.
Other companies, such as guitar makers Fender and Yamaha, sell instruments at big retailers, but First Act may have been the first to sell band instruments at mass merchants such as Wal-Mart Stores Inc.
Brook Mays has 63 stores in eight states, mostly in the South. The company did not immediately return a phone call seeking comment.