Prince, the flamboyant pop star with 10 platinum albums, should pay nearly $4 million in damages for going back on his promise to promote a perfume named after his latest CD, a special referee in Manhattan concluded after conducting a four-day inquest on damages.

The referee, Louis Crespo, awarded $3.9 million to Revelations Perfume and Cosmetics to cover expenditures it had made in reliance on Prince's commitment to promote a perfume, 3121, named for the CD.

Crespo, however, rejected Revelations' claim for an additional $3.4 million in lost profits, finding they were too "speculative." He also denied Revelations' assertion that it was entitled to punitive damages.

Revelations' lawyer, David Landau of Duane Morris in Philadelphia, said last week he would ask Manhattan Acting Supreme Court Justice Bernard J. Fried to confirm the referee's award this week. Prince's lawyer, Kenneth A. Novikoff of Rivkin Radler in Uniondale, N.Y., said his client would oppose the application.

The case came before Crespo for an assessment of damages in January following Prince's default on Revelations' claims of fraudulent inducement and tortious interference with contract.

Prince failed to appear at a scheduled December court hearing after Peter C. Harvey of Patterson Belknap Webb & Tyler withdrew, complaining that the firm had not been paid "for months" and that Prince had "failed to comply with basic discovery obligations."

Prince's new lawyer, Novikoff, entered the case shortly before a hearing on damages started on May 5.

According to Revelations' complaint, Prince had induced the Philadelphia-area perfume maker in late 2006 to enter a licensing agreement for the perfume by promising to personally engage in a promotional campaign. The singer also promised to allow his name and image to be used in the packaging of the new perfume.

The day after a licensing agreement was signed on Dec. 2, 2006, according to the complaint, Prince started backtracking; refused to give interviews in connection with the project, which was launched on July 7, 2007; and failed to provide a current photo of himself for a press release.

According to Landau, Revelations' attorney, Prince was personally involved in selecting the fragrances to be used in the perfume, described by merchants as "a sexy scent," "Xquisite, Mysterious, Xotic," that smells like a "kaleidoscope of rich florals." It comes in a purple bottle reminiscent of the artist's album "Purple Rain."

From March 2007 until that July's launch at a Macy's in Minneapolis, Revelations had no personal contact with Prince, Landau said, but the singer did perform an in-store concert in connection with the launch on July 7.

Afterward, Prince refused to make any public appearances promoting the project, the lawyer said, and refused to grant any interviews, aborting potential sit-downs with Oprah Winfrey, Whoopi Goldberg and Ebony magazine.

Prince's refusal to give media interviews and stage in-store events crippled the marketing effort, Landau said, and forced the cancellation of the licensing agreement because Revelations failed to meet minimum sales requirements, the lawyer said.

The company was left with an inventory of 3121 that it could no longer sell and that had cost approximately $1 million to make. Revelations' other outlays to develop and distribute the perfume brought its total out-of-pocket losses to $3.9 million, Landau said.

Because Prince had defaulted, Crespo's starting point in assessing damages was that all of Revelations' allegations about the pop star reneging upon his commitments were true.

Crespo accepted the testimony of Revelations' expert that "celebrity appearances and media interviews are material and important because they are the tools that create excitement in the market for consumers and vendors."

Adopting that line of reasoning, Crespo found in Revelations Perfume and Cosmetics Inc. v. Prince Rogers Nelson that Prince's failure to follow through with his commitments was the proximate cause of 3121's marketing collapse and awarded Revelations $3.9 million for expenditures it had made on the product.

Crespo also rejected Prince's defense that Revelations had a duty to mitigate its losses once it realized he would not follow through on his commitments.

Revelations took "reasonable action" to recover "as much profit as possible to cover the cost of the product," Crespo wrote, while "at the same time pressing Prince to perform as promised."

Crespo, however, rejected Revelations' claim for lost profits as "insufficient and impermissible speculation" based on its own data without independent verification.

The claim was even more tenuous, he wrote, because Revelations never marketed a product line in cooperation with a celebrity of Prince's "caliber."

Revelations' arguments for punitive damages fell far short, Crespo found. There is "no evidence in the record" to support a finding that Prince acted out of "spite, malice or evil motive" upon which an award of punitive damages could be predicated, he wrote.

Reprinted with permission from The Legal Intelligencer, © ALM Media Properties LLC. All rights reserved.