The Nashville-based manufacturer is being hammered in a number of class action lawsuits accusing Gibson and other groups of fixing the retail prices on guitars.
The litigation comes on the heels of Gibson being investigated by federal authorities on whether it uses wood protected under U.S. law at its manufacturing facility in Nashville.
Gibson has denied wrongdoing in both cases.Related11/19/09: Gibson Guitar CEO leaves rainforest group after Nashville raid11/18/09: Gibson Guitar plant in Nashville raided by fedsMusicians who play Gibson guitars
"It's a colossal distraction for the entire company, and it's going to hurt the business," said Brian Majeski, editor at trade publication The Music Trades Magazine .
More job losses could be on the horizon in the music manufacturing industry because of a storm of lawsuits and weaker guitar sales, Majeski predicted.
He estimates the industry could spend more than $12 million in defending against the lawsuits, which name several other manufacturers, including Fender Musical Instruments Corp., as well as Guitar Center and NAMM, the industry's trade association.
"People will lose jobs. Companies will be hurt. No one will benefit except lawyers," Majeski said.
The class action lawsuits are brought by guitar buyers who allege that in recent years, selected music manufacturers worked together with Guitar Center to increase the retail prices of guitars. Guitar Center is the nation's largest musical instrument retailer.
Gibson's attorney did not return a call for comment, but the company said in a statement, "The allegation that Gibson participated in any scheme to artificially inflate or fix prices is wholly without merit."Gibson listed in 30 lawsuits
Gibson said it is a listed party in about 30 lawsuits on the topic. The company has been listed as a defendant in at least nine of the lawsuits since 2009.
Retail sales of guitars have slumped as cost-conscious consumers and retailers cut back on their purchases, according to The Music Trades Magazine . In 2008, sales fell about 7 percent to nearly $1.04 billion.(2 of 3)
Condos propel increase in Nashville-area home salesReal Estate Outlook: Strong Sales Predicted