NEW YORK — Nine months after Elie Tahari filed a lawsuit against Andrew Rosen, his former business partner in Theory, the case has been decided overwhelmingly in Rosen's favor.
Justice Helen E. Freedman, of New York State Supreme Court, dismissed six claims related to the sale of Theory, but granted one that involves royalties Tahari claimed he is owed for the sale of Theory clothing in Asia.
Besides Rosen, the defendants included Ricky C. Sasaki, Link International, Link Theory Holdings Co., Fast Retailing Co. and L&F Holdings.
In September, Tahari filed a lawsuit seeking no less than $180 million in damages from Rosen and nine other defendants, alleging "commercial treachery and fraudulent self-dealing." In the suit, Tahari charged Rosen defrauded him into selling Theory at a price that didn't reflect the U.S. company's true value. Further, the suit alleged the new Japanese owners resold Theory in an initial public offering on the Tokyo Stock Exchange in 2005 at a market capitalization of more than $500 million — nearly five times the sale price of Theory LLC less than two years before. Tahari sought to recover half of the $500 million market capitalization of Link Theory Holdings in 2005, minus the amount that he received for his interest in Theory in 2003, as well as royalty payments.
In 2003, when Tahari agreed to sell his interest in Theory to an acquiring entity created by Link International, Fast Retailing and L&F Holdings, Tahari received approximately $53 million, according to the suit. Rosen sold his one-half interest for about $49 million, together with 11 percent of L&F Holdings, which held the U.S. operations of Theory.
Dismissing the six causes of action, the judge ruled that "allegations that consist of bare legal conclusions or that are flatly contradicted by documentary evidence or are inherently incredible are not entitled to such consideration." The legal filing states that theories in which Tahari sought to recover the proceeds of Link Theory Holding's public offering "are either contradicted by the relevant contracts or are purely speculative and conclusory."
According to the court documents, the crux of the defendants' position "is that this is a ‘classic case of seller's remorse' for which Tahari has suffered no cognizable injury."
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