A Liz Claiborne Inc. outerwear licensee has filed a $100 million breach of contract lawsuit over the company’s exclusive deal with J.C. Penney Co. Inc.
This story first appeared in the February 5, 2010 issue of WWD. Subscribe Today.
The Levy Group Inc., which has held the license for Liz Claiborne rainwear since 1997, filed the complaint in New York State Supreme Court in Manhattan on Jan. 21.
In October, Liz Claiborne announced that Penney’s would have exclusive rights to sell its namesake brand starting for the fall. The Levy Group alleged in the lawsuit that the deal will “destroy” the business it has spent more than 10 years developing by taking the brand out of better retailers and ultimately tarnishing the reputation of the trademark.
“Even a robust business with J.C. Penney will not replace The Levy Group’s current volume, as sales at J.C. Penney stores are a fraction of those at the network of multiple ‘better zone’ department stores that The Levy Group has cultivated,” according to the complaint. “The Levy Group’s right to sell merchandise to ‘better zone’ department stores is meaningless unless Liz Claiborne protects the reputation and prestige of the marks and maintains the ‘better zone’ standard.”
Claiborne and The Levy Group renewed the license for a five-year term in 2008, according to court documents. It has the option to renew the license every five years until 2023.
The outerwear licensee said it has not seen the Penney’s agreement and accused Claiborne of entering the arrangement solely out of self-preservation.
“Concerned only with self-interest, Liz Claiborne has ignored its contractual obligations to The Levy Group, executing the J.C. Penney agreement even though it runs roughshod over the express terms of [The Levy Group’s] agreement,” the lawsuit said.
Nicholas Rubino, Liz Claiborne senior vice president and chief legal officer, said Thursday, “We believe the lawsuit has no merit and intend to conduct a vigorous defense of the claims asserted by The Levy Group.”
The licensee is seeking no less than $100 million in damages for “lost sales and profits” over the life of the agreement, as well as “excess and unwanted inventory and the cost of producing sample lines that cannot be used.”