TIFFANY CLAIMS ‘ILLEGAL RESTRAINT OF TRADE’ IN SUIT FILED AGAINST SOUTH COAST PLAZA

Byline: Teena Hammond

LOS ANGELES — Tiffany & Co. has filed a lawsuit against South Coast Plaza, claiming the upscale shopping center prevented it from opening a store at the Mission Viejo Mall.
The suit, filed Aug. 25 in Orange County Superior Court, combats a non-competition clause in the lease geared to keep Tiffany’s, which opened a 14,000-square-foot unit at South Coast Plaza in 1988, from opening at Mission Viejo Mall. Both malls are in Orange County, with Mission Viejo about 20 miles south of South Coast Plaza.
The South Coast Plaza unit is the only Tiffany’s in Orange County.
Tiffany’s concedes in the suit that the lease does contain a provision that says in part, “neither tenant nor any parent, affiliate or subsidiary, directly or indirectly, shall operate, manage or have any interest in any other competing stores, including a concession in another store, within the prohibited area. The prohibited area shall be Orange County, California.”
However, the suit calls the clause “an illegal restraint of trade,” making it “void and unenforceable.”
Tiffany’s has, according to the suit, incurred “in excess of $1 million in damages, including lost sales and profits, loss of market position, loss of goodwill and other damages resulting from its inability to open a store in the Mission Viejo Mall.”
A spokeswoman for South Coast Plaza said, “We’re aware that a legal complaint has been filed and our legal counsel is reviewing the report.” Tiffany’s officials declined to comment.
Tiffany’s has a prime spot at South Coast Plaza with entrances on the inside and outside of the mall. According to the suit, in 1999, Tiffany’s met with South Coast Plaza officials to discuss its desire to expand in Orange County. After South Coast Plaza officials turned down the request, Tiffany’s passed on the opportunity to sign a lease at Mission Viejo Mall.
Mission Viejo Mall is undergoing a $150 million renovation and is becoming more upscale. Nordstrom is opening in November and Saks Fifth Avenue is opening Sept. 10. The current anchor tenants, Robinsons-May and Macy’s, are expanding. After the renovation is complete, the mall will have grown from 816,000 square feet to 1.2 million square feet. South Coast Plaza has 2.8 million square feet.
Mission Viejo Mall is owned by Simon Property Group. Henry T. Segerstrom is founder, developer and managing partner of South Coast Plaza.
Competition among retailers is growing fierce in Orange County, said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles.
“Obviously South Coast Plaza is the 800-pound gorilla of retailing in Orange County with a pretty impressive client list. All of a sudden you have the Mission Viejo Mall making a major run for the upscale customer. Getting a Tiffany’s would have obviously been a real feather in their cap,” Kyser said.
“Tiffany’s is probably looking at some of their customer base, and there’s a heck of a lot of money in Orange County. You have a lot of development, and it’s all middle- to upper-level home construction, and there’s a high tech industry cluster in Irvine. This would obviously be juicy territory to stake a claim in,” Kyser said.

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