Tommy Hilfiger has sued its former sock licensee for breach of contract, accusing the manufacturer of missing royalty minimums and threatening to dump merchandise to unauthorized sellers.
This story first appeared in the October 7, 2009 issue of WWD. Subscribe Today.
In a complaint filed Oct. 2 in U.S. District Court in Manhattan, Tommy Hilfiger Licensing alleged that Mountain High Hosiery Ltd. had trouble meeting sales and royalties targets over the course of their agreement, which lasted from 2002 until earlier this year.
Hilfiger said it continued with the arrangement despite the San Diego-based manufacturer’s problems, and didn’t object when, in 2006, private equity firm MHH Acquisition took a controlling stake in Mountain High.
According to the complaint, the relationship disintegrated in April after Hilfiger declined to approve another acquisition bid by slipper maker R.G. Barry Corp. The deal would have required the brand to reduce its royalty rate by 3 to 5 percent and waive minimum sales figure requirements.
Tommy Hilfiger alleged Mountain High’s chief executive officer, Gerald Birin, then said the company would not ship any more orders, would not pay outstanding royalties and would liquidate its remaining inventory.
The brand owner said it then terminated the license and allowed Mountain High a 90-day sell-off period. It is seeking $4.7 million it says it is owed plus interest, legal fees and unspecified damages.
MMH Acquisition did not return a call seeking comment. Several numbers listed for Mountain High Hosiery were disconnected.