Rachel Roy has filed a lawsuit against Jones Apparel Group in an attempt to prevent the company from selling her brand to Bluestar Alliance for $14.6 million. This has occurred after Jones closed operations of the brand and is attempting to sell off its underperforming brands as its being acquired by equity firm, Sycamore Partners.
Roy is claiming that the sale is being done without her consent and is therefore a breach of contractual agreement. Roy’s relationship with Jones began in 2008 when she entered into agreements to develop and sell products under the Rachel Roy band. The agreements included a transfer of intellectual property assets including her trademarks, an asset purchase agreement, a licensing agreement, and an employment agreement, where Roy became the artistic director of the brand. Roy alleges that these agreements were drafted by Jones and she did not have a counsel represent her in the negotiations of these agreements.
The lawsuit alleges that Jones never actually intended to create a partnership with Roy but “entered into these agreements under false pretenses.” It goes on to allege that Jones intended to take exclusive control of the brand and the associated intellectual property assets. It goes on to state that Roy’s “rights to creative control and approval of designs were non-negotiable conditions of the business relationship,” and that Roy “would at all times retain full creative control over the designs that were to be sold under her name, and would have exclusive approval rights over the use of the trademarks.”
The lawsuit states that the closing of the brand was done purposefully to “eviscerate” the designer brand and that Jones was preventing any effort by the designer to continue her business. It is also alleged that Jones decided to sell the brand to Bluestar, even though there were other buyers willing to honor Roy’s approval rights.
Roy is seeking a declaration that Jones does not have the authority to sell the intellectual property assets without her approval, rescission of the 2008 agreements, and money damages for lost profits and business opportunities.
It will be interesting to see how this plays out in court, if the lawsuit reaches court and isn’t settledbeforehand. The crux of the case will be determined on what rights Roy was given in the 2008 agreements between her and Jones. Also, the actions taken by Jones once they were starting to be acquired by Sycamore and once they decided to stop production of the brand will be held under scrutiny to determine whether Jones acted in a fair and just manner under the agreements as well as under the law.
I, personally, hope that Rachel Roy is able to regain control of her brand because I think it is an amazing brand with beautiful pieces and has the great potential to be a major contender in the industry. The brand just needs the proper management, and perhaps the Jones Group wasn’t the right partner for her. We shall see how this case plays out.
source: “Rachel Roy Files Lawsuit Against Jones“, Women’s Wear Daily.
image: David Shankbone