21-Jul, 17:44

23:07, December 22 176 0

2016-12-22 23:07:15
Carolina Herrera and Oscar de la Renta Clash Over Young Talent

In a proxy-battle-turned-head-on-clash, the Carolina Herrera and Oscar de la Renta fashion houses are fighting over young talent.

On Tuesday, Carolina Herrera filed suit against Oscar de la Renta, demanding that its new creative director cease working for the label immediately.

The creative director at the center of the conflict is Laura Kim, a designer who began working at Oscar de la Renta in 2003, while still in college, and left for Carolina Herrera in 2015 after being passed over for the role upon Mr. de la Renta’s death, in 2014. She joined Carolina Herrera in February of this year as senior vice president for design, but submitted her resignation about four months later.

Less than a week after her official departure from Carolina Herrera at the end of August, Alex Bolen, chief executive at Oscar de la Renta, confirmed that Ms. Kim and her creative partner, Fernando Garcia, would take over as creative directors beginning with the label’s fall 2017 collection.

That is when the troubles began.

When she joined Carolina Herrera, Ms. Kim signed a noncompete contract, an agreement not to work for any direct competitors for six months after leaving the company. This means that she would not be allowed to do anything for Oscar de la Renta until April 2017, so she could not work on the label’s fall 2017 collection and stay within the terms of her contract.

“The claims themselves seem pretty straightforward,” said Julie Zerbo, founder of the website The Fashion Law. “A clearly written six-month clause is expected for someone in Laura Kim’s position.”

Ms. Zerbo cited recent examples of other fashion designers who have been expected to wait to work at other companies, including Raf Simons, who left Dior last fall and joined Calvin Klein this August, and Hedi Slimane, who left Saint Laurent this spring and actually demanded that Kering reinstate his noncompete clause after it had been removed.

So, in a sense, it is surprising that Ms. Kim wasted no time in flouting the agreement and joining the competition, a sentiment Carolina Herrera quickly expressed in a letter demanding that Ms. Kim honor her contract.

As communications between the label’s lawyers became a back-and-forth battle over the legitimacy of the noncompete clause, several story lines have emerged.

One: According to Ms. Kim, she joined Carolina Herrera under the impression that its founder, Mrs. Herrera, would be retiring and that she would be offered the creative director position, but quickly discovered that Mrs. Herrera had not been made aware of those conversations. Ms. Kim’s lawyers called the plan of succession “surreptitious” and the resulting work situation “untenable.”

Just three days after Ms. Kim filed her resignation, François Kress, the president of Carolina Herrera, did, in fact, offer her the creative director post (and a $1 million salary, more than double what she made as senior vice president). According to the complaint, Ms. Kim refused the promotion because Mr. Garcia had not been offered a co-creative director position, and because the Carolina Herrera company had not offered enough support to Monse, the label Ms. Kim and Mr. Garcia run together.

In her affidavit, Ms. Kim also said that Mrs. Herrera had often intervened in her working process and did not like some of her designs. According to Ms. Kim, Mrs. Herrera told her: “Nobody knows you and nobody knows that you are here. I am more famous than you and have more powerful friends.”

Two: In asking Ms. Kim to sign a noncompete agreement, Carolina Herrera had been specifically concerned with Ms. Kim’s possible return to Oscar de la Renta, not her going to other labels. In a letter sent on Oct. 26, a lawyer for the house wrote, “Carolina Herrera has no objection to Ms. Kim working for any fashion house other than Oscar de la Renta, Carolina Herrera’s direct competitor.”

The official complaint elaborated further, arguing that the relationship between the two houses is a zero-sum competition, and that when one suffers the other inevitably benefits.

Three: The beef goes way back. In its responses to the Carolina Herrera complaints, Oscar de la Renta has asserted that its hiring of Ms. Kim “was part of a larger pattern and practice of poaching” Oscar de la Renta employees — according to the letter, nearly a dozen have been recruited over the last few years — and accused the house of having “a record of unclean hands and unfair competition.”

It named Raffaele Ilardo, whom Carolina Herrera hired as a replacement for Ms. Kim, as the latest example, saying he had made an agreement to join Oscar de la Renta before Carolina Herrera snatched him away.

On Wednesday, a judge ruled in Carolina Herrera’s favor (sort of), issuing a temporary restraining order that blocks Ms. Kim from continuing to work for Oscar de la Renta, at least until Jan. 10, when she and the label’s lawyers are expected in court to try to fight the noncompete clause.

In a statement, Carolina Herrera said: “As the court ruled, the noncompete agreement was fair and plainly worded. At all times, Carolina Herrera was faithful to the letter and spirit of our agreement, and we will continue to ethically and forcefully protect our business interests.”

On Thursday morning, Oscar de la Renta said that an official statement would be forthcoming.

Ms. Zerbo noted that this is probably not the last anyone will see of disputes over noncompete clauses in the fashion industry.

“I think we will see more matters like this given that the turnaround time of creative directors is decreasing quite rapidly,” she said. The short stints raise companies’ concerns over trade secrets being spilled to competitors, a worry heightened by the lax intellectual property protection laws in the fashion industry.

Susan Scafidi, a professor at Fordham Law School and the founder of the Fashion Law Institute, agreed, adding that executives are highly aware of how talent can affect sales. “Fashion companies can grow to be enormous economic engines,” she wrote in an email, “but they remain dependent on the creative sparks of their designers — hence the proliferation of noncompetition agreements in industry employment contracts.”

“Whatever the outcome of this case,” she added, “hopefully it will inspire rising stars to read before they sign.”