Double Dutch
Von Dutch owners in bitter dispute over hipster brand
Just as Von Dutch, with its street-smart, edgy apparel and accessories, has reached the peak of its popularity as one of the West Coast’s premier hipster labels, the company’s original founders have become mired in a bitter dispute over ownership of the brand.
Von Dutch is currently red hot with celebrities and young clubgoers. Von Dutch apparel, including custom-made jeans that can cost up to $1,500 a pair, is sold in specialty boutiques across the country.
The Von Dutch brand takes its name from a ’50s-era artist who is well known in the custom-car community but whose name does not have mainstream resonance.
“Most girls who wear Von Dutch accessories couldn’t tell you who Von Dutch was, but if you ask an automotive enthusiast, chances are they know who the man is behind the brand,” said Justin McCormick, a consultant at the Petersen Automotive Museum in Los Angeles. “The real Von Dutch was a beatnik who was best known as a pinstriper but was also an amazing artist who, through the clothing line, has been elevated to being a pop-culture icon.”
But to the fashion public at large, the name is simply a widely popular brand emblazoned on baseball caps, patches and T-shirts worn by celebrities such as Limp Bizkit front man Fred Durst, Gwen Stefani and Beyonceacute; Knowles.
The company’s headquarters and flagship store are on Melrose Avenue in Los Angeles. There is also a franchised retail store in Beverly Hills, Calif., owned by members of the Marciano family.
Amid all this success, three principals of the company are fighting for a stake in the brand, which industry sources estimate to be worth about $20 million.
On June 6, apparel maker Robert Vaughn, a former partner in Von Dutch Originals LLC, filed suit in Los Angeles Superior Court, accusing Von Dutch principals Michael Cassell and Tonny Sorensen of unfair business practices, fraud and breach of fiduciary duty.
The summons complaint alleges that Cassell and Sorensen tricked Vaughn out of company ownership by claiming the business was “going under” and persuaded him to relinquish his interest in the company.
Vaughn is seeking general and punitive damages, as well as 20 percent of the current value of the company.
Vaughn said he met Cassell through the surf industry circuit and worked briefly at Cassell’s apparel company Bronze Age Inc. until it went out of business. He said the two then secured the licensing rights to reproduce signature designs and use the trademark name of the late custom-car artist Von Dutch (a.k.a. Kenny Howard) in 1996.
Vaughn said they signed a licensing agreement to use the trademark with Howard’s daughters, Lisa and Lorna Howard, and paid royalties to the sisters until 1999, when Cassell and Vaughn procured a loan from Japanbased Ueno Shokai Co. Ltd. for $1 million and bought the trademark for $450,000.
According to Vaughn’s complaint, the duo renamed the company Von Dutch Originals for the purpose of marketing and selling apparel. Cassell was the majority owner with 80 percent, while Vaughn owned 20 percent of the company.
Vaughn’s complaint states that Von Dutch Originals was in a poor financial condition when Sorensen decided to invest in the company in June 2000. The suit claims that Cassell and Sorensen “conspired to defraud” Vaughn into giving up his 20 percent interest in the company by “failing to disclose the pending investment by Sorensen and misrepresenting the financial prospects for the company.”
Furthermore, the complaint claims that Cassell and Sorensen told Vaughn they would cancel his financial liability in the company and allow him to license sportswear and surfwear under the VD Kustoms trademark if he would relinquish his ownership stake in the company. He said he produced the licensed line for about a year until Cassell and Sorenson terminated the licensing agreement.
Los Angeles–based attorney Steven Lowe, who is representing Vaughn, said his client is seeking additional damages from Von Dutch Originals for breach of good faith and fair dealing. Lowe said Von Dutch Originals unfairly competed with VD Kustoms and misappropriated monies fpaid to the company by retailers, such as junior retailer Tilly’s, for VD Kustoms merchandise.
According to Lowe, Vaughn contributed a “substantial amount” of funding to Von Dutch Originals and helped secure the celebrity following for the brand before the company hit it big. Vaughn may be able to claim damages in excess of $1 million, according to Lowe. Currently, Vaughn is getting ready to launch an edgy streetwear collection for men and women called F@$* the World.
Meanwhile, in fall 2002, Cassell initiated litigation against Sorensen regarding his interest in Von Dutch. Cassell charges that Sorensen misrepresented an investor’s agreement and has illegally claimed all rights to Von Dutch. “We are in arbitration in an equitable proceeding to set aside this slick and unconscionable agreement, among other things,” said Cassell’s attorney, Robert Ring of Ring & Green in Century City, Calif. The hearing is currently scheduled to take place at the end of September at the arbitrator’s office in Century City.
In response to Vaughn’s lawsuit, Ring said: “This is just a minor side show in the Von Dutch dispute. After initial review of the matter, it appears to be meritless.”
Sorensen could not be reached by press time. —Claudia Figueroa.
