Iconix Wins Case Against California Jeans Maker
After a long and drawn-out lawsuit that lasted nearly three years, Iconix Brand Group Inc. won a jury verdict in its case against Los Angeles denim king Hubert Guez.
In the lawsuit, Iconix claimed that Guez carried out “schemes to deprive plaintiffs of millions of dollars through fraud and blatant acts of self-dealing over several years.”
On April 11, the jury awarded Iconix $45 million in compensatory damages, with a punitive-damage hearing scheduled soon after.
The jury agreed with every claim in the lawsuit filed Aug. 5, 2004, by Iconix, the New York company that owns several brands, including Rampage, Candie’s, Joe Boxer, OP, Badgley Mischka, Mudd and Bongo. The jury did not uphold any counterclaims filed by Guez.
Calls to lawyers for both parties in the lawsuit were not returned.
Court documents show that in October 1998, Iconix and Guez became equal partners in a company called Unzipped Apparel. Under the agreement, Guez made and distributed Bongo jeans at his Mexican factory under a license granted by Iconix, whose corporate name was Candie’s until 2005.
According to court papers, Iconix had a put-agreement with Guez, also president of Azteca Productions International Inc., to buy his 50 percent share after three years. The purchase price was to be set at 50 percent of 7.5 times of EBITDA (earnings before interest, taxes, depreciation and amortization) for fiscal 2003.
Guez allegedly told Iconix that the joint venture was expected to earn $8 million in fiscal 2003. Iconix said it never knew that this amount was allegedly inflated.
In 2003, Iconix agreed to buy Unzipped for nearly $20 million, paying $8.6 million in Iconix common stock and $11 million in preferred stock redeemable in 10 years, the lawsuit said. Guez was also given a seat on Iconix’s board of directors , which he held until March 10, 2004. —Deborah Belgum
