The week in fashion law (volume 2 of 2): fashion outlaws; let's (not) make a deal; fashion ethics; international development(s)
As promised, LAW OF FASHION now brings you the second installment in its fashion law roundup for the week. Since this writer covered intellectual property, advertising, and free speech-related stories yesterday, today's theme is a non-descriptive "everything else"...
"Lauren Odes, a data entry professional, claims she was fired because she was too busty and dressed too provocatively for her Orthodox Jewish employers at wholesale lingerie company Native Intimates.... [H]er busty shape was allegedly unacceptable to her Native Intimates supervisors, who deemed her figure 'distracting.' Even after Odes agreed to purchase a long sweater to cover up, management fired the 29-year-old blonde. Odes' employers reportedly told her, 'You are just too hot for this office.'...
Said [Odes' attorney Gloria] Allred at yesterday's press conference, 'No woman should be told that her breasts are too large, her body too appealing and her appearance too attractive for the male leadership of that company,'..."
"Subsequent to the Supreme Court’s 5-4 decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), rejecting per se treatment of resale price maintenance, a groundswell erupted of outrage and threats of reprisal by federal and state legislators. On the federal front, several efforts to legislatively overturn Leegin have either died in committee or on the floor....
The failure of federal and state governments to move forward legislatively on resale price maintenance, and the thin enforcement efforts of per se treatment by state attorneys general, may suggest a gradual death knell for per se treatment of resale price maintenance. [HOWEVER,] this conclusion must be heavily caveated on a state-by-state basis (particularly New York, Illinois and California), where [active] state attorneys general may [invoke state consumer protection statutes in an effort to prohibit the practice.] As a result, companies should proceed with caution and consult counsel before setting up resale policies...."
"At Kim's Holly Salon in Crown Heights, manicures for men were $8 while women paid $6. At Freckle Skin and Hair in Greenpoint, haircuts for men used to be a good $10 cheaper than for women. And until recently, a wax at Vanilla Hair Spa on the Upper East Side was priced differently for men and women. No more.
The salons are among 138 businesses that have been hit this year for violating a little-known provision that has many pulling their hair: gender-pricing discrimination. The majority of violations so far this year—103—were issued to salons and barbershops...."
"A mother who allegedly coerced two children into helping her shoplift clothing and accessories from an Old Navy store on Saturday night refused to pick up her 11-year-old daughter from police after the girl was busted, the Detroit News reports.
Police officers told the paper that a 49-year-old mother enlisted three people -- her daughter, a young boy, and a 61-year-old woman -- to help her shoplift clothing and other items from an Old Navy in Troy, Mich.... The woman is now wanted for retail fraud, child neglect and contributing to the delinquency of a minor...."
LET'S [NOT] MAKE A DEAL/'JUST SAY NO' TO AN IPO
"Remember those Elsa Peretti for Tiffany heart and bean necklaces from the early 2000s? We had one. All our friends had one. Stores made cheap knockoffs. Emma Watson wore one. They were the rage.
But the days of stylized starfish jewelry might be behind us, if Tiffany's recent bid to purchase the rights to Peretti's intellectual property falls through. Women's Wear Daily reports that Peretti is considering ending her licensing agreement with the esteemed jewelry company, according to a filing with the Securities and Exchange Commission on Wednesday...."
See also “Tiffany May Lose Elsa Peretti License, Has Mixed Quarter” (JCK Magazine): “Since 1974, Tiffany has had the sole license for Peretti’s designs. Current Peretti designs sold by Tiffany include the 'Diamonds by the Yard' collection and teardrop necklaces. But now, Peretti, 72, has expressed interest in retiring from the relationship and has authorized her advisors to look into possibly selling her intellectual property to Tiffany….”
"The women's clothier Talbots Inc. said Friday that a deadline expired without a deal in its exclusive talks about being acquired by a private equity firm and that it will actively pursue other options. Its shares plunged by more than a third in morning trading.
The retailer said that Sycamore Partners told the Massachusetts-based company that 'it is not prepared to execute a transaction at this time.'..."
"Private equity firms have put their best foot forward and submitted first-round bids of up to £120m for Dr Martens, the British footwear brand....
The owner of Dr Martens hired advisers at the investment bank Rothschild earlier this year and first-round bids were due last week. Private equity firm, Electra Partners, is thought to be among the suitors but others are known to be looking at the company...."
"Versace is in expansion mode but for now has no plans to take on an investor or go for an initial public offering. The Italian fashion house returned to profit last year and the Versace family is eyeing ways to grow globally — including the possibility of an IPO at some point in the future. But in the meantime, the owners have no intention of relinquishing control even as they look for ways to fund further growth...."
"London-based luxury jeweler Graff Diamonds, which kicked off its initial public offering (IPO) roadshow on Monday, is expected to get a weak response from investors due to its “risky” business model and lack of brand awareness in Asia, market experts told CNBC....
In 2011, the company’s top 20 customers accounted for 44 percent of revenue, with one individual alone making up 13.2 percent. 'This business model is not typical of companies looking to go public, the risk is high. I have doubts that it will get a lot of interest,' Jiong Shao, Chief China Strategist, Macquarie said.... Besides a limited revenue model that could deter investors, Shao says the market is also not in a position to welcome a big offering. The jeweler plans to list on June 7...."
See also "Graff Diamonds IPO gleams but doesn't dazzle" (Reuters): "Whereas the likes of LVMH or Prada rely on expanding wealth, Graff can benefit simply from growing [income] inequality. That helps explain its 25 percent revenue growth over the past three years. Against that, investors have to weigh unusual risks. Sales could prove lumpy, since Graff gets around half of its revenue from just 20 customers. Billionaires, especially in Asia, can fall from grace alarmingly fast. There’s also the risk of false confidence. The super-rich are often touted as shock-proof spenders, but that was proven wrong in 2009, when Graff’s sales fell by 25 percent...."
But it appears at least two companies are sufficiently infatuated with each other to seal the deal…
"Yoox SpA (YOOX), an Italian online fashion retailer, rose the most in 2 1/2 years in Milan trading [on Thursday] after confirming that it’s in discussions to set up an e-commerce joint venture with PPR SA. (PP)
The venture will run the online sales of all of Paris-based PPR’s luxury brands, including Gucci, a person with knowledge of the talks told Bloomberg News yesterday, asking not to be named because the matter is private. No definitive agreement has been signed, Yoox said [on Thursday] in a statement...."
"[Wesley Card, CEO of The Jones Group, Inc., spoke to the company's shareholders on Thursday, noting the company's 4% increase in sales in 2011 -- and its 5.8% decrease in net income in the same year. He explained that the company] has identified five strategic pillars to achieve their goals. They consist of revitalizing core brands, investing in emerging brands, expanding its international footprint, improving direct-to-consumer performance and building operational excellence....
One shareholder asked Card if the company has resolved its issues with People for the Ethical Treatment of Animals, and Card replied, 'We no longer use fur in any of our products.'..."
"It’s official: Fish pedicures aren’t just a bizarre beauty ritual with shady animal-welfare considerations, they’re also downright dangerous to your health, according to the U.S. Centers for Disease Control and Prevention. On Wednesday, the federal agency published a report by U.K.’s Centre for Environment, Fisheries & Aquaculture Science, which examined the types of bacteria associated with Garra rufa, an inch-long toothless carp that nibbles away at dead skin. Native to Southeast Asia, the so-called “doctor fish” soared in popularity in 2008, when salons across the nation began offering them as an alternative to razors for scraping away calluses...."
"Last night, I asked Cindy Crawford if she had any reaction to Vogue's recent decision to stop hiring models under the age of 16 (and models who, in Vogue's words, "appear to have an eating disorder"). Unlike some of her colleagues, who have embraced the measure, Crawford's response is more of a shrug....
'[T]hat was never one of my issues, so. I think that the fashion industry is in the consumers' hands. Because if they buy into it, nothing will change. If consumers don't like it that models are too skinny, or too young, and they don't buy the magazines, then believe me, then the magazines will have to change.'...
Crawford began modeling locally in Chicago at 17, and briefly attended college (Northwestern, on an academic scholarship) before moving to New York and beginning her international career at age 20. That's older than most models, who typically begin working in their early teens, many of whom are lucky if they can find time to earn their GED...."
"Plus-size model Candice Huffine made the cover of Spain's S Moda magazine [see image at the top of this post] — naked, as we see so often with plus-size models.... Seeing a wider variety of body types in fashion is good, obviously, but associating larger women with sexual availability is problematic...."
"More than 5,000 Cambodian garment workers failed to reach an agreement with their employers on Tuesday after 11 days of striking.... Employees, [one worker at the factory "SL Garment Processing"] said, are regularly denied sick leave and ordered to work up to 16-hour shifts, including on days off. Although long shifts are compensated with overtime pay, SL Garment Processing was breaking Cambodian labor laws by forcing employees to work against their will, [the worker] added.... According to its website, the garment factory supplies clothing to more than two dozen international brands, including J.Crew, Old Navy, Gap, Banana Republic, H&M, and Levi’s."
[Ed. LAW OF FASHION cannot, of course, corroborate either the workers' or the factory's assertions; see the disclaimer at the bottom of this and every post.]
"Following hot on the heels of H&M's sustainable Glamour Conscious Collection, high street retailer Topshop has teamed up with eco fashion brand Reclaim To Wear to create a debut upcycled capsule collection made entirely from discarded materials.
Materials including surplus stock and production off-cuts have gone into the line, which comprises on-trend pieces including ombre bleached denim shorts and color block panel mini and maxi dresses. On sale from June 8 at the retailer's London Oxford Circus store and online, the line aims to encourage sustainability within the fashion industry...."
"The French luxury goods giant is launching an internal 'Green Week' in tandem with a conference kicking off in Brussels on Tuesday under the title 'Every Drop Counts.'
LVMH said its aim is to 'encourage its more than 90,000 employees to adopt state-of-the-art environmental practice.'
'This year, LVMH is focusing on techniques to reduce its footprint in water-intensive sectors, including vineyards, cosmetics and perfumes,' the company added...."
As the fashion conglomerate continues to wave its green flag with pride, it should keep in mind this guidance from the FTC (an excerpt from the so-called "Green Guides," briefly discussed in this July 2011 LOF post):
(a) General environmental benefit claims. It is deceptive to misrepresent, directly or by implication, that a product, package or service offers a general environmental benefit. Unqualified general claims of environmental benefit are difficult to interpret, and depending on their context, may convey a wide range of meanings to consumers.
In many cases, such claims may convey that the product, package or service has specific and far-reaching environmental benefits. As explained in the Commission’s Advertising Substantiation Statement, every express and material implied claim that the general assertion conveys to reasonable consumers about an objective quality, feature or attribute of a product or service must be substantiated. Unless this substantiation duty can be met, broad environmental claims should either be avoided or qualified, as necessary, to prevent deception about the specific nature of the environmental benefit being asserted."
There's a lot more where that came from (and more, still, in other areas of the law); however, for guidance on that, you'll have to retain my firm -- via a formal, countersigned engagement letter, of course...)
"Different cultures, various definitions and a global market make it difficult for regulation of cosmetic products in Europe and the US to properly align, but strides are being taken in order to sufficiently protect consumers around the world....
Speaking of the differences between the two regions, [Director General of the trade association Cosmetics Europe Bertil] Heerink said that the endpoint of scientific investigation in Europe is regulation; a concept that Europe is used to….”
"Sometimes U.S. stocks are the natural way to play a business trend in the emerging world because they dominate a particular market. In other circumstances, we suggest the U.S. competitor as a proxy on a hard-to-reach sector. The global cosmetics industry gives us examples of both....
AVP [Avon] has turned its toehold in Latin America into a $1 billion-a-quarter business by spending a fortune on marketing and retailer incentives.... [Ed. The article's writer then mentions the 'bribes' Avon 'is accused of distributing in Asia,' and queries whether these practices extended to Latin America.]
In China, the bid is simplicity itself. Local cosmetics industry manufacturers like T Joy have aligned themselves with global partners, but even with foreign backing they remain fringe players.... Right now, the real winner in China is well known to Western investors: PG, which has a staggering 62% of local shampoo sales sewn up among its top three brands, and a significant presence in several other key categories. [As a result,] PG has amassed maybe 19% of the $10 billion Chinese personal care and cosmetics market...."
"The US is currently negotiating an ambitious agreement to enhance trade and investment with [several] other nations.... Last summer, the US announced it had tabled an unprecedented proposal in a chapter on e-commerce in the TPP: binding, enforceable language obligating TPP countries not to block the cross-border transfer of data over the Internet, as well as a binding obligation that a TPP country cannot require a company to locate its data servers in its territory as a condition of doing business there. Other provisions in the e-commerce chapter according to the Office of the US Trade Representative (USTR), which has yet to publicly release the legal text, address customs duties in the digital environment, authentication of electronic transactions, consumer protection, and treatment of digital products....
[The TPP's so-called 'data flow' provision arguably] has significant implications due to differing national information privacy and data security regimes. In particular, recent accounts indicate that Australia and New Zealand are concerned about the TPP proposal due to potential conflicts with their laws. [It remains unclear, for example,] whether data transmitted to another TPP country would be subject to laws such as the PATRIOT Act in the US that could breach the privacy of its citizens...."
"White House press secretary Jay Carney pushed back strongly against Mitt Romney's record on Chinese trade, saying that he has flip flipped on the issue: 'Gov. Romney wasn't always for enforcing trade laws against China. In his book, Gov. Romney attacked the President for standing up for American workers and businesses by enforcing trade law against China, even calling it 'bad for the nation and our workers."'...
Obama 'has been extremely consistent and firm when it comes to enforcing trade laws,' Carney said...."
"[For its latest catalog,] J. Crew crew headed to Bali, where it photographed the latest spring looks against a backdrop of ancient temples and the village of Ubud. The team also paired their spring models with local Balinese children, 'our littlest local friends,' wearing traditional religious dress on the steps of a thousand-year-old temple.... But some might find J. Crew's 'Bali Adventure' slightly off-putting. As one Instagram user (who Instagram'd the new catalog cover) noted, 'Come on, J. Crew. Accessorizing with brown kids is so 2010.'
The sentiment echoes critiques of Donna Karan's recent ad campaign, which featured Adriana Lima modeling Donna Karan duds in the Haitian town of Jacmel with several local children huddled in the background...."
"Last night, a panel discussion at the Soho House called 'Design Africa' drew a significant crowd, including Edun founder (and wife of Bono) Ali Hewson, Julie Gilhart, and Barneys's new senior fashion director Tomoko Ogura.... [Participants] discussed whether Africa's apparel industry would be 'the next China' (known for competitive prices) or the 'the next Italy' (known for craftsmanship).
Moderator and Essence editor-in-chief Constance White pointed out that a great deal of Italy and France's 'prestige value' comes from government-sponsored promotion, and she asked whether African governments should go the same route....
Passion Projects’ Bridget Russo, who produced the event, said the imminent expiration of a fashion-friendly trade policy for brands producing in Africa made the conversation even timelier. The provision allows brands to import fancy foreign fabrics to lesser-developed African countries without paying duty, making places like Lesotho attractive to clothing companies...."
"The [Indian] government imposed a 50% entertainment tax on ramp shows organised by the Fashion Design Council in India (FDCI) a couple years ago. The fashion community was very upset and questioned the relevance of the tax. To them, fashion shows are not entertainment and to call them that is an insult to their craft. The law provided for an exemption, which was requested by the FDCI between October 2008 and March 2009, but on 10 September 2009, the government rejected the request for 100% exemption from the tax on all of the FDCI’s fashion shows.
The Delhi High Court was [asked to rule on the issue], with the hope that it would find for the FDCI, however, to add insult to injury, the Delhi High Court recently declined to interfere, leaving the government to enforce the tax. Judicial review was only limited to the examination of the decision-making process. The court stated: 'Whether to grant exemption to the fashion events from entertainment tax or not is a discretionary power granted to the Government of NCT of Delhi.'... The FDCI is anticipating a meeting with the Entertainment Tax Department, after which the organisation will decide on the next steps...."
"German sportswear and equipment maker Adidas AG filed a criminal complaint against the former chief of its India operations and another former senior employee for alleged financial and commercial irregularities...."
"The California State Teachers’ Retirement System, the largest teachers’ retirement fund in the country and known as CalSTRS, filed an important lawsuit this month against 27 current and past executives and directors of Wal-Mart Stores Inc., the world’s largest employer.
The case alleges widespread corruption and bribery at the company’s Mexican subsidiary. Last week, the company said it was expanding an internal inquiry to include other subsidiaries. The Justice Department and the Securities and Exchange Commission have begun parallel inquiries [primarily under the Foreign Corrupt Practices Act ('FCPA')]. This suit, along with those investigations, could help ensure that the company reckons with what it did wrong and fixes its broken corporate governance...."
The way events are unfolding, Wal-Mart might be interested in this advice from Corporate Counsel on “Ways to Build Credibility During Government FCPA Investigations.”
[SOME OF] THE RICH GET RICHER; EVERYONE ELSE, WELL...
"Fashion houses like Chloe and YSL create scents inspired by [a certain romantic city in France], and so does Paris Hilton–only her inspiration is herself. The heiress’s latest scent Dazzle, which will be sold in a pink diamond-inspired falcon with platinum jewel-bedecked cap (naturally), is meant to express her personality....
The fifteen scents [Ms. Hilton] already has with marketer and distributor Parlux is believed to be worth $1.5 billion, according to WWD, and it is predicted Dazzle will generate at least another $20 million...."
"[A]n heiress [has failed in her attempt to] adopt her 65-year-old ex-husband to increase her family's claim to a billion dollar inheritance.... [B]ecause Susan Gore and [ex-husband] Jan Otto had three children, while each of her four siblings had four, Susan's children stood to inherit fewer shares [her family's company]....
Delaware's Supreme Court ruled on Tuesday that the unconventional adoption did not entitle the man to inherit a share of the Gore-Tex waterproof fabric fortune.
Heirs to the founders of W.L. Gore & Associates Inc of Newark, Delaware, have fought for years over how to divide their stake in th e privately held company, which has $3 billion in annual revenue...."
"The aspirational/symbolic buyers that most luxury marketers are chasing have all but disappeared in this economy, according to one of the leading luminaries in the luxury marketing world.
While the upper-echelons of the wealthy have not drastically pulled back their spending amid the Euro crisis and weak U.S. market, those earning between $150,000 and $400,000 per year largely disappeared as luxury consumers, claims Greg Furman, founder and chairman of The Luxury Marketing Council, New York. 'Many contend the middle class is rapidly disappearing, sadly so,' Mr. Furman said...."
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