An exclusive three-year deal between mall retailer Charlotte Russe and premium denim brand People’s Liberation came to a contentious halt this week as the firms accused each other of breach of contract.
The dueling suits stem from a December agreement that called for Charlotte Russe to carry the People’s Liberation line starting with the 2009 back-to-school season. Shortly after the firms made the deal, Charlotte Russe put itself up for sale and, this month, Boston-based private equity firm Advent International Corp. took the company private for $380 million.
In a breach of contract and fraud suit filed Monday in Los Angeles Superior Court, San Diego-based Charlotte Russe alleged that during negotiations People’s Liberation misrepresented the quality of merchandise it intended to deliver and made false promises, such as its ability to provide the services of creative director Marcella Lindeberg.
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People’s Liberation filed its own breach of contract complaint in the same court on Tuesday. The Los Angeles-based vendor alleged that shortly after the sale, Charlotte Russe’s new ownership said it was not interested in third-party brands and, on Oct. 23, sent a contract termination notice. People’s Liberation contends the notice contains false allegations that are “legally insufficient and [that] violate the express terms of the agreement.”
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An Advent spokesman said the firm does not comment on litigation involving its portfolio companies. Charlotte Russe did not return a call seeking comment.
Colin Dyne, chief executive officer of People’s Liberation, said he hadn’t been served with the Charlotte Russe complaint but was aware that it had been filed. He called it “basically the carbon copy” of the termination letter Charlotte Russe sent his firm.
According to the People’s Liberation suit, the contract called for Charlotte Russe to order at least $65 million worth of goods over three years. The firm is seeking $59 million it says it is owed on the contract as of Sept. 30 and other, unspecified damages.
Charlotte Russe is seeking any funds it provided People’s Liberation; compensatory, general and special damages of no less than $25,000; punitive damages, and other relief.