David versus Goliath?
In one corner is Richard Kirschenbaum, whose family founded The Shoe Box chain in 1954. And in the other corner is his former employer G-III Apparel Group Ltd.
The two are now locked in a lawsuit that began when Kirschenbaum in March sued G-III for a breach of contract claim, among other alleged assertions for relief, seeking the payment of a bonus and furlough compensation that he said was owed to him. But G-III’s answer and counterclaims also raise questions over whether Kirschenbaum has any valid claims at all.
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Kirschenbaum’s complaint
G-III acquired the parent company of the Donna Karan and DKNY brands in December 2016. G-III recruited the shoe executive nearly one year later at an annual salary of $400,000, Kirschenbaum said in his suit, adding that he was given the responsibility of “straightening out” the shoe division and growing the business.
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But it’s the alleged nonpayment of annual bonuses in the executive’s employment agreement that’s at the heart of the complaint that was filed in a state court in New York in Nassau County.
The former shoe executive said in the court document that when the COVID-19 pandemic started in March 2020, there was talk about furloughing employees, including himself and others from the Shoe Division.
But he also said he worked during the furlough because of a shipment of shoes from China, although he had to use his former Shoe Box retail space to accept the cartons because G-III offices were closed. He alleged that he wasn’t paid for his work during the furlough period that ran from March 16, 2020 through June 12, 2020.
And due to a disagreement concerning the disclosure of certain information connected to G-III’s business, Kirschenbaum said he was fired on Dec. 22, 2022. He returned to work in January 2023, but then was terminated again in March 2023. Kirschenbaum also claims he was owed bonuses for the fiscal years ending Jan. 31 for 2019 through 2024.
G-III’s answer and counterclaims
G-III filed an answer that essentially denied its former employee’s allegations, except for a few factoids, such as the admission that its offices were closed for a period due to COVID and that Kirschenbaum was furloughed. But it also threw in some counter-claims of its own, noting that the former shoe executive was fired “for cause” and that he breached his “duty of loyalty and/or breach of fiduciary duty owed to G-III.”
G-III said Kirschenbaum had access to confidential information, including pricing information, that if disclosed to other firms would “undercut any competitive edge” the company had developed in the fashion apparel market. It also charged that in December 2022, Kirschenbaum “impermissibly forwarded” Excel spread sheets containing proprietary pricing information for shoe prototypes to Seth Schwinger, president of Millennium Footwear. (Millennium is a vendor that acts as an intermediary between companies factories that manufacture shoes.) That move gave Millennium an “unfair competitive advantage” in bidding for G-III’s business, as well as the risk that Millennium could share the pricing sheets with other firms, G-III said in its court document.
G-III in its counterclaims also alleged violations of the company’s employee handbook, and certain provisions in connection with “confidentiality, conflicts of interest, and outside employment.” Alleged facts cited by the apparel giant include a consulting agreement between Kirschenbaum and Vida International Shoes Inc. — while he was employed at G-III — that resulted in a license agreement between Vida and Kenneth Cole Productions in 2021.
Another example cited was a draft consulting agreement for services that Kirschenbaum sent to Xcel Brands, an apparel fashion competitor, in 2021. At the time, he was still employed at G-III, and was also a board member of Xcel between 2018 and 2020. G-III said Kirschenbaum neither disclosed his board membership nor that he received compensation for his services. And G-III further said Kirschenbaum used his company email account to conduct business on behalf of Shoe Box, while also copying his Shoe Box email account. G-III said the former executive told the apparel firm when he was hired that his son had taken over running the family business.
G-III said Kirschenbaum was hired back temporarily in 2023 for three months to transition him to a non-working capacity after he pled for help claiming he wanted to avoid a bankruptcy filing due to debts owed. The apparel firm said he received a salary, but no work responsibilities and no access to G-III’s trade secrets.
In Kirschenbaum’s reply, he essentially denied the allegations in the counter-claims, or referred to certain statements to the trier of fact for interpretation. Kirschenbaum admitted to a factoid in the counter-claim that he “agreed” to try to assist Vida in connection with obtaining a certain license from Kenneth Cole Productions, that Vida paid him $490,000 and that he did send a draft of an agreement to Xcel Brands.
He also admitted to sending certain documents to Millennium’s Seth Schwinger, but did not disclose the nature of that paperwork. He also admitted to requesting that G-III re-employ him and that he was rehired in January 2023.
And as for G-III’s charge that Kirschenbaum was essentially soliciting for Shoe Box, the shoe executive said he is “not responsible for operating his sons’ business.” There is also an indication in the response that the shoe executive had filed a personal bankruptcy petition.