Urban Outfitters has bagged a win in a lawsuit related to the origins of its rental offering, Nuuly.
In 2020, Le Tote, the now-bankrupt rental service, brought a lawsuit against Urban Outfitters, alleging it had violated the Defend Trade Secrets Act and the Pennsylvania Uniform Trade Secrets Act, as well as accusing it of breaching an NDA the two entities signed, unjust enrichment and unfair competition.
The complaint alleges that Urban used “highly valuable confidential information and trade secrets belonging to Le Tote” in the process of developing Nuuly, which it launched in 2019.
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The ex-Lord & Taylor owner claimed Urban attempted to acquire it, but when the deal came to a standstill, it relied on its proprietary information, which Urban acquired through site visits, extensive documents provided by Le Tote and more during the flunked acquisition.
Le Tote stated it turned over information about its reverse logistics, warehousing, algorithms and more to Urban while the two broached the possibility of an acquisition, alleging in the initial complaint that, “With its Roadmap from Le Tote in hand, Urban then proceeded to launch its own competing fashion rental subscription business, Nuuly.”
That, it said, was evidence that Urban had breached the NDA the two signed and used Le Tote’s trade secrets to turn profit.
The jury disagreed.
After a unanimous jury verdict in favor of the company, a judge in Pennsylvania’s Eastern District Court awarded a favorable judgment to Urban Outfitters.
Urban Outfitters maintains that it created Nuuly without unlawful assistance from Le Tote.
“URBN has been successfully building billion-dollar fashion brands from the ground up for more than 50 years. We built and launched Nuuly in 2019 the same way we’ve created all our beloved and industry-shaping brands—with creativity, integrity, and a highly experienced internal team,” a spokesperson told Sourcing Journal via email. “We appreciate the judge and jury fairly evaluating all evidence presented and wrapping this trial up quickly so all parties can move forward.”
Copies of the jury’s notes and verdict could not be downloaded or viewed as of Wednesday.
Saadia Group purchased Le Tote and Lord & Taylor after the two filed for Chapter 11 bankruptcy 2020, but the rental subscription company appears to be effectively defunct; its website has been shut down, and subscribers have taken to blogs and X to complain about their inability to cancel their membership. Le Tote has an “F” rating from the Better Business Bureau.
Saadia’s Lancaster, Pennsylvania, distribution center has been shuttered, per the Federal Motor Carrier Safety Administration (FMCSA) website. Like Le Tote, its website can no longer be reached.
Even as Le Tote and Saadia Group flounder, Nuuly has continued to churn cash for URBN. In its Q4 2023 earnings results, the company cited “significant growth in subscribers” for Nuuly, which saw net sales increase by $25.5 million year on year between 2022 and 2023. In February, Nuuly also opened another fulfillment center outside of Kansas City, Missouri.
Counsel for Le Tote did not return Sourcing Journal’s request for comment, and Le Tote and Saadia Group could not be reached to comment.
