Rachel Roy has a bit of a fashion business nightmare on her hands at the moment. Just last month, Jones Group, which produces and has a 50 percent stake in Rachel Roy, decided to suddenly stop producing her designer label. A source within the company said the collection was not in line with Jones's overall strategy.
Since then, Jones Group has officially been acquired by Sycamore Partners, and, apparently, has sold Roy's brands and trademarks to Bluestar Alliance (the deal has been rumored since January) without Roy's permission. So, Roy is suing.
The lawsuit was filed April 11 -- the same day Sycamore announced the completion of its acquisition of Jones, and in it she claims Jones committed a breach of contract by selling the business without her approval, that it entered into the original agreement with Roy in 2008 under "false pretenses," and that it has disregarded their agreement that "Roy would at all times retain full creative control over the designs that were to be sold under her name, and would have exclusive approval rights over the use of the Trademarks."
It also says that Roy was never made aware that Jones thought it had the right to sell her brands without her consent, and that Roy wasn't represented by a lawyer during their initial negotiations. And regarding Jones's decision to discontinue Roy's designer line, the suit alleges that Jones "has also been working to eviscerate one of Ms. Roy’s brands -- the Rachel Roy designer-line brand -- by abruptly shutting down its operations, firing the personnel that run the business and stonewalling all efforts by Ms. Roy to continue to conduct business." Jones has allegedly also gone so far as to refuse to respond to Roy's communications, instructing Roy's employees not to speak to her and denying Roy access to her sample room.
Neither Sycamore nor Bluestar is named as a defendant in the lawsuit, however, the documents allege that Sycamore wanted Jones to “purge the Rachel Roy business,” and that Jones went ahead with the Bluestar deal despite the fact that there were other parties interested in Roy's business that would have honored her approval rights.
Roy is seeking a declaration that Jones has no authority to sell her business, a recession -- or undoing -- of their agreements (since Jones already breached them), as well as monetary damages.
A rep for Sycamore Partners wouldn't confirm the sale to Bluestar Alliance.