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Carolina Herrera Is Trying to Keep Laura Kim From Working at Oscar de la Renta in a Very Juicy Lawsuit [Updated]

One of the most illustrious houses in American fashion is suing another.
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When Oscar de la Renta announced in September that Laura Kim and Fernando Garcia (also the creative directors and founders of Monse) would return to the house as co-creative directors, there was little mention of the fact that Kim had been named senior vice president of design at Carolina Herrera earlier in the year — a story that broke on Fashionista.

We assumed she quietly gave notice and that was that, but a lawsuit filed by Carolina Herrera on Wednesday reveals the whole situation was incredibly messy — and still is. As initially reported by WWD, Herrera has sued Oscar de la Renta in the Supreme Court of the State of New York, seeking to block Kim from joining the latter until April. That's a problem, given that Kim and Garcia were set to debut their first collection for Oscar during New York Fashion Week in February, and presumably had already begun working on it.

The suit claims that in joining Oscar, Kim is in breach of the agreement she signed with CH "with the effect of advancing ODLR’s business interests to the competitive detriment of CH’s present and prospective business relations" — and that ODLR also is at fault because it knew of the agreement. The agreement provided that Kim not compete with CH for a period of six months following the end of her employment with CH.

The court has granted a temporary restraining order preventing Kim from working at Oscar until the defendants, Laura Kim and Oscar de la Renta, LLC, can show cause as to why Herrera's request for a preliminary injunction shouldn't be granted.

Asked for comment, a rep for Carolina Herrera provided the following to Fashionista: 

Carolina Herrera is pleased the court today granted a temporary restraining order that upholds the non-compete agreement we signed with our former senior designer. As the court ruled, the non-compete agreement was fair and plainly worded.

At all times, Carolina Herrera was faithful to the letter and spirit of our agreement, and we will continue to ethically and forcefully protect our business interests.

Our focus now remains on continuing to introduce new collections that embody the spirit of timeless elegance and refinement for which Carolina Herrera is known.

That refers to the offer letter, which is included in the court documents obtained by Fashionista, along with Herrera's initial filing and an affidavit from Kim in opposition to Herrera's complaint. From Kim's proposed salary and clothing allowance (!) at CH to tensions at CH over Kim's proposed replacement of Herrera, read on for the juiciest bits.

Kim was only allowed to work at Monse five working hours/week while at Carolina Herrera, per the offer letter: 

Although, during your employment at the Company, your involvement with Monse should not exceed five working hours a week and should not interfere with your duties at the Company.

She also got "a clothing allowance of $20,000 annually at cost at Carolina Herrera NY and 50% of retail price at CH."

Kim is responsible for Herrera's most commercially successful collection to date:

During her time working as Senior Vice President, Design for CH, Kim designed one season’s collection from beginning to end. That season—the Resort 2016 collection—was CH’s most commercially successful collection ever in its 35-year history, based on its combined wholesale and retail success. By comparison, the Fall 2017 collection, which was shown after Kim’s departure from CH and was created by a different designer, has not inspired the same level of commercial orders from clients. 

Kim was under the impression she would become the full creative director of CH, replacing Herrera entirely. The suit claims the position was offered to her by the CEO of CH at a salary of $1 million.

On July 8, 2016, Kim submitted a letter of resignation... Kim explained that if she and CH came to another agreement on her future role, she would simply retract her resignation. Kim made it known to CH that she wanted to be the Creative Director, in effect displacing Carolina Herrera herself.

On or about July 15, 2016, Mr. Kress and Jose Manuel Albesa, the Chief Brand Officer of Puig, which owns the Carolina Herrera brand, met with Kim in the Roxy Hotel in New York City to present her with a written offer for the position of Creative Director of Carolina Herrera. The offer included a salary of $1 million per year, eligibility for an annual bonus of up to $300,000, and a term allowing Kim to spend one day each week working for her own start-up brand, Monse, LLC (“Monse”), among other benefits 

However, according to Kim, Herrera wasn't aware of this.

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Shortly after Ms. Kim started working at CH, she realized that nobody had informed Ms. Herrera that she was being transitioned out, and that Ms. Herrera intended to run CH as if she were the Creative Director. According to my offer letter, I was supposed to be reporting to CH’s president and chief executive officer Francois Kress. However, I soon learned that Ms. Herrera frequently took charge, without objection from Mr. Kress. Indeed, in a 'Fashionista' article published February 26, 2016, Ms. Herrera is quoted as saying, 'The creative director is myself. They [Laura and Fernando] are coming to join me.'

Kim decided to take Oscar de la Renta's offer instead, communicating to CH that it was because the former's offer included the hiring of her design partner, Garcia. Then things started to go sour:

On August 26, 2016, after Kim advised that she did not believe it would be a good idea for her to continue to come to the CH office after an upcoming show, Mr. Kress emailed Kim and Garcia confirming that they were relieved of any obligation to attend CH’s offices going forward. Kim continued to be paid her full salary and benefits during this notice period, including the period from August 26, 2016 through October 8, 2016.

On September 7, 2016, Mr. Kress sent Kim a letter informing her that CH had elected to exercise its option to hold Kim to the six-month non-competition period to which she had agreed. CH began paying her at the agreed-upon 50 percent salary rate, while continuing to provide her with health benefits, effective October 9, 2016. CH continues to make such payments and intends to do so through April 8, 2016, the end of Kim’s agreed upon non-compete period.

Kim added a little more color to that "relief" of obligations.

At this time, Mr. Kress informed me and Mr. Garcia that Carolina Herrera (the person) did not like our designs for the upcoming show [for spring 2016] and that she felt she could finish the collection in a way that was appropriate for her brand. In fact, Carolina Herrera said to me at that time: ‘Nobody knows you and nobody knows that you are here. I am more famous than you and have more powerful friends.’

Kim adds that she was then unable to put her name on the spring 2017 collection she had been working on, which Herrera "substantially revised," and notes that now Herrera is attempting to prevent her from putting her name on de la Renta's fall 2017 collection. She also notes that Carolina Herrera is a "smaller, less well-known and differently marketed fashion company."

Carolina Herrera provided the following example as to why it holds Kim directly responsible for its success in the market over Oscar de la Renta:

Shortly after Kim joined CH, department store Bergdorf Goodman decided to shrink the in-store space dedicated to the ODLR shop, and to give that space to CH to showcase its designs in its own shop. This was directly attributable to Kim’s having joined CH. Prior to Kim’s affiliation with CH, CH efforts to obtain independently identifiable and dedicated floor space in Bergdorf Goodman were unsuccessful

Carolina Herrera basically said in its complaint that it benefited from de la Renta's death:

When one brand suffers—which ODLR did following the death of its eponymous founder in 2014—the other often benefits in a zero-sum manner as its portion of their shared market grows.

A rep for Oscar de la Renta did not immediately respond to our request for comment. We'll be keeping an eye on this case and will report back as it progresses.

Update 12/23: On Friday, New York State judge Jeffrey Oing lifted the temporary restraining order that was preventing Kim from working at Oscar de la Renta in the short term. A final decision as to whether ODLR can employ her before April won't be made until after a hearing on Jan. 10. A rep for ODLR provided the following statement to WWD:

We are pleased with the court's decision today to reverse the temporary restraining order that prevented Laura Kim from returning to our company where she worked for over 12 years before being recruited by Carolina Herrera. We look forward to returning on Jan. 10, 2017, to fully brief the court on the non-compete matter and to more fully answer the claims in the lawsuit brought by Mrs. Herrera and her team.

And a rep for Herrera provided the following:

The company, Carolina Herrera Ltd., understands and appreciates the judge's reasoning for today's decision, which is to ensure the January 10 hearing is the final word on the question of the restraining order. It’s important to note the judge put the opposing parties on notice that if he grants the preliminary injunction, they will be prohibited from using any and all work product they have jointly created if they choose to work together before January 10. We are satisfied with this decision and look forward to continuing to pursue this matter.

Update 1/9/2017: Oscar de la Renta and Carolina Herrera have settled the suit, according to a report by WWD. While terms of the settlement remain confidential, a joint statement from the two companies states that Laura Kim will be allowed to return to work at OdlR, "subject to the conditions agreed upon by the parties."

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