Are Lawsuits Affordable Luxuries?

c.2014 New York Times News Service

When a French labor court finally ruled last week against designer John Galliano in his wrongful-dismissal case against the house of Dior and Galliano (which is owned by Dior) — a case that dates back more than three years — the symbolic, almost-comical amount of 1 euro that he was ordered to pay suggested that a certain message was being sent to both sides: Enough is enough.

Indeed, that the French court felt it necessary to end this messy squabble (albeit with a ruling that Galliano may yet appeal) with a bit of “a pox on both your houses” condemnation may be a forewarning not just to the parties in this specific dispute, but to the French luxury industry itself.

For the Galliano/Dior dispute is only one of several recent examples of this once-media-shy sector airing its dirty laundry via the legal system.

For the last three-plus years, after all, the three major French groups — Kering, LVMH and Hermès — have been duking it out in the courts over a variety of bad-behavior claims on the parts of one another or their employees, an uncharacteristic display of public acrimony that has served to paint none of them in a particularly glistening light.

First, in 2011, came the Dior/Galliano implosion, wherein Galliano, then the creative director, was fired, charged with making anti-Semitic comments in a French bar during a drunken rant. Galliano was convicted of making “public insults” and given a suspended fine of 6,000 euros ($8,415). Less than two years later, he sued Dior and Galliano for wrongful dismissal, asserting, effectively, that they were complicit in his destruction.

Then, in 2012, LVMH and Hermès International filed suits against each other incited by LVMH’s 2010 stealth acquisition of a chunk of Hermès shares — and its continued effort to build equity. Hermès charged LVMH with “insider trading, collusion and manipulating stock prices,” and LVMH then accused Hermès of “blackmail, false accusations and unfair competition.”

And last year, Kering, the French conglomerate that owns Gucci and Yves Saint Laurent, among numerous other brands, sued Nicolas Ghesquière, the former Balenciaga creative director, accusing him of breaking the contractual agreement surrounding his departure by making derogatory comments about the group in an interview with System magazine, an arty inside-fashion publication.

The cases have been wending their way through the French judicial system ever since, giving the actions, and gossip, in question a life far beyond the actual events involved. As a result, while there’s no question that big companies have a right to protect their brands, and individuals to protect their rights, it’s hard not to wonder who is actually being punished here: (a) the defendant; (b) the plaintiff; or (c) both?

Because the answer seems, with some perspective, to be (c), such visible tussling is traditionally uncommon in luxury, where discretion and exclusivity and the mystique of being in the know are woven into the identity of the industry, where the “dream” takes precedence over any grubby reality.

Sure, there are exceptions, most often acquisition- or counterfeit-related: Bernard Arnault’s takeover of LVMH was completed only after numerous legal disputes; ditto PPR’s purchase of Gucci. LVMH has also aggressively gone after eBay and Google, charging them with facilitating fakes.

But even then, many brands have been reluctant to call too much attention to their actions, preferring to navigate under the radar rather than damage their above-it-all aura. A Kering executive once told me that the company had made a strategic decision not to publicize its actions against counterfeiters, as did the watch and jewelry group Richemont, lest it skew perception.

Yet, like miniskirts giving way to maxis, something has changed. These luxury legal actions have been the equivalent of the most gaudy nighttime soaps. If Aaron Spelling were still alive, he’d be working on a treatment.

After all, there was Galliano in court, years after the initial incident that cost him his job, saying, according to Women’s Wear Daily: “During these years as creative director of this house, I did not realize that its success, multiplying its sales by four, came at a destructive and exorbitant cost: my physical and mental health. Always more work, always more obligation, always more pressure, a dangerous and pathological spiral, without control.”

Here was the interview Ghesquière gave System, quoted again and again every time the legal situation came up: “I began to feel as though I was being sucked dry, like they wanted to steal my identity while trying to homogenize things.”

And as entertaining as that may have been for all of us industry watchers (and it was, very), as gratifying as it may have been for luxury critics, and as elucidating as it may have been to the actual behind-the-scenes machinations of big brands, it is improbable that entertainment, gratification and elucidation were the goals of those involved.

Indeed, for an industry obsessed with image and that ephemeral thing known as “brand equity,” this was a notably different look. One that didn’t fit particularly well.

Certainly, the French legal system seems to have thought so. It may be sheer coincidence that the Paris district court sent Ghesquière and Kering off to mediation to resolve their dispute last August, thus getting them out of sight and off the public record (they are still in discussion, so it is possible they will end up back in court), and that it was Franck Gentin, the president of the commercial court of Paris, who came up with the settlement that finally resolved the LVMH/Hermès dispute the next month. But if so, it’s a coincidence worth considering.

Sometimes it is in all interests to just move on.