Carolina Herrera, Oscar de la Renta Quietly Settle Designer Legal Dispute

Rival design houses Carolina Herrera and Oscar de la Renta have managed to settle their dispute regarding the non-compete provision in the contract of Laura Kim, Herrera's former senior designer and Oscar de la Renta's current co-creative director. Kim, who is named as a party in the lawsuit, joined the Carolina Herrera team in October 2015 and was slated to begin her transition to replace the house’s founder - a $1 million dollar per year-paying job (with a potential $300,000 bonus) - beginning in late February 2016, something that was unknown to Ms. Herrera, 77.   

Kim ultimately resigned from her role at Carolina Herrera on July 8 and as of early September, she and Fernando Garcia - her partner in New York-based brand, Monse (pictured above) - announced that they were joining Oscar de la Renta as the house’s creative directors. Both had previously worked under the late Oscar de la Renta, Kim as a studio director for 12 years and Garcia, who spent six years there, ultimately left with the title of senior designer. 

According to Herrera’s complaint, Carolina Herrera CEO Francois Kress sent Kim a letter shortly after the news of her and Garcia's appointment at Oscar de la Renta to notify her of the six-month non-compete agreement that was included in her contract with Carolina Herrera, which was slated to last until January. The employment agreement required that Kim give Herrera three months’ notice when she intended to resign and stipulated that the company could “at its discretion” elect to exercise a six-month non-compete provision.

The lawsuit accused Kim of breach of contract, stating that she breached the non-compete clause explicit in her contract with the brand when she joined the team at de la Renta. The complaint also asserted a claim of Tortious Interference with Contractual Relations against de la Renta for allegedly luring Kim away from Herrera. 

In terms of the latter charge, Herrera alleges in its complaint: "[Oscar de la Renta] was aware of Kim’s non-competition obligations to Herrera prior to and at the time of entering into an agreement to employ Kim in duties and responsibilities in a business directly competitive with the business in which Kim had been engaged for Herrera. Whether or not [Oscar de la Renta] was aware of Kim’s non-competition obligations to Herrera prior to the time of entering into an agreement to employ Kim as aforementioned, Herrera unambiguously informed [Oscar de la Renta] promptly upon Kim’s departure from Herrera of Kim’s contractually binding post- employment obligations to Herrera and its view that Kim’s employment by [Oscar de la Renta] in the six-month period following Kim’s departure from Herrera was and would be in violation of Kim’s post- employment obligations to Herrera."

Moreover, Herrera claims, "[Oscar de la Renta] has, with full knowledge, interfered with business relations existing between Herrera and Kim, with the purpose of harming Herrera and by means that are dishonest, unfair or improper.”

After initially siding with Herrera, late last month New York State judge Jeffrey Oing lifted the his previously implemented preliminary injunction that barred Kim from working at Oscar de la Renta given her non-compete agreement with Carolina Herrera.

While the terms of the parties’ settlement are largely confidential (a common theme in settlement practice), WWD notes that “the settlement appears to be a victory of sorts for de la Renta, given that Kim is allowed to continue in her role as co-creative director with Fernando Garcia.”