Lanvin: A Fashion House Divided

Lanvin has been fined upwards of $3,000 by Paris’ high court, following the initiation of a legal battle between a house divided. In one camp: the Paris-based brand’s management (and majority shareholder, Shaw-Lan Wang) and in the other: its work council, designers, ateliers. Following creative director Alber Elbaz’s ouster in October, the work council, Comité d’enterprise, threatened that if Wang was not willing to listen to their requests for a hearing regarding Elbaz’s abrupt ouster, they would take their case to Paris's commercial court. After failing to get answers to the questions of why Mr. Elbaz had been fired and what the strategy was for the company’s future, that is exactly where the two parties ended up.

On Wednesday, the court ordered Lanvin’s management to pay a small fine, 3,000 euros, in damages to cover legal costs, but according to reports, this may not be the end. “It’s a legal issue,” Johann Sultan of CBR & Associés, which represents the brand, said. “The court has decided that it has no jurisdiction to decide in the matter."

The New York Times's Vanessa Friedman provided the following summary of this week's outcome in court: 

Lanvin executives had accused the Comité d’Entreprise, a works council that functions as an intermediary between employees and executives, of abusing the internal communications network, fomenting unrest since Mr. Elbaz’s departure, and groundlessly alerting the board of directors to concerns about the company situation, especially its financial situation, and requesting an independent audit, and asked that such actions be halted. The judge found that the works council had behaved within its rights on the first two points and that the court did not have jurisdiction to suspend the right to alert. 

Not surprisingly, both sides are claiming victory. Charles Henry Paradis, a member of Lanvin’s works council, which represents employees on the company board, said: “This is a beautiful victory. All points put forward by the company have been rejected by the court. We now expect strong action on the part of the board of directors,” said Paradis, arguing that “this legal battle launched by the Lanvin management has damaged the company’s image.” The work counsel’s attorney, Isabelle Schucké-Niel, similarly noted: “This is not a draw. This is a victory for the works council. This decision is shameful for the company’s management. They should have respected the law in the first place instead of taking this case in front of a judge.”

As previously reported, the management of Lanvin had initiated legal proceedings against the works council to further prevent it from using the company’s official e-mail system and message boards to share information with members of staff regarding its long time creative director's ouster.

Also at odds in this case – and proving to be one of the uglier battles – is Lanvin's majority shareholder and its former creative. As Friedman notes: "Fashion houses are not democracies, of course, and Madame Wang is Lanvin’s majority shareholder; she owns the last word. Still, it is striking that, over the years, the strategic disagreements all seemed to turn broadly on the same point: an alleged reluctance on the part of Madame Wang to invest in the business, whether by putting cash back into the company after selling off assets or opening it up to investment from the outside." Such turmoil has also manifested itself in threats from Elbaz, who has claimed he will not only sue the house’s management and its owner for defamation, stemming from what alleges in the spreading of untrue and damaging information (namely, that his departure was a result of a lack of "creative designs" on his part). He has also threatened to pursue a tell all interview. 

As for how this will play out in the future, we will have to wait and see. On the legal front, Lanvin management said it would not pursue the court case any further, and hopes to engage in more constructive dialogue with the employees. It may not be that easy, though, as Elbaz is reportedly due between €20 million and €40 million in severance.

And as for his next move, there are, of course, the rumors that he will succeed Raf Simons at Christian Dior. Such speculation has been prefaced by the assumption that he is prevented from working for for competitors, like Dior, due to a noncompete clause in his contract with Lanvin. However, the New York Times stated that Elbaz is not bound by a noncompete with Lanvin, which is significant (both in terms of his next move and in terms of how much money he will be able to recover from Lanvin).