Image: Cushnie et Ochs

The Fashion Law Exclusive – A duo that was previously considered to be among New York fashion’s most promising young talent has been feuding behind the scenes if a newly-filed lawsuit is any indication. A year and a half after Michelle Ochs made headlines when she abruptly left Cushnie et Ochs, the 10-year old company she founded with fellow Parsons School of Design graduate Carly Cushnie, Ochs has initiated a new legal battle, accusing the since-renamed Cushnie brand of breaching their existing non-disclosure and settlement agreement. 

According to the complaint that she filed in a New York federal court on Tuesday, Ochs claims that in August 2018, six months after she left the Cushnie et Ochs brand, she and the defendants – Cushnie LLC and Cushnie Holdings, LLC (“Cushnie”) – “agreed to settle a dispute then existing between them.” In furtherance of this settlement, the corporate entities of the Cushnie brand “agreed to make certain monetary payments to [Ochs] over a two-year period.” 

It appears that the parties’ separation arrangement was working out well until this past March when Ochs asserts that Cushnie was “required to make a penultimate payment to [her] in the amount of $180,000 within ten business days of February 27, 2020 (i.e., on or before March 12, 2020),” followed by a “final payment in an equal amount within ten business days of August 27, 2020.” The problem, according to Ochs? The brand refused to pay up. 

In light of Cushnie’s alleged failure to pay the $180,000 sum in March, and its failure to respond to a formal demand from Ochs’ legal counsel regarding the missed payment, Ochs sought an “immediate acceleration of [Cushnie’s] remaining payment obligations, together with statutory interest and reasonable attorneys’ fees,” as outlined in the parties’ agreement, and accordingly, on April 8, 2020, demanded arbitration of the dispute before the American Arbitration Association, a process that was also allegedly set out in the parties’ settlement agreement. 

Ochs claims that the arbitration hearing came and went, but representatives for Cushnie “failed to appear, and the matter was deemed closed on May 18, 2020.” 

“Given the foregoing,” Ochs asserts in the complaint that she has been “left with no choice but to commence this action seeking monetary damages arising out of [Cushnie’s] breach of the settlement agreement and promissory note in an amount to be determined at trial, but believed to be in excess of $360,000.” 

The legal battle, in furtherance of which Ochs sets forth two claims of breach of contract – one for Cushnie’s alleged breach of the parties’ settlement agreement and the other for the breach the promissory note – follows from a successful decade-long tenure between the two thirty-something women, who met while enrolled at design school in New York, and formally launched their brand 2008 to rave reviews from New York fashion’s powers-that-be, from Bergdorf Goodman’s Senior Vice President of Women’s Fashion Linda Fargo to Vogue and the Council of Fashion Designers of America. 

Best known for their creatively cut-out, bodycon dresses and subsequent expansion into knitwear and swimwear, as well as leather goods and footwear, the duo – who were long-praised for “knowing their customer” and steadfastly devoted their design sensibilities to creating flattering garments for her – amassed a list of big-name stocks and famous fans, including the likes of First Lady Michelle Obama, Beyoncé, Selena Gomez, Jennifer Lopez, Karlie Kloss, Gigi Hadid, and Blake Lively, among many others. 

“We’re women designing clothes for women, and we’ve been doing it for eight years now, and it’s working,” Ochs said on the heels of showing their well-reviewed Spring/Summer 2017 collection. Beyond attracting A-list fans and big-name retailers, and the praise of the fashion media, the budding New York-based brand caught the eye of investors, and in 2016, sold off a minority interest in the company to Farol Asset Management and several other investors.

Speaking of the deal at the time, Ochs said, “We always took pride in growing organically and smart and really making the right moves as we were growing the brand. It’s been very lean, and we’ve built a very strong team. We’ve always focused on female power and energy and growing smart and finding the right people.” The new funds would help the brand to “expand its collection, accelerate its growth and build out its profile further.” However, within two years of welcoming the investment, Ochs would be on her way out, as would Peter Arnold, who had been appointed to the CEO role in light of the brand’s new funding. 

“It seemed like a sudden break,” Vogue wrote of Och’s leaving, “especially considering the fact that they’d just celebrated [their 10-year] milestone.” But “apparently, there were no hard feelings—at least that was the vibe that Carly Cushnie conveyed while showing off her first solo outing for the label that she now helms.”

Ms. Cushnie would go on to helm the newly-renamed brand on her own, expanding into bridal wear and activewear, and teasing a recently-announced collaboration with Target, while Ochs has remained out of the fashion industry spotlight, almost certainly the result of a stringent non-compete agreement included as part of the settlement deal. 

Fashion industry trade publications’ reports that the duo’s partnership had “simply run its course and come to a natural end” seemed to ring true in lieu of any public-facing drama following Cushnie and Ochs’ parting of ways two years ago, a narrative that was echoed by the Cushnie et Ochs brand. The company released a prepared statement in connection with the announcement of Ochs’ departure in 2018, saying that it was “realigning our organization … as we plan for the next decade,” and praising the company’s co-founder as “playing an instrumental role in the creation and growth of the brand.”

Neither Ms. Cushnie nor Ms. Ochs made individual statements to the contrary (or any public statements about their separation at all, actually) at the time, and have not publicly spoken out about the split since, likely in line with the terms of the non-disclosure agreement that Ochs references in her complaint. 

The new lawsuit – and particularly the language surrounding the “dispute” that existed between the two parties as of the summer of 2018 (i.e., one that predates the onset of the COVID-19 pandemic and any potential impact that may have had on Cushnie’s ability to make good on the amount it owes to Ochs) – breaks that silence, and seems to suggest that there very well may have been more to the by-all-other-accounts amicable parting of ways. Sources for TFL, speaking anonymously, assert that the designers’ split was far less harmonious than it was made out to be by the brand and subsequently, by the fashion media.

Reps for Cushnie did not immediately respond to a request for comment, and the brand has not yet filed a response to the newly-initiated suit. Although its formal answer to the complaint, which can be expected within 60 days, should provide a greater look into what really has been playing out behind the scenes of this once-very-buzzy brand. 

*The case is Michelle Ochs v. Cushnie, LLC (Formerly Known as Cushnie at Ochs, LLC), and Cushnie Holdings, LLC (Formerly Known as Cushnie at Ochs Holdings, LLC), 1:20-cv-04215 (SDNY).