Kanye West is angling to get himself out of the lawsuit filed against him by a fabric supplier for his Yeezy brand. Earlier this year, Japanese textile firm Toki Sen-I Co. filed suit against Yeezy Apparel LLC and West for allegedly failing to make good on a $600,000-plus contract they signed, and for operating Yeezy Apparel in a fraudulent way, namely, as “a mere shell and sham without capital, assets, membership interests, or members other than Kanye … intended, conceived [of], and used by Kanye as a device to avoid individual liability.”
After formally requesting this spring that the court strike a number of claims from Toki Sen-I Co.’s complaint, counsel for Kanye and Yeezy Apparel has filed a memo supporting its request, primarily taking issue with its allegations that West set up Yeezy Apparel exclusively to shield himself from personal liability in connection with his fashion collections and that in reality, West and Yeezy apparel are little more than “alter egos.”
Kanye’s counsel claims that Toki Sen-I Co.’s lawsuit “rests only on [a] business dispute between two companies,” and that “there are zero contracts alleged between [Toki Sen-I Co.] and Mr. West, himself, either before, after, or during the [failed] transaction.” Nonetheless, Toki Sen-I Co. has named the musician-slash-fashion figure as a defendant in the case and has “needlessly inflated its pleadings to baselessly name the celebrity member of Yeezy Apparel, [in an] attempt to [make] pre-litigation communications into the basis for a lawsuit, and to seek punitive damages against both [Kanye and Yeezy Apparel].”
The “pre-litigation communications” that the Yeezy counsel is referring to? Tweets from Kanye – one that makes mention of his compensation as inexorably linked to Yeezy Apparel, and another that “refers to the shoes that bear his name as a brand, without distinction between himself and the company that sells the shoes,” which Toki Sen-I Co. says amounts to proof that Kanye and Yeezy Apparel are essentially the very same entity. As a result, Toki Sen-I Co. claims that Kanye should be held personally liable for the claims against Yeezy Apparel.
The rapper’s counsel calls foul, noting that “the general rule for limited liability companies,” which is what Yeezy Apparel is organized as, “is nonliability for the individual members of the [LLC] for judgments for the debts or obligations of the company.” The latest filing also asserts that “California courts have held that alter ego liability is an ‘extreme remedy, sparingly used.’”
Regardless of that, though, counsel for West and Yeezy claims that Toki Sen-I Co. has failed to make its case that Kanye and his brand are, in fact, “alter egos” and thus, that Kanye should be included as a defendant in the case.
As West’s counsel sets out, “To establish an alter ego theory under California law, a plaintiff must sufficiently show: 1) that there is a unity of interest between the corporation and the defendant so that separate personalities of corporation and individual no longer exist; and, 2) that an inequitable result will follow if the individual’s acts are treated as that of the corporation.” In terms of the first element, Kanye’s attorney argues that “an online statement” – such as a tweet – that “addresses two parties as one does not support an alter ego theory; instead, courts recognize that separate corporate entities presenting themselves as one online does not rise to the level of unity of interest required to show companies are alter egos.”
More than that, the assertion that Kanye is the sole member of Yeezy Apparel is “legally and factually unsupported,” his counsel claims, since at the timing of the contract, “Yeezy Apparel’s Chief Executive Officer was an individual named Eugene Kim – not Mr. West.”
With the forgoing in mind, and given that Toki Sen-I Co. has also allegedly “failed to plead the facts or legal theories necessary to support a claim for punitive damages,” counsel for Kanye and Yeezy wants the court to toss out “all causes of action [that Toki Sen-I Co. has asserted] against Mr. West,” as well as its plea for punitive damages.
*The case is Toki Sen-I Co., v. Yeezy Apparel LLC, Kanye West, et al., 19-VECV-00110 (Cal. Sup.).