International law firm McDermott Will & Emery represented emerging fast fashion client Honey Bum, defeating a motion to dismiss in a case alleging that an established competitor orchestrated a vendor boycott in violation of the Sherman Act. The motion upholds a Section 1 conspiracy claim against the defendant Fashion Nova.
On March 26, 2021, a judge in the federal District Court for the Central District of California denied a motion to dismiss by Fashion Nova, ruling that McDermott client Honey Bum had “adequately pled a claim for per se violation of Section 1 of the Sherman Act based on a theory of a group boycott carried out pursuant to a conspiracy.” (Honey Bum v. Fashion Nova (C.D.Cal.) 2:20-cv-11233-RGK-AS)
“Together with our client, we are pleased with this outcome and look forward to following this case through to hold the defendant fully liable,” Michelle Lowery, lead antitrust partner in the case, said. “This case provides important safeguards for market entrants from entrenched monopolists and protects an emerging fast fashion industry in the Los Angeles area.”
Honey Bum, a new player in the fast fashion industry in the Los Angeles area, is a direct competitor to the well-known and well-established Fashion Nova. Rather than compete with Honey Bum on price and quality, starting in 2017, Fashion Nova began inciting a group boycott of Honey Bum. Specifically, Fashion Nova began communicating to key “must-have” LA vendors that if they did not cease business Honey Bum, Fashion Nova would no longer order from them.
As a result of the group boycott Fashion Nova constructed, Honey Bum’s revenue declined significantly. McDermott filed a complaint against Fashion Nova on behalf of Honey Bum, alleging violations of the Sherman antitrust act and business tort violations.
Fashion Nova promptly moved to dismiss. On March 26, 2021 the Court denied Fashion Nova’s motion to dismiss in part, maintaining Honey Bum’s group boycott and business tort claims against Fashion Nova. Fashion Nova is now potentially liable for compensatory, treble, and punitive damages as well as attorneys’ fees.
The McDermott team was led by Michelle Lowery and Jeffery McFarland and included Grant Maxwell, Sarah Hogarth and Alexandra Lewis.
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