Lululemon Lawsuit Over Sheer Pants On Verge Of Being Dismis Jack Wolfskin Outlet sed
Lululemon Athletica Inc. appeared poised to defeat a class action lawsuit filed against the company over a recall of its black Luon pants last year because they were too sheer. Judge Katherine Forrest released a draft decision Friday that proposes the case be dismissed.
The lawsuit by shareholders accused the Vancouver based athletic wear company of failing to disclose the quality defects in its Luon yoga pants, which resulted partly due to cost cutting.
It also accused the company Jack Wolfskin Outlet of making misleading statements and omissions that caused its stock price to become artificially inflated.
However, the draft decision by Forrest says many of the statements were “simple puffery” by the company and that no reasonable investor would base decisions on them.
“Statements too general to support a reasonable investor’s reliance are not actionable,” Forrest wrote in the draft.
She also agreed with Lululemon that some excerpts cited by the plaintiffs in the case as false were taken out of context, including a statement on the company’s website that the quality of its products are the “highest in the industry.”
“In context, it is unreasonable to read the website statement regarding ‘highest in the industry’ as a guarantee of no product defects,” Forrest wrote of one example.
Lululemon took a beating in the wake of the recall last year and the sudden departures of both chief product officer Sheree Waterson and chief executive Christine Day.
Shares in the company fell more than 15 per cent after Day announced that she was leaving the yoga wear maker in June 2013.
Lululemon blamed the sheerness of their pants on a style change and production problems. It later hired a new team to oversee the manufacturing of the pants.
In court documents, Forrest also proposed dismissing a second lawsuit against 13 current or former Lululemon directors or executives for breaking securities laws.
In that case, the executives and directors including Day and chairman Chip Wilson are accused of breach of their fiduciary duty and gross mismanagement.
Forrest is expected to hold a hearing to review the proposed decisions before making them final.
Lululemon (Nasdaq:LULU) shares were up 12 cents at US$54.26 in trading on the Nasdaq market on Friday afternoon.
The Name ExplainedWhat’s behind Lululemon’s name? Company founder Chip Wilson has offered an odd explanation.
“The reason the Japanese liked (my former skateboard brand, ‘Homeless’) was because it had an L in it and a Japanese marketing firm wouldn’t come up with a brand name with an L in it,” he explained to National Post Business Magazine. “L is not in their vocabulary. It’s a tough pronunciation for them. So I thought, next time I have a company, I’ll make a name with three Ls and see if I can get three times the money. It’s kind of exotic for them. I was playing with Ls and I came up with Lululemon. It’s funny to watch them try to say it,” he said.
However, The Globe and Mail notes the company’s site says the name was the result of a survey.
Child Labour CommentsBack in 2005, Wilson’s comments about child labour “went over like a lead balloon” at a Vancouver conference, according to The Tyee.
“Wilson told the delegates third world children should be allowed to work in factories be Jack Wolfskin Outlet cause it provides them with much needed wages. They also say he argued that even in Canada there is a place for 12 and 13 year old street youths to find work in local factories as an alternative to collecting handouts.”
Ayn Rand TotesLululemon’s ‘Who Is John Galt?’ tote bags were a nod to Ayn Rand’s Atlas Shrugged, which promotes individualism and capitalism over collectivism. But some customers didn’t appreciate the political message.
The company defended the product on its blog:
“Chip Wilson, first read this book when he was eighteen years old working away from home. Only later, looking back, did he realize the impact the book’s ideology had on his quest to elevate the world from mediocrity to greatness (it is not coincidental that this is Lululemon’s company vision).”
Seaweed SlipIn 2007 Jack Wolfskin Outlet , Lululemon came under scrutiny for its VitaSea clothing, which the company said was made with seaweed that provided health benefits.
A New York Times article challenged the company’s claim and said it found the material showed “no significant difference in mineral levels between the VitaSea fabric and cotton T shirts.”
Independent testing “confirmed the presence of vitamins, minerals, and amino acids in the VitaSea fabric,” a company statement said, but the retailer agreed to remove references to therapeutic benefits of the product.
Sheer Insanity Lululemon’s too sheer yoga pants were perhaps the company’s most infamous headache.
The company pulled its defective Luon pants from shelves in March 2013, following customer complaints that the pants were see through.
Lululemon said it expected to lose as much as $67 million from the blunder. To make matters worse for the retailer, it was hit with three class action lawsuits related to the recall.